The General Services Administration needs to step up its leadership to take advantage of cost-saving real estate opportunities, according to House members who participated in a round table discussion Tuesday morning.
The current buyer’s market — along with the 100 million square feet of government leases expiring over the next five years — presents agencies the opportunity to save money on real estate, according to members of the Transportation and Infrastructure Committee.
Lawmakers questioned if GSA had the authority and tools necessary to see that agencies take advantage of the unique market opportunities. “GSA has a terrible, terrible record of leadership,” one committee member said.
“Sometimes we need to be a little bit more forceful in terms of drawing the line, if it’s in the interest of the taxpayer at the end of the day. We may not have always taken that position in the past, but that’s the position we will take as we go forward if it means protecting the interest of the taxpayer,” Norman Dong, commissioner of GSA’s Public Buildings Service, said.
Industry representatives agreed that giving GSA more power over real-estate issues would be helpful in moving forward with cost-saving leases.
“It would be great if the GSA had more power, was more in power to be the arbitrator, to help with the process, and facilitate the process and help achieve better terms for the government,” said Lynn DeCastro, principal of Prudential Real Estate Investors.
GSA plans to use its authority to help agencies leverage the current market, which gives the government the opportunity to change how it leases space, Dong said.
“The large amount of leased space in expiring leases in the near term creates an opportunity for GSA to reduce costs through improving utilization rates, negotiating longer-term leases to lock in lower rental rates and negotiating other concessions that benefit the taxpayer. One of the key areas is ensuring that where there are long-term space needs, longer-term leases are acquired,” a memo from the committee stated.
By moving to long-term leases of at least 10 years, agencies can reduce rent payments. Government and building owners can also spread out the cost of reconfiguring the space to fit more people, according to the committee.
GSA plans to start working with agencies on negotiating leases at least 36 months before current leases expire, said Dong. DeCastro agreed that agencies need to move quickly before this ideal market window is shut. She said 36 months is typical for the private sector to begin leasing plans.
Dong said GSA needs “all hands on deck” to maximize the opportunities of cost- savings in real estate. He said GSA must work with regions to identify specific transactions, especially larger real estate opportunities first.
“We recognize there is a sense of urgency here to be able to really leverage this market opportunity and to not let this pass by,” Dong said.
Stephanie Wasko is an intern with Federal News Radio.