City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2025-01398 7/29/2025
First Amendment to Commercial Lease Agreement with Starbucks Corporation File ID: 2025-01398
Location: 1003 L Street, District 4
Recommendation: Pass a Motion: 1) authorizing the Interim City Manager or designee to execute the attached First Amendment to Commercial Lease Agreement with Starbucks Corporation for an additional term of five years at the City owned real property located at 1003 L Street extending the term from June 1, 2028 to May 31, 2033 for an additional total rent for the extended five-year term of $545,875.20 and retaining the four five-year options potentially extending the term of the agreement until May 31, 2053.
Contact: Steve Ward, Real Property Agent, (916) 808-1081, [email protected]; Richard Sanders, Facilities and Real Property Superintendent, (916) 808-7034, [email protected]; Staci Hovermale, Parking Manager, (916) 808-5047, [email protected], Department of Public Works Presenter: None
Attachments:
1-Description/Analysis
2-First Amendment to Commercial Lease Agreement
Additional Description/Analysis
Issue Detail: The City-owned property known as Capitol Garage, located at 1003 L (the “Property”) is an off-street parking garage containing approximately ten retail suites located in the downtown corridor. Starbucks Corporation (“SBUX”) is currently leasing 3,031 square feet within 1003 L Street and its current term is expiring on May 31, 2028 with four five-year options potentially extending the agreement until 2048. SBUX has requested extending the term of the lease an additional five years, until 2033, and retaining their four five-year options to potentially extend the term of the agreement until 2053. To ensure stable rental income at the Property, staff are recommending that the City enter into a First Amendment of Commercial Lease Agreement with SBUX through May 31, 2033 with the four five year options potentially extending the agreement until 2053.
File ID: 2025-01398 7/29/2025
Policy Considerations: The recommendation in this report is in accordance with City Code section
3.04.020, which requires City Council approval of real property agreements involving expenditures of $250,000 or more.
Economic Impacts: None
Environmental Considerations:
California Environmental Quality Act (CEQA): It has been determined that the proposed activity of entering into an amendment to the lease agreement is not a project pursuant to the California Environmental Quality Act (CEQA) Guidelines Section 15378(b)(2 and 4). The activity described in this report is continuing administrative or activity and government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. The proposed activity is not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).
Sustainability: Not applicable
Commission/Committee Action: Not applicable
Rationale for Recommendation: SBUX is the world’s largest coffee house chain with approximately 35,000 stores worldwide and a market capitalization of $106 Billion. SBUX has occupied 1003 L Street since May 2018 and successfully maintained operations from this location throughout the COVID pandemic. Execution of the First Amendment will allow for a five-year extension of their lease which ensures its continued operations at this location through May 31, 2033. The remaining options allow for extension of the lease through May 31, 2053 with four five options potentially extending the lease until 2053.
Financial Considerations: The monthly base rent for the extended term running from June 1, 2028, through May 31, 2033, is about $9,100, which is approximately $3.00 / square foot Triple Net Lease (NNN). This equates to an additional leasehold value from the extended term of approximately $546,000. All lease revenue will be deposited in the Parking Fund (Fund 6004).
Local Business Enterprise (LBE): Not applicable.