September 29, 2011
The Federal Government's Real Estate Fire Sale
There have been reports for a year or more that the Obama Administration is considering selling surplus real estate assets (leases and fee simple interests) as part of an effort to ease the federal deficits. The New York Times reports today that this idea has garnered rare bipartisan support and may be building steam.
But a recent study by the GAO argues that GSA (the real estate arm of the federal government) has over-relied on leasing and that used owned real estate is a better strategy for the government than leasing.
I hate to criticize that rare policy issue that both parties have apparently agreed upon, but I have two issues with the administration's plan. First, in light of the GAO report, does it make sense to divest of owned real estate while GSA is still leasing? Perhaps GSA has reviewed all of the "surplus" real estate (such as Plum Island) and rejected it, but then again, perhaps not. Second, in a time when commercial real estate values are still significantly depressed, is it a good idea for the government to dump more inventory on the market?
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