Resolution approving and authorizing the Director of Property, on behalf of the San Francisco Employees’ Retirement System (SFERS), to execute a lease agreement with Double Wood Investment, Inc., a California Corporation, as landlord, for use of a portion of 111 Pine Street, consisting of 47,482 rentable square feet for an initial term of 10 years with two five-year extension options to renew and 12 months of rent credit with an annual base rent of $2,089,208 with 3% annual increases; SFERS to contribute up to $4,748,200 on tenant improvement; effective upon approval of the Resolution by the Board of Supervisors and the Mayor and upon execution of the lease by the Director of Property; and authorizing the Director of Property to execute any amendments, make certain modifications and take certain actions that do not materially increase the obligations or liabilities to the City, do not materially decrease the benefits to the City and are necessary or advisable to effectuate the purposes of the lease agreement or this Resolution

This resolution approves a 10-year lease agreement for the San Francisco Employees’ Retirement System (SFERS) to relocate to 47,482 rentable square feet across floors 8, 9, 10, and 11 at 111 Pine Street. SFERS has outgrown its 37,532 sq ft space at 1145 Market Street, which it has occupied since 2013 and is currently on a month-to-month holdover. This move accommodates significant growth in $38.9 billion in pension assets and 81,000 members.

Financial Details:

• The initial annual base rent is $2,089,208 ($44 per square foot), with 3% annual increases.
• SFERS will receive 12 months of rent credit, totaling approximately $2,237,427.97 over the initial term.
• The landlord will provide a turnkey buildout and a Tenant Improvement Allowance of $4,748,200 ($100 per square foot).
• SFERS will contribute an additional up to $4,748,200 for tenant improvements, bringing the total estimated TI budget to $9,496,400.
• SFERS will also pay its proportional share (21.8249%) of increases in operating expenses and taxes over the 2026 base year.

Lease Terms & Features:

• The lease includes two five-year extension options at fair market value.
• The landlord is committed to obtaining LEED Gold certification for the tenant improvements.
• A relocation clause allows the landlord to move SFERS for code-related work, but not within the first seven years, with nine months' notice and all costs covered by the landlord.
• Public access to a reception floor is required, with landlord allowing check-in but not ID.

Environmental Considerations:

• A 1994 asbestos survey identified Chrysotile asbestos in gypsum wallboard joint compound (>1%) and residual mastic (5-10%) in storage areas, which is currently non-friable and in good condition.
• An adjacent property at 36 Battery Street is a Leaking Underground Storage Tank (LUST) site, identified as having a high potential to impact the Subject Property, though contamination levels have decreased.
• A 300-gallon diesel Aboveground Storage Tank (AST) for a former emergency generator is present in the basement but is unused and in good condition.