- Is your building a good fit for a GSA lease?
Technically any building can potentially be a good fit for a GSA lease. Some agencies require the quality and appearance of a true Class A asset, whereas some agencies are only concerned about functional space which would steer them toward a Class B product. Even Retail properties can be a great fit for certain GSA lease procurements, specifically leases for agencies that are customer facing. Social Security Administration would be a prime example. That said, the “bread and butter” of GSA leasing tends to be a quality Class B asset. This type of asset is modern enough to meet GSA stringent “Shell Standards” while still being capable of offering a rent package that is competitive in GSA’s Lowest Price Technically Acceptable procurement approach.
- What services must you include with a GSA lease?
GSA leases are predominately fully serviced leases. In fact, they typically include requirements that would normally be considered “above market” service requirements. When it comes to a GSA lease, the lessor is responsible for everything from maintaining the building envelope and systems to making sure the floors are vacuumed and the trash is taken out. Additional examples include paying for all utility usage, periodic window washing, washing & dusting of blinds, shampooing carpets, and strict snow removal requirements. On top of all of these requirements, most leases will contain requirements for periodic replacement of all carpet in the GSA leased space as well as periodic repainting of the Government occupied suite.
- What to expect with tenant improvements and GSA leases?
Tenant Improvements can be a tricky subject if you are not familiar with the GSA lease. Unlike the private sector, the GSA mandates a base TI amount that the landlord will “loan” to the Government for their share of the TI expense. In most cases the Government will actually exceed the required loan amount and reimburse the lessor for the overage via lump sum payment upon completion of the TI work. Another issue that differentiates GSA leases from private leases is that the GSA lease has a fairly strict definition of what work is considered Tenant Improvements, and what work is considered “Shell” and therefore to be included in the “Shell Rent”. This is a topic that generates a great deal of confusion and needs to be fully understood during the proposal process. Once the lease is executed, there is no going back to the Government requesting additional rent because you failed to understand your responsibilities under the Shell requirements. Please seek professional assistance with your proposal development or, at a minimum, become very familiar with the base requirements in Section 3 of the GSA lease.
- What is the average GSA lease process timeline?
This is a very difficult question to address directly. While I am positive that there is an actual “average” that has been calculated, the standard deviation would be so wide that it would likely render the “average” meaningless. To simplify this answer, we need to simply state that it depends on a number of factors. Examples of these factors include: size and complexity of the project, who the tenant agency is (some agencies are very slow to review and execute documents), is the project a priority for the Government, what procurement method / model is GSA using, and many others. To answer more directly, I have personally worked on projects where a lease was executed in three months (very fast) and I am currently working on projects that started over 2 years ago (not uncommon).
- How to become technically acceptable for a GSA lease?
GSA lease procurements typically follow a procedure called “Lowest Price Technically Acceptable”. This is where the term “Technically Acceptable” originates. Technically Acceptable can further be broken down into two general categories; Building Technical Acceptability and Offer Technical Acceptability. In order for the building itself to be technically acceptable, it must be CAPABLE of meeting the requirements of the lease. This doesn’t mean that the building currently meets the requirements, only that it is capable of meeting the requirements should the offeror be willing to make the necessary investment to meet the standards as outlined in the Request for Lease Proposal. The other category, offer technical acceptability, has more to do with preparing an offer that complies with the offer submission requirements of the Request for Lease Proposal. Essentially, all required forms must be filled out correctly, all other required documents are submitted, and all deadlines are met. While this last category of technical acceptability certainly sounds more bureaucratic (and it is), it is no less important in achieving the designation of Technically Acceptable.
- AAAP vs RSAP vs Traditional for GSA lease offerors
Large organizations LOVE acronyms, and the Government is certainly no different. The thing to note here is that AAAP, RSAP, and Traditional RLPs all point to the same thing. They tell you how to submit your offer to the Government. Each one certainly carries with it its own nuance and even it’s own website (with regards to AAAP and RSAP), but they are all simply ways of submitting an offer on a GSA lease project. For more information on each lease procurement approach, you can begin by reviewing our services page which provide a brief description on how each process works.
- What are the benefits of a GSA lease?
This is a pretty common question especially given the cumbersome and lengthy process that must be endured in order to potentially obtain a GSA lease. More commonly, this question is phrased as, “Why in the world would I put myself through this process? What is the benefit?” While GSA likes to paint a picture that their leases are landlord friendly in that they provide for CPI adjustments on the operating rent, and that Real Estate Tax increases are reimbursed, both of those claims come with large disclaimers. Also, it is worth noting that GSA leases are fully serviced leases that likely exceed the market definition of fully serviced. So again, what is the benefit? Ultimately the benefit can be summarized in one statement. The GSA has never missed a rent payment since it was founded in 1949. Granted, they did get close to missing rent payments for the first time in 2019, the fact remains that they never missed a payment. And yes, while there are other very high credit tenants in the market who have a very low probability of defaulting on their lease obligations, the pool of assets containing these high credit tenants is much smaller. So an advantage of GSA leases in the market place is the sheer number of high quality, high credit tenants it provides not just in primary markets, but also in rural tertiary markets.
- Should you hire a lawyer for your GSA lease dispute?
The best way for me to begin addressing this question is to simply state that I am not a lawyer, nor am I qualified to provide legal advice. If you believe you need an attorney, please reach out to me via the Contact Us page and I will happily refer you to the best attorneys that specialize in this space. As with every aspect of Government Leases, there are just a handful of lawyers that specialize in this space and that I would consider experts. Now that the critical disclaimer is out of the way, It has been my experience that it is best to first try and resolve a dispute via discussion and negotiation. So many disputes arise from a misunderstanding amongst the parties involved. We have seen many occasions where simply bringing in a third party that understands the perspectives of both sides can increase the odds of a negotiated resolution. This is also important because it typically keeps the relationship intact as opposed to a litigated resolution which is all but certain to damage the relationship. For more information on GSA lease dispute resolution please visit our blog post here.
- Are there building safety requirements for GSA leasing?
Absolutely! The foundation of these requirements will of course be compliance with local building code. In addition, the lease contains fire protection / life safety minimum standards, seismic standards (depending on where the building is located), and other safety compliance standards. The majority of these requirements can be found in Section 3 of the GSA lease, but as always, it is best to understand the entirety of the lease document so that you know what is required of you as a building owner.
- Are there building security requirements for GSA leases?
In most cases, yes. The level of building security requirements will vary by location and will be largely dependent upon the size of the Government’s footprint, the actual agency housed in the facility, and the activities carried out in the space. The security requirements range from electronic security systems (CCTV, intrusion detection, etc…) to physical security systems (set back requirements, bollards, gates, etc…). In order to fully understand what a particular lease will require, you will need to review two primary documents. First, you will need to review the Facility Security Level exhibit to the lease. Second, you will need to confirm whether or not the Agency Special Requirements contains additional security requirements. Those two documents should contain most, if not all, security related requirements for a given lease.
- What are the GSA lease pricing components?
Understanding the GSA lease pricing components is perhaps one of the more difficult tasks when preparing to bid on a GSA lease project. First of all, you will find terms that do not exist in the market such as “Shell Rent” and “Building Specific Amortized Capital Rent” (BSAC for short). Secondly, even familiar items like Operating Rent may not receive the same treatment that a private sector lease would, and this rent category does NOT contain items like Real Estate taxes and Insurance. Finally, Tenant Improvements in a Government Lease can seem a bit foreign when compared to TI treatment in a standard market lease. In a Government Lease, TI’s and BSAC are basically loans that are amortized based on terms you negotiate and then paid back over a given term. All of these unique components need to be fully understood as you prepare your proposal. If this seems daunting, keep in mind we have yet to discuss how Real Estate Taxes are treated, Operating Rent is escalated, and what strategies for rent bumps are generally acceptable to the Government and which are not. Suffice it to say, GSA Leases are not landlord friendly, nor are they “market” leases. You need to fully understand what you are signing up for in order to prepare a proper rent proposal strategy.
- What is a typical GSA lease term?
A few years ago, this would have been a very easy question to answer. The GSA, almost as a habit, would frequently request lease terms that were 10 years with 5 year “firm”. This meant that your typical lease term would have a guaranteed 5 year term immediately followed by a 5 year period where the Government could move at anytime by simply providing a 90 – 120 day notice (depending on the terms of the particular lease). While you will still find these leases in existence today, and in fact they are reemerging in new leases due to the uncertainties brought about by COVID, GSA has largely moved in the direction of long term leases. In fact, there is even a small effort at GSA to reduce the amount of “non-firm” term below the standard 5 years. Today, it is not uncommon to see lease terms of up to 20 years (GSA’s statutory maximum) and “non-firm” terms typically falling into categories of 0 years, 2 years, and the standard 5 years. Over the last decade, GSA has made a massive effort to educate its leasing staff and client agencies on the value of longer terms and reduced “non-firm” portions of the overall term. While the uncertainties surrounding the future of the workplace brought on by COVID have certainly reduced term lengths for many projects, it is not uncommon to still see new GSA lease advertisements with longer, more attractive terms. For more information on GSA lease terms, visit our blog post on the topic here.