Extreme Leasing: The Nation’s Most Expensive Office Lease

2000 North Roosevelt Blvd, Key West, Florida

When we searched for the GSA’s most expensive office lease (measured in rent per square foot) we expected to find it in New York, or Boston, or maybe San Francisco or L.A., but we never expected to find it in laid-back Magaritaville (Key West, Florida for the non-Parrotheads). Indeed, a short stroll from the Key West Yacht Club stands the local headquarters of the U.S. Immigration and Customs Enforcement.

The 2-story building, a build-to-suit constructed in 2006 is 11,305 rentable square feet. It is designed and constructed to withstand a Category 5 hurricane and is elevated to sit at 22 feet above sea level. The second story of the building comprises the office area and below that are covered parking spaces. Also on site is a diesel back-up generator.

So what’s the rent? According to GSA’s records, it is currently paying $86.90 per rentable square foot. Normally, GSA leases are structured as full-service but this one – judging from the sales comp – appears to have net components. In any case, real estate in Key West is pricey and the barriers to entry are reportedly high, though we expect a big chunk of this rent premium to be due to amortization of tenant improvements. The 15-year lease expires in 2021 with a termination right beginning in 2018.

The building might also qualify as the most expensive GSA-leased office sale – at least on a per-square-foot basis. Two years after the building was completed, it was purchased by a Pennsylvania-based private investment partnership for $10.7 million, which works out to a whopping $946/SF.

A note about methodology: We focused on “office” type leases for this article and we set an arbitrary minimum size of 3,000 RSF.  There are numerous non-office leases which rank as more expensive including TSA on-airport leases, certain parking leases and leases between GSA and other governmental or quasi-governmental agencies.  There is even a data center lease which clocks in at higher rent.  However, for the purposes of this article at least, we focus on traditional office space (subject of course, to the unique requirements of the federal tenant).

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