City spending $2.8M on remodel of future Mission Valley office

The city of San Diego will spend $2.8 million on improvements to the newly leased and already renovated Mission Valley office building where it plans to next year move a majority of its development services department.

Tuesday, the San Diego City Council unanimously approved a sole-source construction contract with Pacific Building Group to complete interior tenant improvements for the city’s future home at 7650 Mission Valley Road. The contract was approved on the consent agenda, meaning council members did not discuss the agreement.

With the action, Pacific Building Group is expected to start construction in November. The contractor’s work includes a redesign of the building’s main entrance and the creation of a new public hearing room for the city’s Planning Commission, according to a staff report prepared for Tuesday’s meeting.

The work is expected to take 110 days to complete and employees should be able to move into the building by April or May, the report said.

“Development Services is proud to secure a central headquarters where the public can be served in a newly updated facility,” DSD Director Elyse Lowe said. “This facility will provide a new public hearing room, improved customer service spaces and changes for fire and safety requirements. The refresh is in service of meeting the needs of residents, businesses, employees and our growing city.”

In May, council members agreed to sublease the entirety of the two-story, 73,970-square-foot building from Wawanesa General Insurance Company Inc. for a term of four years and four months, ending September 2028. The short-term contract will cost the city $10.2 million in rent and operating expenses. The city also plans to negotiate a direct lease with the landlord, H.G. Fenton, at the end of the sublease.

The building, renovated by Pacific Building Group in 2019 for Wawanesa, will serve as the primary headquarters for staff in San Diego’s Development Services Department who need to interface with the public.

DSD is responsible for reviewing project plans, processing permits for public and private developments, performing building inspections, maintaining records, and enforcing building and land-use regulations. The department, which employs more than 700 people, is currently spread across three facilities, including the dilapidated City Operations Building at 1222 First Ave.

The Mission Valley location is part of the city’s two-part plan to get staff out of the operations building, which is often plagued by broken elevators, plumbing problems and other issues. In September, council members also agreed to lease two floors in the office skyscraper at 550 W. C St. in downtown San Diego. DSD will consolidate into the two newly leased properties, with 500 people expected to work at the Mission Valley location and 225 people expected to move into to the downtown skyscraper.

The city’s staff report notes that the Mission Valley building’s interior is in “pristine condition.” The first floor is also already furnished with workstations, desks, chairs and break room furniture.

However, the office building’s ground floor needs to be reconfigured to serve both staff and the public.

The remodel, designed by Hollander Design Group, calls for a new main entrance with a secured city employee-only area, a front reception desk for customers, a cashier’s office, a public hearing room, rooms for in-person plan checks, as well as new flooring, drywall and painting.

The priciest line items, as identified in the contract, are $485,633 for electrical work, $304,793 for data cabling and $292,229 for audio-visual equipment upgrades to support public broadcasts. The contractor has also budgeted $302,143, or 14.5 percent of the total project cost, for potential cost overruns and it expects to pocket $349,202 in profit.

The tenant improvement contract is priced in the low- to mid-range of average costs for similar commercial office space projects, Lowe said. And Wawanesa did not occupy the building’s second floor, meaning it requires significant electrical, telecommunications and data cabling work to accommodate 289 new workstations, she said.

San Diego did not pick the contractor through a competitive bidding process, as is typical. Building owner H.G. Fenton requires Pacific Building Group to do the remodel work because of the contractor’s previous work in the building, the staff report said. San Diego-based Pacific Building Group is privately owned by Greg Rogers and has worked on projects for Qualcomm, Sony and the San Diego Union-Tribune.

The contract will be paid with money from DSD’s enterprise fund. The department fund collects fees charged for city services.

The council voted 8-0 on the contract. Councilmember Jennifer Campbell was absent.