The federal department responsible for vast real estate holdings is trying to restructure its approach to leasing.
General service management Top executives are looking for policy changes on Wednesday that will allow them to pursue up to $ 9 million worth of leasing and capital projects without going through Congress, addressing the unprocessed portion of slow-moving leasing negotiations. He said he was making further efforts for this.
Bisnow / Jacob Wallace
GSA Public Building Services Commissioner Nina Albert will speak at the DC State of the Market event in Bisnow on May 11, 2022.
“It will take 5 years to run [a lease]And who knows how many people will work from home in five years? ” Nina AlbertPublic Building Services Commissioner GSASaid in Bisnow DC State of the Market event. “I need to get into a much faster trading process, and that’s what I’m working on with Congress.”
GSA spokespersons say while agencies pursue higher thresholds Bisnow..
“In order to address the rising costs of the building industry and achieve the most efficient modernized and optimized federal building portfolio, the GSA believes that raising the prospectus threshold is an appropriate approach. And continues to work with OMB and Congress to develop this proposal, “GSA spokesman said.
GSA is the largest office tenant in the country occupation Approximately 180 million SF office space nationwide.The total include About one-third of the total DC office space, it is an important occupant of the office market. search For the signs of life.
Some of those leases include blockbuster transactions like the Transportation Security Administration 625KSF Office in Springfield, VirginiaOr of the Securities and Exchange Commission 1.2 MSF lease In northeastern Washington, DC, however, there are many small lease and capital projects that Albert, who is responsible for federal-owned and leased offices, wants to speed up by skipping Congressional approval.
“This is a strategic and tactical exercise,” Albert said. “As the lease is approaching, we are trying to get it ahead of time as soon as possible.”
Inevitably, large portfolios have consistent churn. According to federal data, 60% of federal leases will expire by the end of 2025. According to the capital planning area alone, this is equivalent to millions of square feet. Darian LeBlancExecutive Vice President of Cushman & Wakefield.
“Whatever we can do to streamline this process, it will be music that will be heard by everyone in this market,” LeBlanc said in a keynote speech with Albert on Wednesday.
If the change in the threshold of the lease prospectus is approved, GSA will be authorized to sign leases with a net average annual rent of less than $ 9 million without passing parliament, increasing agency autonomy. Leblanc says it will streamline the leasing process. According to GSA, the current threshold is $ 3.375M. Website..
Over the past few years, GSA has tried various tactics to reduce both lease negotiation time and footprint. Shrinkage Since conservatives in Congress began flagging rising costs from office leasing 10 years ago.
Former PBS Commissioner Damma shoes said Bisnow last year His most important achievement was the reduction of leasing costs. This was partially achieved by extending the average lease term from 5 years to over 10 years.
Albert has been playing that role since July 2021. Said Bisnow In September She wants more institutions to move to government-owned buildings and consolidate their workforce.
Headquarters of General Services Administration at 1800FSt.NW, Washington, DC
According to Albert, the pandemic has allowed agencies to rethink their footsteps and embrace telework at an unprecedented level. According to Albert, half of all federal agencies allow telework before the pandemic, and the same allows telework today. However, the pandemic has boosted the number of workers using this policy from about 50% to 90%.
“We have proved ourselves how we can work and what works,” Albert said Wednesday. “Now we need to prove to ourselves what the deserved result is. What are the benefits of returning to the office?”
Albert hopes that the footsteps of the government will be further strengthened. She says agencies are usually shrinking by 15%, but if you dig into the numbers, it’s somewhere between 20% and 40%.
“I don’t want to apologize for why the federal government has to control costs. I think that’s an important priority,” Albert said. “I think the second most important priority is to have an attractive workspace for this and the next generation.”
Albert said he has focused on modernization and optimization mantras since taking on that role. She said telework policies are both a way to deal with the office footprint and a way to attract talent, but they could have some impact on the federal government’s overall footprint. She is expecting.
She said the agency still favors long-term leasing in cost-effective merchandise space, but she is adopting more modern office buildings such as: SECof New 1.2 million SF headquarters of NoMaPartly to achieve sustainability goals.
The impact of federal integration has spilled over into the DC office market. Cameron PrattManaging Partner and CEO Foulger-PrattSaid that the historic tendency that the government is the only resident of large commodity office buildings leaves empty buildings when government agencies leave.
Bisnow / Jacob Wallace
Cameron Pratt of Foulger-Pratt, Gary Cohen of Willco, and Maura Brophy of the NoMa Business Improvement District will speak at the panel at Bisnow’s DC State of the Market event on May 11, 2022.
In an era when Class B offices are experiencing record vacancies, it opens the door to the office-to-residential conversion in the downtown office market of the district. Change the structure of an environment with many offices..
“The DC is unique because GSA is a single resident of so many buildings,” Pratt said. “This office-to-residential trend shows that DC is one of its leaders, because there are so many offices that are 100% free for GSA.”
GSA has just begun incorporating pandemics into its leasing strategy. Albert said it would take at least another year for her agency to better understand the new work paradigm.
nevertheless Federal workers begin to return to the officeOther large lessors are paying attention to changes in the way the government thinks about office space and are adjusting their plans accordingly.
“Especially in DC, where the federal government is one of the major tenants, people are beginning to notice. If federal workers can work remotely, they don’t have to go back to the office,” said Ryan Principal Steve Thompson. Said. “So what does it look like when these leases are launched? Do people want smaller space?”
Updated, May 12th 16:15 ET: This story has been updated to include new comments from General Services Administration.