General Services Administration (GSA), Public Buildings Service (PBS) has sought competition under the Federal Supply Schedule 520, Financial and Business Solutions (FABS), for Asset Management Support Services to conduct a Rent to Useable (R/U) study. Attached for review and comments are the results of the study. Background: Created by the Public Buildings Amendments of 1972, the purpose of the Federal Building Fund (codified at 40 U.S.C §592 a) is to provide a source of funds (“rent”) for GSA to manage its inventory. The FBF is financed by revenue from rental charges assessed federal government occupants for space, which GSA is legally responsible to maintain. The rental charges, by law (40 U.S.C. 586), are determined by the GSA Administrator and shall approximate commercial rental rates for comparable office space. Similar to the private sector, the rental charges for GSA’s owned inventory is based upon the area that the tenant occupies with the rent charges determined by Fair Annual (FAR) Rent appraisal. Each space assignment is documented in an Occupancy Agreement between GSA and the federal agency occupying the space. The Agreement states the financial terms, the floor area and the conditions of occupancy. GSA uses the Building Owners and Managers (BOMA) Standard Method for Measuring Floor Area in Office Buildings in its Federal buildings. The Standard was originally created in 1915 as a means of measuring tenant space and has been updated over the years with the latest modification made in 1996. Previous versions only measured space on a floor-by-floor basis. The latest one provides a building-wide method of measurement that allows spaces that benefit all the building occupants (the common area) to be apportioned to the tenants on a pro-rata basis. The revision produced new terms (floor useable area, floor rentable area, floor common area, and building common area) into the lexicon of commercial real estate, which GSA has since adapted to its Government buildings. But the conversion has not been a simple process for GSA because its buildings are not easily adapted to private sector standards. Public spaces in Federal Buildings do not easily translate to the standard common area configuration in private sector office buildings where space is designed to be efficient and cost effective. Tenants in the private sector typically pay a pro rata share of the cost to maintain the common areas. If the common area comprises 15% of the building, the landlord will increase or “load on” a 1.15 factor to the tenant’s useable area. Most leases are silent as to how this ratio is calculated and simply address the rentable square feet and the applicable rental rate. So if the tenant occupies 1,000 useable square feet, it is charged rent on 1,115 rentable square feet. This load factor can be influenced by market forces and the interaction of supply and demand, which will ultimately affect the final calculation that appears in the lease agreement. The Rentable to Useable (R/U) ratio in GSA’s Federal buildings are often much higher than in private buildings. Federal Buildings have large plazas, lobbies, atria and grounds that are significant public areas for the communities that they serve. Hallways in Courthouses provide attorney-client conference areas. Lobbies in the Federal Office Buildings provide gathering areas, cultural displays and agency information. This common area space can be significant. While a portion of the differential is often attributed to the difference in function, inefficiencies can exist in the layout of federal buildings; from the long double-loaded corridors to the expansive basements. In the past, appraisers did sometimes adjust for building efficiency, but such adjustments were subjective and difficult to quantify. In an attempt to put the core factor for its Federal Buildings on par with private sector buildings, GSA adopted the Regional Appraiser’s “Summary of Rates” form (copy attached) in 2005 to further adjust its R/U ratio after it obtained its FAR (Fair Annual Rent) appraisal. But the form has unintentionally introduced major concerns into the rent calculation process. Request for Comments: Please note that this Request for Comments (RFC) is in accordance with the terms and conditions under GSA Task Order GS-P-00-08-CY-0134 dated August 21, 2008. All comments should be address in writing no later than Friday, August 14, 2009, and submitted to General Services Administration (GSA), Public Buildings Service (PBS), Office of Organizational Resources, Center for Acquisitions (PGE), Ms. Paris N. Marshall, Room 4302, Washington, DC, 20405. Electronic (Email) responses are acceptable and preferred.

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