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Molina Healthcare Closing In On Lease For Millworks On Pine

Healthcare Organization Expected To Bring Up To 1,000 New Jobs To Downtown Long Beach

By Tiffany Rider - Senior Writer

May 8, 2012 - Although negotiations are continuing, Molina Healthcare is expected to sign a lease soon for office space at the 6th Street and Pine Avenue site known as Millworks, with plans to locate up to 1,000 newly-hired employees to the space.

Executives with the Long Beach-based, publicly traded healthcare organization, which offers managed care for Medicare and Medicaid patients, discovered last fall that, based on growth projections, Molina Healthcare would need more office space than what is available at Molina Center, the two towers the firm owns at 200 and 300 Oceangate formerly known as Arco Center.

Nadel Architects, headquartered in Los Angeles, produced this rendering of the future
Millworks site, to be occupied by 800 to 1,000 employees of Molina Healthcare, Inc.,
once the healthcare organization signs a lease for the property at 6th Street and
Pine Avenue in Downtown Long Beach. The lease is a build-to-suit, which includes the
remodel of the former Press-Telegram building, shown in the foreground, and expansion
of the adjacent Meeker-Baker building from its current 17,000-square-foot size to
106,000 square feet. (Rendering provided by Millworks)

“We started looking around, thinking, ‘Where else can we get space?’ There just isn’t that amount of contiguous space in Long Beach,” John Molina, chief financial officer of Molina Healthcare and co-owner of Millworks with his wife, Michelle, told the Business Journal.

The Millworks project site – originally planned for high-rise condos before the recession hit – is bounded by 6th and 7th streets and Pine and Locust avenues, and includes two existing structures. Over the past two years, three of the original five buildings at the site were demolished and renovations occurred. The two remaining buildings are the former Press-Telegram office, about 75,000 square feet at 604 Pine Ave., and the historical Meeker-Baker building, about 17,000 square feet at 650 Pine Ave.

Because John and Michelle Molina are the developers in this deal, the Molina Healthcare Board of Directors formed a special committee with four of its independent members to make sure due diligence was done. “We had to go through measures that any other developer would not have had to go through because they would be a neutral party in the transaction,” Michelle Molina said.

According to John Molina, “The things that attracted the special committee [to Millworks] was that we could have a campus-feel property; it’s a single-tenant, build-to-suit, which is always nice because you have control over everything; and, equally important was the economics. The economics had to show that the company was getting a deal that was equal to or better than what they could get in the market.”

Nadel Architects, based in Los Angeles, designed the tenant improvements for the former Press-Telegram building and the remodel and expansion of the Meeker-Baker structure. Michelle Molina said that once the city’s planning commission approves the Meeker-Baker renovation plan (it’s on the commission’s May 24 agenda), permits are likely to be pulled by the end of summer.

Renovation of the Press-Telegram building is expected to begin later this year and be completed for occupancy by the first quarter of 2013. Molina Healthcare employees would, however, begin to use the Meeker-Baker structure while it is under construction for a period of 18 months, Michelle Molina said. Under the current architectural designs, the 17,000-square-foot Meeker-Baker building would be expanded to a six-story building at about 106,000 square feet. That expansion is scheduled for completion by the second quarter of 2014.

As part of the architectural plans, a bike rack is to be installed at the foot of the Meeker-Baker building to encourage the tenant’s employees to use alternative modes of transportation to and from work. In addition, Millworks is in talks with the city’s bicycle coordinator to be a part of the bike-sharing program on Pine Avenue. According to Michelle Molina, there is a plan and a budget for programming on the site, pop-up art installations and outdoor yoga classes open to the public.

Molina Healthcare plans to locate 800 to 1,000 employees at the built-to-suit office space. Most of the employees will be new positions created by the company.

Parking is another issue that has required some creative answers. While the Press-Telegram building is “grandfathered in” regarding parking requirements, the Meeker-Baker building expansion requires a minimum of 200 parking spaces on site in order to conform to city regulations and the new Downtown Plan, according to Michelle Molina. The Millworks site will have 215 surface parking spots, but as the lease under negotiation is a built-to-suit, both parties agreed that building a parking structure “didn’t make sense,” Michelle Molina said.

To address the parking issue, Millworks has been working with the city to find city-owned parking that could be leased for Molina Healthcare employee use. On May 1, the Long Beach City Council approved an item allowing the city to lease up to 500 parking spaces at various lots throughout the city for use by future employees who will occupy the Millworks site. Those parking locations are: The Pike employee lot; 140 E. 7th St.; the Broadway Block bounded by Long Beach Boulevard to Elm Avenue and Broadway to 3rd Street; and 3621 and 3660 Kilroy Airport Way.

Molina Healthcare has indicated it will provide shuttle services for its employees who park at the Kilroy Airport Way lots and possibly to and from The Pike lot. Once the city attorney drafts a lease agreement for the parking spaces, John Molina has indicated that they would work to get the contract signed in a diligent fashion in order to expedite the signing of the Millworks lease.

Over the past two months, Millworks has conducted 10 community meetings, addressing neighborhood organizations such as the North Pine Neighborhood Association (NPNA), the Downtown Residential Council, the Willmore City Board and others. Michael Wylie, a member of the NPNA and president of the Cultural Alliance of Long Beach, said he and his family are happy about the project and look forward to meeting their new neighbors. “Given their current investment in the property and the current economic situation, that they are able to actually achieve a real project like this is remarkable,” Wylie said. “My family’s charity that owns quite a bit of property in the neighborhood is ecstatic about it. We’re looking forward to welcoming the new tenants to the neighborhood.”

Molina Healthcare, which currently employs about 1,750 people at several locations within the city, has also been leasing office space at Hughes Way near the San Diego/Long Beach freeway interchange. There are no plans to vacate that space since the lease has about five years remaining on its contract, John Molina said. He also said there is no plan to lease space at Molina Center to third parties, and indicated that at some point, the firm will likely vacate its space at 1 Golden Shore.