In Capital Business this week we look at how owners of Washington-area office buildings are having to react to new scrutiny the federal
government is applying to leases proposed by the General Services Administration.
Congressional approval of GSA lease prospectuses used to be more of a formality. But with the national debt on the minds of so many taxpayers and politicos, even the most mundane lease extensions aren’t assured a speedy approval.
Some landlords have been waiting for more than a year to see whether the agency in their building would get approval for an extension. Developers who are planning office buildings, meanwhile, are having a hard time figuring out when leases will be approved and how much space agencies will be seeking once they are.
The reason for the enhanced scrutiny is no mystery: the Obama administration and members of Congress agree that the federal government ought to use space more efficiently and spend less money on office space.
In this chart, the House Transportation and Infrastructure Committee outlines anticipated savings from 11 lease prospectuses that were recently approved, 10 of which are in the Washington area. (Note that savings attributed to the Office of the Director of National Intelligence deal are via comparison to that office’s current rent.)
What does this mean for the Washington office market? For tenants with expiring leases, things are rosy, as there are still deals to be had, even with the leases that Congress just approved. But for landlords, smaller deals that take longer aren’t a good mix. Now that the GSA leases have been approved, some of them will draw intense competition.
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