Trying to take advantage of the distressed real estate market, the General Services Administration is looking to buy new office buildings from private developers in Washington and four other cities.
The government hopes to make "opportunity purchases" of buildings "where there is a chance to get space for a good price," GSA Public Buildings Commissioner Richard O. Haase said yesterday.
Two Washington area developers have already approached GSA with offers to sell buildings that they have been unable to rent because of the glut of office space, said Kenneth L. Perrin, a local GSA property manager.
Perrin said he received an unsolicited proposal from a building owner in Washington and another in Northern Virginia. He said he could not reveal the owners' names "because negotiations are either under way, or are about to begin."
Because GSA normally makes purchases based on sealed bids or proposals, the agency yesterday published an advertisement in The Washington Post seeking proposals for the purchase of privately owned office buildings in the downtown area. The building owners who approached the government first will be treated the same as others who respond to the ad, Perrin said.
The agency plans to advertise later this week for additional buildings in Atlanta, Phoenix, Houston and San Francisco.
In the District, GSA is seeking buildings of at least 200,000 square feet that were built within the last five years and are either vacant or can be readily vacated for government use. Buildings of at least 100,000 square feet are being sought in the other cities.
Yesterday's advertisement emphasized that the solicitation is "merely to explore the availability of potential buildings and is not to be construed as an invitation to bid or as a basis for negotiations."
Haase said the government is shopping for office buildings now because "it's a soft market that has probably a larger-than-normal supply of office space vacant. It's only a matter of time that that amount of office space is absorbed. That's why we want to get in now."
Washington office rental specialists estimate there is about 3.5 million square feet of newly constructed but unrented office space in downtown Washington.
Stephen Goldstein, corporate vice president of the Julien J. Studley, Inc., a real estate brokerage and consulting firm, said "to some degree GSA's idea is fantasy."
"It is very expensive to buy the current stock of buildings because they are very well made," Goldstein said. "They GSA go to a less expensive building generally; one where the ground costs less and the purchase price is lower than the market is. They'll find this out with time."
The search for office buildings is part of a GSA effort to decrease the amount of money spent annually to lease office and warehouse space--$806 million this year and an estimated $880 million in fiscal 1984. GSA has adopted a policy of shifting more than 200,000 federal employes from leased to government-owned space over the next six years. GSA accounts for about 75 percent of the federally leased space.
Currently, about 53 percent of the 860,000 federal employes working in GSA-controlled space are in government-owned buildings. By 1989, the idea is to have 70 percent of those workers in government-owned space that is cheaper to maintain.
GSA has $7 million of a $14 million appropriations for opportunity purchases left in its fiscal 1983 budget. So far, it has acquired only one building in Dallas, which it bought in February for $7.2 million. In fiscal 1984, GSA has asked Congress for $20 million, but Haase said the program won't be confined by the "dollars in hand."