TO: Mayor and Members of City Council
THRU: Lachelle H. Pulliam, City Attorney
FROM: Kecia N. Parker, NCCP, Real Estate Manager
DATE: August 25, 2025
RE:Title
Adopt Resolution Authorizing the City Manager to Lease Space at 472 Hay Street to Subway Real Estate, LLCTitle
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COUNCIL DISTRICT(S):
Council District(s)
2
b
Relationship To Strategic Plan:
Goal IV - Desirable Place to Live, Work and Recreate
Executive Summary:
The City currently leases a portion of its property located at 472 Hay Street to Subway Real Estate Corp. Subway Real Estate Corp. began leasing the property on September 1, 2000, and has utilized the property as a restaurant space since that time. The original lease has been amended several times but is expiring August 31, 2025. Subway Real Estate, LLC would like to continue leasing this property from the City and would like to enter into a new 3-year Commercial Lease Agreement with the option to renew for 5 additional 1-year periods.
Background:
North Carolina General Statute §160A-272 authorizes the City to enter leases of up to 10 years upon resolution of the City Council. Subway Real Estate Corp. began leasing approximately 2,200 square feet within the City owned property located at 472 Hay Street on September 1, 2000. The original Commercial Lease Agreement was for 5 years and was amended on September 11, 2002, to allow the assessment of a 4% late fee for all payments received more than 15 days after the due date. Said lease agreement was further amended on August 31, 2005, to extend the term for 5 years and included an option to extend for another 5-year term provided proper notice was given. On July 17, 2015, the lease was further amended to extend the term to August 31, 2018, and provided for two 3-year renewal options with a potential to increase the fixed monthly rent by the property tax values according to City Policy 155.6. In September 2024, the term of the lease was extended for 1 year to allow for a new lease to be negotiated. The new lease will have an annual rent of $17,679.12 with a 3-year term with the option to renew for 5 additional 1-year periods. Rental adjustments will be based on City policy.
Issues/Analysis:
• Subway Real Estate Corp. now known as Subway Real Estate, LLC has leased approximately 2200 square feet at 472 Hay Street since September 1, 2000.
• A new lease has been drafted to include additional clauses applicable to all City leases.
• The new term will be for 3 years with an option to renew for 5 additional 1-year terms.
• The new rental rate will be $17,679.12 annually and is based on City policy.
• Rental rates will be adjusted based on City policy at term renewal.
Budget Impact:
All revenues will be added to the general fund balance.
Options:
• Approve the proposed Commercial Lease Agreement and authorize the City Manager to negotiate and execute a lease on behalf of the City.
• Do not approve the proposed Commercial Lease Agreement.
Recommended Action::Recommended Action
Staff recommends City Council approve the proposed Commercial Lease Agreement and allow the City Manager to negotiate and execute the Commercial Lease Agreement on behalf of the City.
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Attachments:
Proposed Commercial Lease
Resolution