P3: Federal Property and Public/Private Partnerships

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A few days ago, Stephanie Spear,  NAR’s Policy Representative for Commercial Real Estate attended the 3rd Annual Washington DC Federal Property & Public/Private Partnerships Summit put on by Bisnow.  As Stephanie was kind enough to share her notes, a quick report follows on the three sessions, each dedicated to a different aspect of public/private partnerships.

Take it away, Stephanie:

GSA is undergoing a cultural shift in terms of how they approach space and how space is used. This is a result of the Total New Workplace initiative and the executive order to Freeze the Footprint. There are enough large sized, high profile P3 projects that have been successful that it is reasonable to expect more P3 opportunities in the future.

Bottom line for commercial members is that while government funding isn’t increasing, it’s staying steady and there are many opportunities to do business with the government through traditional landlord/tenant relationships and the emerging P3 arrangements. Building owners/lessors who can accommodate the changing needs of the modern workforce will have a better chance of a successful working relationship with the GSA.

Session Notes

Panel 1:  GSA Operations Now And The Future, featuring the Commissioner of the GSA Public Buildings Service and the director of the GSA’s National Capital Region office.

 

  • Freeze the federal footprint – is happening but is creating more opportunities for private industry partners (landlords, building owners) because agencies have to be more creative with how they use space
  • Market is more competitive because agencies are signing shorter leases so there is more churning going on
  • GSA wants to have agencies be more forward-thinking about the end of their leases and work with landlords to think about it well in advance, work with landlords to get new needs met, concessions, manage the progress from upstream
  • Increased emphasis on reducing the number of lease holdovers being held by GSA
  • Agencies are being responsive to funding challenges and cooperating with shrinking footprint efforts because they understand that it frees up more money for running the actual program
  • “Total New Workplace” – GSA encouragement of new building designs for a remote workforce, hoteling spaces and cooperative work spaces
  • GSA personnel, telework, technology, IT priorities all go into the shrinking footprint and what exactly the remainders look like
  • GSA transparency goals
  • Making a lot of use of Section 14/412 construction/swap authority to be creative about using space, rebuilding, etc
  • Many success stories of P3 projects – The Yards, Old Post Office, St Elizabeth’s – hope to be a model because private industry partners are where the money is – govt doesn’t have, won’t have access to huge cash needed to do these big deals
  • GSA surplus property
  • Trying to be more mindful of using govt resources, part of a larger data-driven effort to be more efficient
  • Property Disposal Unit – 669% increase in properties sold in FY2013 over Fy2012

Panel 2: Talked about a P3 project in DC – was very interesting but hyper-local to DC

Panel 3: Perspectives on Leasing with GSA

  • Cultural shifts from GSA are having an impact on the way agencies use space – ‘total new workplace’ goals are main culprit
  • Skepticism about whether this new style of work will stick around, we have seen it come and go in private sector
  • Competition for contracts has focused on price only instead of best value
  • Structural requirements in procurements are challenging to accommodate in leases
  • Avoiding holdover leases
  • Working with tenants in advance of the lease termination to avoid vacancies
  • Shorter leases will favor new buildings because old buildings can’t be prepared fast enough to accommodate tenants’ needs

 

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