GOVERNMENT REAL ESTATE LEASING OVERVIEW: PART ONE
By Jamie Scruggs, Government Lease Advisors
To grasp the enormity of the total universe of government leases in the US it is best to look to the numbers. According to the US Census Bureau, in 2012, there were 89,004 local governments in the United States; local governments include 3,031 counties, 19,522 municipalities, 16,364 townships, 37,203 special districts, and 12,884 independent school districts, which, when combined with the federal and state governments, comes to 89,055 units of government. Many of these government entities will have multiple subgovernment entities or subagencies within them that will create a multiplier of agencies beyond the 89,055 units of government listed above. Most of these units of government will have some level of real estate leasing activity with the private sec- tor, whether it is for a million-square-foot office lease or a 500-square-foot warehouse storage lease.
To estimate the current number of real estate leases government agencies have with the private sector could be conservatively estimated at 150,000 office and warehouse leases with an average size of 5,000 square feet per lease, for a government-leased foot- print of 500 million square feet. Adding into this calculation the number of government agencies with private-sector ground leases, land leases, structures, ports, etc., could add another 50,000. By comparison, in 2015 Starbucks, Walmart, and McDonald’s combined had 32,053 stores in the United States.
Most large government agencies have both internal and external leasing activities, while smaller government agencies will typically own the real estate they are occupying, with a smaller number of private-sec- tor leases in their lease inventory. Government leasing activities that occur internally will often be silent to the public, while external leasing activities will usually be published for public review and consideration. A significant difference among government agencies that do external leasing is whether they are required to compete their real estate leases or if they can sign a lease with a building owner without conducting a competitive bid process. Government agencies required to compete their real estate leasing activities for external leasing activities will follow some type of regulated and public process, which can range from simple lease acquisition requirements to overly complex rules and regulations, depending on the size of the lease requirement and which agency is procuring the leased space.
Jamie Scruggs works with property owners and brokers on government real estate leases and property sales throughout the US. Jamie has been involved in thousands of government real estate leases and can assist you with your government real estate lease needs. Jamie is the author of The Complete Guide to Government Real Estate Leasing: Volumes I & II.