Any observer of the federal leasing market will agree that the pace of new leasing has slowed considerably. This is to say that there are few requirements for new space or expansions of existing leases. Landlords hoping to lease space to the federal government must focus instead on what it will take to poach tenants from other buildings and the opportunity to do that poaching usually coincides with the expiration of the government lease.
Since most federal leasing is managed by the GSA, we thought we’d look at those lease expirations on a state-by-state basis to provide an indication of the volume of leasing opportunity. The graph above illustrates that trend, from the present year out to 2032, the date upon which the last of GSA’s current, commenced leases expire.
Our observations on the trend are as follows:
- The highest volume of lease expirations are expected this year and next. This is a signature of the GSA expirations trend whereby, due to the Bow Wave effect, the initial couple of years following the date of analysis are always the ones with the highest volume of lease expirations.
- GSA lease terms are typically some multiple of 5 years and the vast majority of leases are for 10 years or less. You can pretty clearly see that in the chart. The first 5 years offer the highest volume of expirations, the next 5 years offers fewer, the third tranche of 5 years offers a significantly lower volume of expirations and the final tranche even more so. Of course, near term leases will renew or relocate and continue to roll, pushing the expirations volume ever-forward.
- Perhaps the most interesting element of the expirations graph is the period from 2017-2021. In this period lease expirations are fairly stable and the volume remains high. This is due, in large part, to the post-9/11 construction boom that included numerous new FBI field offices, DHS facilities and Border Patrol stations, among others. Most of these were built on 15 to 20 year initial lease terms and the vast majority of these leases are expected to renew in-place.
The chart above is fully interactive. Move your mouse over any bar to see the lease expirations stats for that year, or choose to display the expirations trend for one or more states. The Colliers Government Solutions team tracks a wealth of data on government leasing activity across the country. If you want to explore market trends relating to a specific property or location contact us.