Thomas H. Walker, PE, managing principal, Thomas H. Walker Consultants LLC, spoke at a Development ’10 panel on industrial and office tenants, offering these tips and insights for working with the General Services Administration (GSA):
- The emphasis is on existing space.
- The GSA is pressing for better deals in the marketplace, especially for renewals.
- FBI deals are usually build-to-suit because of heavy security requirements but it will pay a lump sum in order to make the deal work.
- A GSA regional commissioner can do a deal without asking anyone on transactions below $2.8 million in annual rent.
- There is greater emphasis on a GSA deal being within a central business district.
- The GSA requires LEED Silver for everything except EPA and DOE projects for which it wants LEED Gold and sometimes LEED Platinum.
- When buying GSA developments, the buyer is paying a significant lease cap rate premium.
- GSA has a 20-year limit on lease deals but it will renew them 98 percent of the time so that such a deal is in effect a 40-year deal. GSA will only move generally for three reasons: 1) the requirement no longer fits in the building; 2) closure of an agency in a particular locale (be careful of IRS deals because technology will force the agency to get smaller in the future); and 3) and poor building management.
- Do it their way! To do a GSA deal, be prepared to do it the GSA way or not at all.