The city of Riverside has bought the Wright Point office buildings on Springfield Street, a purchase city officials say demonstrates their commitment to economic development as well as an effort to generate revenue.
Riverside purchased the two buildings — Wright Point I and II — for $2.5 million in an online auction. The city had the winning bid when the auction closed March 28.
The total cost is about $2.66 million, which includes all the fees, and the city will close on the 7.12-acre property at the end of the month, Riverside City Manager Bryan Chodkowski said.
The city plans to finance the acquisition. The city does not own any other commercial property in Riverside.
“This is self-supporting,” Chodkowski said. “There is no tax obligation from the city to cover these expenses. The leases and rents will pay the expenses for the building, including the financing.”
The property has been on the market the last five years and the minimum bid was $1 million. They were both built in the mid-1980s.
The city will collect approximately $115,000 annually from the existing leases, and at the current rent levels, the city projects to generate about $400,000 per year in net income from property and income taxes. In 2013, the property tax for each building was $88,660.24 (I) and $136,679.74 (II).
“Those buildings have long been an anchor for economic development and economic retention in the city,” Chodkowski said. “We’re looking forward to bringing stability to that office space and making sure our long-term business residents feel confident and comfortable staying in Riverside, and make opportunities for other businesses. We help control our own destiny, and that’s something we haven’t had the ability to do in quite some time.”
Wright Point I, 5200 Springfield, is three stories, 64,425 square feet and 30 percent occupied. Wright Point II, 5100 Springfield, is five stories, 109,755 square feet and 65 percent occupied.
A total of 22 tenants combined lease space in the buildings. The city does not know how many total employees there are.
“We will add stability to a very important asset to Riverside,” said Bob Murray, the city’s director of planning and economic development. “It will be easier to attract defense contractors and it gives us options we didn’t have before. It puts us in the market and makes us more competitive.”
At an 80 percent occupancy, the buildings’ value would be between $8 to $10 million, Murray said. The city is committed to spend $1 million for roof repairs and update the HVAC system in each building, he said.
Riverside Mayor Bill Flaute said he was in favor of the purchase, but “I’m not excited about it because I don’t think the city needs to be in the real estate business.”
“On the other hand, I understand the need to have that property’s problems dealt with in the best way, and that’s what the city can do,” he said. “Hopefully we can get some good tenants in there and market it correctly.”
Chodkowski said Riverside is considering the option of hiring a company to manage the buildings, grounds and leasing for the city.
“The intent is to be as minimally involved as possible,” he said. “We’re good about government, not necessarily the real estate business.”