GSA Faces Challenges and Opportunities for Leasing Office Space

The economic recession is presenting the U.S. General Services Administration (GSA) with challenges and opportunities in the leasing and development of office space, according to Urban Land Institute (ULI) vice president Dean Schwanke. Although the lack of financing makes it difficult for building owners to meeting specific GSA standards and requirements, the availability and variety of office space is increasing as their costs are decreasing, said Schwanke when he testified before the U.S. House of Representatives Subcommittee on Economic Development.

Schwanke noted that as part of its acquisition activities, GSA could strengthen its role as a catalyst for the development of green buildings that are energy efficient. Retrofitting existing office space will help owners make their buildings more competitive.

The GSA provides workspace for more than 1.2 million federal workers through its Public Buildings Service. Approximately half of the employees work in buildings owned by the federal government, and half are located in over 7,100 separate leased properties across the country. The GSA leases space in diverse locations when leasing is the best solution for meeting federal space needs. Because more than fifty percent of GSA leases are for 10,000 square feet or less, owners do not have to be corporate giants to compete for lease contracts.

GSA says that it solicits offers on a competitive basis, will negotiate and, for the most part, will award leases to the lowest-priced acceptable offer. The GSA will also consider trade-offs between price and other factors. Typically, for acquisitions greater than 10,000 square feet, the lease award is based on a building rate and a specific allowance for the build out of the tenant space. Once the award is made, the final cost of the build out is negotiated, based on the design drawings of the tenant’s space. After acceptance of the space, GSA begins monthly rent payments in arrears.

For more information on the GSA bidding process, go to www.gsa.gov or see our article, “Leasing to Federal Agencies: Is the Red Tape Worth the Greenbacks?” on this CLLI site.