Getting a GSA lease in your building may seem like a pretty daunting experience (and it can be), but we always tell our clients that obtaining a signed lease with GSA is really just the beginning. Ignoring the Post Award / Tenant Improvement buildout process for the purposes of this blog post, once the government is in their new space you now have to manage that space in accordance with the lease. And that is what we will be focusing on here.
What do I need to know as a property manager?
Our most important advice may seem rather obvious, but it is one of the most overlooked steps that we commonly see. You must read the lease!
While reading the entire lease is important, it is critical that the property manager of a GSA lease at least understand the requirements found in Section 6 of the GSA Lease. In this section, you will find things like:
- Operating hours for the space
- Janitorial requirements (which are well above most market requirements)
- Maintenance requirements for tenant carpet and paint
- Cyclical replacement requirement for tenant carpet and paint
- Other important operational requirements…
As you can see from the list above, Section 6 of the GSA Lease is critical to understanding how the space shall be operated from a contractual / property management perspective.
Beyond the Contract
Once you have an understanding of what the lease requires, the next step is learning some key lessons from some of the best GSA lease operators that we have encountered.
- Automate as much as financially makes sense – The GSA lease, in Section 6 of course, outlines specifically the operating hours for the tenant space. One thing to understand is that this lease is a Fully Serviced Lease in the most extreme version of that definition. As a result, your GSA tenant has NO incentive to adjusting the thermostat setting when they leave for the day. This is where HVAC automation can save a considerable amount of money. The owner is fully responsible for ALL utilities in the vast majority of GSA leases. Having a system for efficiently operating the HVAC equipment is imperative.
- Maintain a good relationship with your tenant – You must understand that your GSA lease is not a “hands off” tenant. Given the Full Service and beyond nature of the GSA lease, owners and property managers must be very much “hands on”. While we are not saying that every GSA leased property must have onsite management, it is important that the tenant and GSA have consistent and predictable access to a management point of contact. In addition to this, the most successful owners we have come across make an effort to visit the facility at least once a year. In fact, they typically supplement the visits with check-in calls and outstanding communication regarding upcoming maintenance activities at the building. Bottom line, communication (in person, phone, written) is critical to a successful relationship with the tenant.
- There are no “bonus points” for going above and beyond – This next point may seem to contradict the point above regarding relationships. And perhaps there is some gray area between the two. That said, we have seen many owners fall into the trap of believing that if they consistently go above and beyond for their GSA tenant that their effort will lock-in a future lease renewal. This is simply not the case. For a more in-depth look at how GSA actually makes its lease award decisions, read this article: https://arcoresolutions.com/gsa-lease-award-decisions/ . The reality is, when your lease comes up for renewal there is no subjective decision criteria for how much the tenant and GSA enjoyed working with you. In fact, the people you have established the great relationship with may not even be part of the decision making process. However, if you have failed to meet the requirements of the lease, then that objective fact can be considered when GSA runs their competitive lease procurement for the tenant that is currently in your space. So what is the take away here? The key seems to be doing what the lease requires, and not much more, while communicating with the tenant in a consistent manner.
If you decide as an owner to provide the property management for your GSA tenant yourself then we hope the above advice is helpful. If you decide to hire this work out to a local property management team, then we strongly encourage that your property manager understand these critical points and that you still maintain a presence via direct communication with the tenant.
It is also worth noting that there is a third option as well. While perhaps not local, there are companies in this niche space that have developed an expertise in performing property management and lease administration services specifically for GSA leased facilities. If you would like some more information on these expert service providers, please contact Chad Becker at firstname.lastname@example.org .