TRS News
Will Pay at least $326,000 Monthly in 10-Year Lease
TRS Reveals Previously Secret Details
Of Upcoming Investment Staff Move
The TRS will pay at least $326,000 a month to lease three floors of a 36-story office building in downtown Austin to house its growing investment management staff when the building opens in 2021.
Austin TV station KXAN was the first to report (updated on Jan. 19) details of the previously secretive deal TRS reached with the developers of the ultramodern Indeed Tower, which is currently under construction and will be Austin’s tallest office building when completed.
The lease calls for monthly “base rent” payments of $326,200.88, with periodic increases after that to a high of $383,391.94 for the final 12 months of the 10-year lease, records obtained by the station via a public information request reflect. See this summary.
TRS Executive Director Brian Guthrie said in a prepared statement that because the retirement system committed early to the Indeed Tower, “we were able to stabilize the rent and negotiate favorable pre-construction rates for the 100,000 square feet.”
Well Below Current Rents
By negotiating the lease 18 months ago, TRS got a rate that is well below current office rents for comparable space in Austin’s tight rental market, Guthrie added.
The system, with the state attorney general’s blessing, over the course of the past several months had declined to release details of the leasing agreement due to concerns that publicizing what TRS was paying to lease the space would put the system at a competitive disadvantage in the marketplace.
The investment management division’s current lease in another downtown Austin building, which the TRS says is too small due to the need to add more staff because of a change in an investment strategy, expires in 2021.
Guthrie told the TRS board last month that it was important for the system’s investment management operations to maintain a downtown Austin presence to attract and retain top-notch investment staff and to facilitate interactions with other investment fund professionals, including those of other state-level investment funds.
As reported in TEN (Jan. 20), Guthrie recently briefed the TRS board on plans to address the system’s facility space-shortage needs.
Other parts of the plan, still in early draft form, include vacating the system’s current two-building main headquarters in a busy part of downtown Austin and selling or leasing the buildings to generate income for the system.
The TRS meanwhile, is considering building a new headquarters “campus” somewhere in the Austin area that would provide enough space for non-investment staff and would be much more convenient (and provide sufficient parking) for the system’s members to visit for retirement counseling and for other purposes.
The TRS is also considering opening first-ever regional offices in different parts of the state.