Publications

- May 1, 2015: Vol. 27, Number 5

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Real estate investing with Uncle Sam: Government-leased properties have particular challenges and opportunities

by Will McIntosh, John Kirk and Mark Fitzgerald

The U.S. government leases more than 196 million square feet of space through the U.S. General Services Administration, or GSA. As the largest public real estate organization in the country, the GSA is comparable in size to the office markets in Los Angeles or Dallas.

Being Uncle Sam’s landlord is not always easy, particularly when decision making depends on a Congress that has become synonymous with dysfunction. Potential investors have raised the question: Do the benefits of investing in assets leased by the GSA outweigh the uncertainties clouding this sector? The short answer is, “yes,” but the long answer is a lot more interesting.

To start, having the full faith and credit of the U.S. government certainly enhances this sector, especially during the underwriting process. Property owners typically receive fair market rents from an AAA-rated tenant that just so happens to be a global superpower. Furthermore, most federal tenants request long-term leases of 10 y

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