Testing Ground: Look to the GSA

Love the federal government or hate it, there is no debating its clout when it comes to real estate. Its sprawling portfolio also gives it built-in influence across a wide swath of real estate business areas, from property management and leasing to sustainability. By Paul Rosta.

Love the federal government or hate it, there is no debating its clout when it comes to real estate. The U.S. General Services Administration holds the title of the nation’s most prolific owner and end user of space by a wide margin. Through its Public Buildings Service division, the GSA manages or leases 364 million square feet of office space in some 8,600 buildings in every state, Washington, D.C., and six U.S. territories. This sprawling portfolio also gives it built-in influence across a wide swath of real estate business areas, from property management and leasing to sustainability.

To be sure, business opportunities alone offer good reason to keep tabs on the GSA’s approach to real estate management. “We believe there will be improved outsourcing facilities management opportunities to run government facilities,” predicted Kurt Stout, a Colliers International executive vice president who recently joined the firm to start a new government services practice group. The GSA awards property management contracts through its 11 regions, mostly for individual buildings or small portfolios.

Facilities managers must expect to contend with highly structured procedures and rigorous standards. Vendor procurement, lease administration, budgeting and other tasks offer far less flexibility than similar tasks carried out for private-sector clients. Real estate managers who take on GSA contracts are well advised to communicate early and often with their agency contacts in order to make sure they know the ropes, noted Shannon Alter, a Santa Ana, Calif.-based property manager and consultant: “I think it’s valuable for the property manager to really understand how the GSA operates.”

Attractive as GSA contracting opportunities may be, however, the agency’s influence on property management extends much further. The agency remains in the forefront of trends that affect not only management of properties owned or leased by the federal government but by private-sector clients as well. In recent years, the GSA has been a sustainability pioneer, for instance, and it continues to be a frequent sponsor of various categories of pilot programs that have the potential for wide application.

“It can engage in activities that are test beds for energy efficiency and modernization that the private sector couldn’t do,” said Stout. “It can take a leadership role in a way that the private sector could never do. You create a great opportunity for solutions and technology that, if they’re successful, can then be rolled out to the entire country.”

Under one such initiative unveiled in April, the GSA is evaluating 16 emerging sustainable technologies that are being incorporated into renovation projects at its facilities. The technologies range from non-chemical water treatment systems and wireless temperature sensors to windows that offer a high level of heat resistance, known in the trade as a high R-value. Technologies that show potential will get a broader rollout at GSA-owned properties.

The agency is also stepping up its work in smart buildings, as GSA administrator Martha Johnson told a Senate committee on March 30. “With this program, we intend to utilize advanced metering equipment and flexible lighting and heating, ventilation and air conditioning controls in a subset of our owned inventory to monitor the use of these facilities by feeding real-time information into a centralized database for review by our facilities managers,” Johnson explained. She said the agency would begin with its largest buildings, since they could realize the greatest benefit, and eventually expand the program through more of the portfolio.

The GSA is rolling out innovative programs funded by the American Recovery and Reinvestment Act of 2009, which allocated $5.5 billion for modernization projects—at least $4.5 billion of that sum for transforming properties into high-performance sustainable buildings. Standouts among the 120 projects funded by the stimulus package include the $87 million renovation of the 32-year-old Dr. A.H. McCoy Federal Building in Jackson, Miss., and the $146 million modernization of the 43-year-old, 467,000-square-foot Peter W. Rodino Federal Building in Newark, N.J.

Tackling Technology

The GSA’s push to bring in new technology has potential ramifications on another front. One probable vehicle for change is the Federal Buildings Personnel Training Act of 2010, which aims to raise the bar for technological know-how among federal government real estate managers. The GSA now has a broad mandate to make federal building personnel proficient in a variety of core competencies, such as sustainability, measuring building performance, energy management, maintenance and safety.

According to Lawrence Melton, the agency’s assistant commissioner of facilities management and service programs, the newly expanded training will address a top priority. “Our biggest concern is skill sets for project managers as related to technology,” he noted. Much of the inefficiency in building operations today is the result of inadequate knowledge.

As is usually the case with government initiatives, it may take some time for public- and private-sector property managers to feel the full impact. The GSA must first identify the entire suite of core competencies and set up training programs, which will primarily target its own employees. But the new best practices and standards will likely filter through the entire property management profession.

“The GSA has the market presence and the size to be the standard, and the industry will benefit,” noted Chris Roth, managing director & head of the national brokerage services group at Jones Lang LaSalle Inc. “I can see a private sector building owner coming out and saying, ‘Do you meet GSA standards?’”

An area where enhanced training is likely to make a direct impact on the GSA’s outside consultants is operations and maintenance. Those services are generally outsourced, and certification will be required for all contractors providing them at agency-owned properties.

Whatever its influence may be, the training mandate is in keeping with a longtime emphasis on continuing education. “Constantly developing and upgrading the skills of their managers is very important to them,” said Nancye Kirk, chief strategy officer for the Institute of Real Estate Management.

Since 2005, IREM has participated in three national training programs for the agency. As a subcontractor to the American Management Association, IREM developed the programs and supplied instructors, along with the AMA. During the latest round, in 2009-10, the two organizations trained about 1,000 GSA employees in reimbursement procedures for $2 billion in real estate-related costs that the GSA spends annually on behalf of those clients.

Though the real estate industry has embraced sustainability movement during the past decade, the GSA continues to seek out new strategies. Under the 2007 Energy Investment & Security Act, 18 percent of the GSA’s owned inventory of at least 5,000 square feet must meet the U.S. Green Building Council’s LEED standards for the operation and maintenance of existing properties, reported Frank Santella, the GSA’s director of smart buildings. The agency plans to create the first building listed on the National Register of Historic Places to achieve net-zero energy performance. The effort will unfold at the Wayne Aspinall Federal Building in Grand Junction, Colo., completed in 1918 and expanded in 1939.

When the renovation is complete, the 42,190-square-foot building will produce at least as much energy as it consumes. Among other features, electricity will be provided by a solar panel installation, and any surplus will be returned to the local power grid. And Johnson, GSA’s administrator, has suggested that the Aspinall Building’s new geothermal heating and cooling system might serve as a model for other GSA-owned properties.