The U.S. General Services Administration (GSA), which leases office space on behalf of most federal agencies, has begun using a streamlined lease acquisition program in several markets across the nation and will continue to expand into new markets. We’ve profiled this program, known as the Automated Advanced Acquisition Program (AAAP), previously on this blog; and we also noted it’s initial multi-city expansion last year.
In summary, AAAP allows property owners/agents to submit offers into GSA’s procurement system. GSA then selects the lowest priced offer that meets the particular needs of a tenant agency. If a space is selected from the AAAP system for lease award, GSA can proceed with lease execution much more expeditiously than in a traditional competitive procurement (because almost all of the business terms are pre-negotiated). The AAAP is also widely used to renew existing GSA leases.
The AAAP has been in effect in the Washington, DC area for more than 20 years, during which time we’ve prepared hundreds of offers and successfully closed several hundred thousand square feet of lease transactions through the program. Our experience with the program, and the program managers, has been positive–though the program does have its pitfalls.
The primary benefits of the AAAP are speed and efficiency. For new leases, the ranking of competing offers is already established when a tenant’s space request progresses to the selection of a property, which eliminates the need for all parties to go through several months of offer revisions and clarifications. And for leases that have an extremely high probability of renewal, the AAAP can save, literally, hundreds of hours of work by GSA and the many landlords that are unnecessarily exercised to compile lease proposals that only serve as stalking horses. The relatively small TI allowance in the standard AAAP (at least here in the National Capital Region) is also a benefit from the Lessor’s perspective; and, as the program does not require participation from GSA’s tenant brokers, commissions are minimized.
On the other hand, there are some potential drawbacks with the AAAP. For example, the cookie-cutter approach limits the parties’ ability to negotiate or clarify aspects of the standard GSA lease. From GSA’s perspective, there may also be a lingering question of whether or not competition was truly maximized, as it’s possible the owner of the perfect building for a particular tenant agency may not have submitted space to the AAAP or failed to update a proposal to make it more competitive when they were capable of doing so.
Lessors that adopt this program during the earlier stages of national roll-out are likely to gain an advantage. Lessors with office availabilities in the following markets should include the AAAP as a standard feature of any space marketing program:
- Dallas/Ft. Worth
- Kansas City
- Los Angeles
- New York
- Washington, DC
Colliers Government Solutions develops AAAP strategies and submits offers on behalf of property owners across the nation. For more information, please contact Keith Lavey.