San Diego officials are turning to a familiar adviser as they evaluate how to better accommodate city employees who no longer need permanent desk space downtown Monday through Friday.
Tuesday, San Diego City Council unanimously approved a $725,000 consultant agreement with real estate investment management and services firm Jones Lange LaSalle. The firm, which last year took stock of the city’s existing portfolio of downtown space, will now help determine over the next 12 to 18 months how and where the city should house its downtown workforce.
City Council members considered the item as part of Tuesday’s consent agenda, meaning they didn’t receive a presentation from staff or discuss the item at length. But in an October presentation to San Diego’s Land Use and Housing Committee, Niki Chalfant, a program manager in the real estate department, explained the rationale behind the contract.
“The city recognizes the need for a fresh look at how and where we house our employees downtown. As we have all experienced, the COVID-19 pandemic forced us to adapt to a new hybrid work model, which also allowed the city the opportunity to ensure that remote working capabilities were established,” Chalfant said. “Now that the in-office occupancy levels vary from the traditional levels, this contract will allow us to look at utilizing our existing and our future spaces more effectively.”
JLL is being tasked with assessing downtown office use and operating expenses at four city-owned buildings, including the problematic 101 Ash St. tower that the city purchased as part of a $132 million settlement with the building’s landlord and lender. The firm will also look at leased premises downtown, work with city departments to understand their varying workplace needs and evaluate ways to maximize square footage. The latter includes weighing whether options such as office sharing, “hoteling” or reserving desks in advance, hot desks and open floor plans can work for city workers.
The work will be conducted in four phases, ending with a 60-day pilot program that tests various formats.
That means the work won’t be ready in time for the city’s formal solicitation of bids to redevelop its City Hall assets and adjacent properties, which is expected to take place in February or March and adhere to the Surplus Land Act. However, the work will eventually inform what’s being called the Civic Core Revitalization effort, ideally providing clarity on how much replacement office space the city needs.
Early next year, San Diego expects to issue a notice of availability for six blocks or more of municipal land. Mayor Todd Gloria’s high-level idea is to offer city land, via a long-term ground lease, in exchange for modern facilities and an abundance of affordable homes.
The city expects to offer the entire City Hall complex — including the concourse, convention hall, parking garage and 3,000-seat Civic Theater — the City Operations Building at 1222 First Ave. and the empty tower at 101 Ash St. The properties, which serve 1,768 city workers, are said to be obsolete or too costly to repair. Together, the buildings require $262 million in deferred maintenance needs, according to JLL’s 2021 assessment of existing space.
In October, Land Use and Housing Committee members questioned the timing of JLL’s latest contract in relation to the coming-soon solicitation. Chalfant noted that recently departed Chief Operating Officer Jay Goldstone, who remains in charge of the revitalization project as a special adviser to the mayor, is being kept in the loop and that JLL’s prior assessment work can be used in the interim.
JLL’s newest contract comes with a five-year term, although the work is anticipated to be completed in 18 months. The firm also continues to advise the city as a real estate consultant on the sports arena project.
