Teva Neuroscience Inc. found a new tenant for its $46 million headquarters in Overland Park.
The pharmaceutical giant, which is consolidating its U.S. workforce in a planned New Jersey headquarters, will sublease the 156,000-square-foot building at 11100 Nall Ave. to its neighbor, Netsmart Technologies Inc. On Monday, the Overland Park Finance, Administration and Economic Development Committee approved Netsmart as a tenant.
Netsmart CEO Mike Valentine told the Kansas City Business Journal that the move was driven primarily by the company’s growth; it plans to add more than 400 employees in the next five years. Since Netsmart first moved to the Kansas City area in 2011, its local employment has grown from 10 to 660, according to documents submitted to the city.
“We’ve had a great year relative to growing into the new markets that we’ve entered in the last couple of years — in-home care, long-term care and software platforms,” Valentine said. “Our part of health care is digitizing more and more. The rules (providers) have to play by to get paid are more and more complex. … Generally, as the business has grown, we’re filling up the ranks.”
As the staff began to run out of space, Valentine said company leaders began to assess their options, including the possibility of building. Then they saw an opportunity in Teva Pharmaceutical Industries Ltd. (NYSE: TEVA).
“The option of moving in just down the street came up six or seven months ago,” Valentine said.
Netsmart plans to move in starting next year, when it will occupy the fourth floor and part of the first. In 2020, Netsmart will fill the entire building and will be responsible for Teva’s lease through 2028. The deal will bring the number of buildings Netsmart occupies in the College Boulevard area to five. Best of all, Valentine can see the new building from his current office.
“We’re excited about staying within the same local, walk-down-the-street type of feel,” he said. “Our long view is to continue to do what we’re doing. If we can find space that’s close and convenient, that allows us to contribute to building out the campus.”
Netsmart still is narrowing down the details of how the building will be used, Valentine said, but it will host a second client briefing center to showcase the health IT company’s technology.
At full capacity, Valentine expects the building will host 400 to 450 employees. The space has two other tenants: the remainder of Teva’s Overland Park staff and employees Teva outsourced to Florida-based AssistRx Inc. Valentine said the current tenants would begin to transition out of the building next year.
Teva employs between 100 and 125 employees in the facility, company spokeswoman Doris Saltkill wrote in an email. Both Teva and AssistRx’s employees will move to a facility at 4500 W. 107th St., where the companies have a sublease agreement.
“The moves are all coordinated to ensure continuity of business for the companies,” Saltkill added.
Teva reported 388 local employees in 2017, but since then it has cut 57 jobs and rebadged 200 employees in a sale of its patient services and solutions segment to AssistRx.
The Israel-based pharmaceutical company began shedding employees after it announced that it would cut about a quarter of its global workforce. Teva received $10.6 million in local incentives and $30 million in state incentives to build the Class A office building in 2013.
If its local employment falls below 200, Teva is subject to pay back a portion of the tax breaks it received from Overland Park. Per the terms of its lease, Netsmart will likely step into the same requirements as Teva.
Originally published in the Kansas City Business Journal, Sept. 18, 2018