Department of Defense Clearinghouse Response: DoD Clearinghouse Response to a letter from the BRAC Commission regarding Leased Spaces. Page: 1 of 159
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DCN 8461HSA JCSG Response to "Leased Space Issues - Topics for Discussion - 5 August 2005"
HSA JCSG Response to "Leased Space Issues - Topics for Discussion - 5 August 2005"
1. As is the case throughout the BRAC Process, particularly with regard to the
COBRA model, certain reasonable simplifying assumptions were used to analyze
BRAC scenarios. Such reasonable assumptions were used in the case of certain
aspects of the analysis of leased space, including costs and termination dates of
a. Typical government leases are written with terms of 5 to 10 years. In fact,
leases are rarely written with longer terms due to the imposition and
enforcement of Scoring Rules by OMB. In the BRAC process, capacity
data was gathered as of 9/30/03. As such, it was reasonable to assume that
the vast majority of existing leases would expire prior to implementation
of most BRAC recommendations (complete by fiscal year end 2011 - or a
maximum of 8 years). Discussions with personnel at Washington
Headquarters Services (WHS) indicated that this was a reasonable
b. The vast majority of DoD leases within the NCR are secured for DoD by
GSA, working through WHS. DoD pays an 8% fee to GSA on virtually
all leases, and a portion of this fee provides for the ability of DoD to return
leased space to GSA with 120 days. This practice is in place for all GSA
clients that use GSA to procure and manage leased space. DoD pays to
GSA approximately $13 million in such fees annually; this is a real cost
that is incurred in the DoD budget. Therefore, specific lease expiration
dates were not deemed crucial to the BRAC analysis since leased space
can be vacated by the DoD with a short notice.
c. Following from the knowledge that the majority of leases will expire
before BRAC implementation, the HSA JCSG determined that using
existing lease rates to measure the cost savings in COBRA from moving
out of leased space would have underestimated the expected costs of
leased space in the future. Leases are written at a specific point in time at
current market rates, which apply over the life of a government lease, with
certain cost escalations. In the Washington DC metropolitan area, lease
rates are increasing steadily as vacancy rates fall. Jones Lang LaSalle, a
nationally recognized brokerage firm, forecasts that rent growth in the
Washington DC area will be in the 2-4% range in the foreseeable future.
As such, lease costs on existing leases that were written in the past are not
the best measure of what costs will be avoided in the future if new leases
that are put in place after existing leases expire. Since current and future
lease rates will reflect current market conditions, the HSA JCSG used the
reasonable assumption that future lease costs would reflect the average
cost of Class A leased space in the Washington, DC metropolitan area at
the time the new lease was written.
2. The HSA JCSG used the average cost of Class A leased space in the Washington,
DC metropolitan area as reported by CoStar because the DoD has space
throughout the NCR, and the market average was more representative. For the
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United States. Department of Defense. Department of Defense Clearinghouse Response: DoD Clearinghouse Response to a letter from the BRAC Commission regarding Leased Spaces., letter, August 30, 2005; (digital.library.unt.edu/ark:/67531/metadc23423/m1/1/: accessed November 17, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.