Real Estate Investing With Uncle Sam - May 2015, Institutional Real Estate Letter

Real estate investing with Uncle Sam Government-leased properties have particular challenges and opportunities By Will McIntosh, John Kirk and Mark Fitzgerald

T he U.S. government leases more than 196 million square feet of space through the U.S. General Services Administration, or GSA. As the largest public real estate organiza- tion in the country, the GSA is comparable in size to the office markets in Los Angeles or Dal- las (see graph on page 46, “Size of office mar- kets compared to GSA footprint”). Being Uncle Sam’s landlord is not always easy, particularly when decision making depends

on a Congress that has become synonymous with dysfunction. Potential investors have raised the question: Do the benefits of investing in assets leased by the GSA outweigh the uncertainties clouding this sector? The short answer is, “yes,” but the long answer is a lot more interesting. To start, having the full faith and credit of the U.S. government certainly enhances this sec- tor, especially during the underwriting process. Property owners typically receive fair market

The Letter – Americas | 45 | May 2015

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