Leasing

Redefining GSA Leases

While few see an upside to the down economy, this turbulent cycle has prompted many commercial real estate companies to evaluate the efficiency of their business processes. The federal government is no exception. Earlier this year, the U.S. General Services Administration’s Public Buildings Service, which maintains more than 361 million square feet of owned and leased space for the federal workforce, announced that it was revising its leasing processes. The end goal: To make it easier for private-sector landlords to deal with the government.

Brenda K. Johnson, CCIM, CPM, senior leasing specialist with GSA’s PBS Office of Real Estate Acquisition division in the Center for Realty Policy, is an implementation manager for the Lease Process Reengineering project. Commercial Investment Real Estate asked Johnson to discuss how these changes may encourage CCIMs and their clients to collaborate with the government.

CIRE : Why is the GSA revising its leasing processes?

Johnson: PBS Commissioner Bob Peck, who also served as commissioner during the Clinton administration, returned to GSA last year after working in the private sector negotiating leases. Peck’s experience made him realize that GSA’s internal processes make it difficult for the private sector to work with us. His goal is for GSA to solicit, negotiate, and execute leases faster, enhance private-sector collaboration, and eliminate regional inconsistencies and counterproductive policy and process constraints. This vision led to the Lease Process Reengineering initiative.

CIRE : What is your role in the initiative?

Johnson: I served on the core team led by project manager Denise C. Broskey, along with subject matter experts and 11 regional representatives. Now we’re in the implementation phase, looking at 21 recommendations as we move to finalize policy and issues.

CIRE : Who did GSA consult to identify necessary changes in the lease acquisition process?

Johnson: Early on we had discussions with the real estate community — lessors, developers, and brokers who have firsthand experience working with GSA in each of the 11 regions. Denise also presented the recommendations to the Urban Land Institute and the National Federal Development Association. Both industry groups have committees reviewing the final recommendations report and will be providing additional input to GSA.

We also reached out to the financing community to understand the challenges current market conditions pose to landlords and the lending community. Talking with lenders made us realize there are several sticking points in our clauses that cause difficulty. As a result, we’ve lost some deals and incurred increased lease costs over the past few years.

CIRE : How will the revised processes facilitate transactions between the government and private sector?

Johnson: GSA has a tendency to be too process-oriented. To counter that, we looked at our transactions from the past two years based on net annual rent (total rent less operating expenses) and determined that our goals to make it easier for lessors to pursue GSA leases and to reduce lease cycle time could be furthered by establishing and using new options, such as simplified lease and accelerated lease models. These models will apply to most leases under 10,000 square feet with a net annual rent value up to $500,000, which is a majority of our transactions. But we’re not neglecting larger, more complex leases and those with extensive security requirements that necessitate more steps.

CIRE : What advice can you offer to CCIMs who are interested in working with GSA?
Johnson
: It’s important to learn how GSA procures space and become familiar with the lease forms. A good place to start is www.GSA.gov’s online resource guide, Doing Business With GSA, which links to Finding Business Opportunities (www.fbo.gov). CCIMs also can contact GSA’s Industry Relations Division at (866) PBS-VEND or by e-mail at IndustryRelations@gsa.gov for assistance. Space requirements usually are advertised on www.fbo.gov or in local newspapers.

CIRE : How have you used your CCIM education and designation in your current GSA role?

Johnson: I have used the CCIM education and analytical tools to analyze the inventory’s performance, develop strategic goals and plans, assess performance measures, and most recently to analyze the lease inventory in conjunction with the re-engineering team. I often reach out to CCIMs to get market data, especially in smaller markets that aren’t tracked by industry analysts. The critical thinking that the CCIM education instills has given me the confidence to tackle complex analytical projects and the ability to develop and support recommendations and performance measures. Government leasing is so unique that private-sector professionals are really glad to work with CCIMs because they know their colleagues are well versed in private-sector nuances, terminology, and processes.

Jennifer Norbut

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