Real Deals

State says no DHHS campus proposals have been eliminated

dbracken@newsobserver.comOctober 10, 2012 

Chances are Tony Beasley won’t be receiving a Christmas card this year from the folks over at the State Property Office.

The Garner economic development director said Tuesday that the list of potential sites for a new Department of Health and Human Services campus has been narrowed to four, including two locations in Garner.

State officials, however, say Beasley is mistaken. John Webb III, leasing and space planning manager for the property office, sent a letter Wednesday to all 10 developers who submitted proposals saying none of them has been eliminated.

“The fact is that discussion is ongoing and no proposals have been eliminated at this time,” Webb wrote. “We appreciate that you respect the sensitive nature of this matter.”

Beasley, when asked about the state disputing his claims, stood by his comments, saying they were based on meetings he sat in on with developers and state officials as well as email updates he received from developers describing other meetings about the project.

There’s no question that the DHHS project is a sensitive matter, but it’s one that should draw a lot more scrutiny as it moves ahead. After all, the state is proposing to fund a major real estate project at a time when all areas of government are under intense pressure to reduce costs. And it is making decisions about the project in a condensed time frame.

A new DHHS campus may make sense for all sorts of reasons, but state officials would be wise to clearly articulate those reasons to the public ahead of any final decision.

Given the sheer size of the project, it was inevitable that there would be a certain amount of lobbying by people not constrained by nondisclosure agreements.

Although some may view Beasley as speaking out of turn, he’s really just trying to make sure that the best argument for the Garner sites are presented to state officials and Grubb & Ellis Thomas Linderman Graham, the broker hired to vet the proposals.

One would assume that much of the data being compiled and submitted by Garner officials about where DHHS employees live and the commute times from the various sites were already being looked at.

That information may indeed prove important, but it certainly won’t be the only metrics by which the various proposals will be evaluated.

It’s also worth reiterating that the new era of austerity has changed the way government build-to-suits are viewed by developers. Given the uncertainty about public spending levels going forward, developers are going to want any campus to be commercially viable in the event that DHHS’ space needs change over time.

The Garner sites, while conveniently located, may carry more risk for developers because recruiting a private tenant to such a campus could prove challenging. Such risks will ultimately factor into the overall cost of the project, which no doubt will also be a sensitive subject for many people.

Bracken: 919-829-4548

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