Special Examination 11-33
January 2012
Georgia Department of Audits and Accounts
Performance Audit Operations
Russell Hinton, State Auditor Leslie McGuire, Director
Why we did this review
The Senate Appropriations Committee requested a special examination to review state policies related to state owned and leased space. The Committee posed the following questions: (1) What is the balance and cost of space for state owned and state occupied, state owned and unoccupied, state owned and nonstate occupied, and non-state owned and state occupied? (2) What are the state's policies for determining location and space? Are there opportunities for an agency to relocate to a lower cost space and continue to serve clients? (3) How does the state manage tenant improvements? Would the state realize savings in rent costs if it self-funded tenant improvements?
Who we are
The Performance Audit Operations Division was established in 1971 to conduct reviews of state programs. The purpose of these reviews is to determine if programs are meeting their goals and objectives; provide measurements of program results and effectiveness; identify other means of meeting goals; evaluate the efficiency of resource allocation; and assess compliance with laws and regulations.
Website: www.audits.ga.gov Phone: 404-657-5220 Fax: 404-656-7535
State Properties Commission
Requested Information on State Space Management Policies
What We Found The State Properties Commission (SPC) is the state's real estate portfolio manager and is responsible for acquiring and disposing of real property, managing administrative space, and establishing/managing lease agreements for (non-exempt) state entities. SPC's expanded responsibilities resulted from recommendations made by the Commission for a New Georgia (CNG) in 2004 that the state create a central real estate authority and a central repository of real asset holdings.
In response to recommendations made by CNG, SPC developed the Building, Land, and Lease Inventory of Property (BLLIP) as the state's first single source inventory of state owned and leased real property. BLLIP records (as of August 2011) indicate that the state owns 15,050 buildings1 and has 1,678 active leases for non-state owned space. The largest property use type is office space, with 13 million square feet of owned space and 9.3 million square feet of leased space.
Inaccuracies and incompleteness in the BLLIP data significantly limited our ability to document the overall balance and cost of state owned and leased space and will continue to limit SPC's ability to fulfill its role as the state's real estate portfolio manager unless improvements are made. We found high error rates and missing values in data fields required to determine basic property attributes such as the primary use, the occupancy status, and the occupancy rate for a large percentage of state owned and leased space.
Additionally, BLLIP contains no data to calculate operations and maintenance costs of state owned buildings. SPC indicated that no
1 In BLLIP, a "building" is a facility owned by the state and/or by state entities and may include property used for a variety of purposes, including offices, storage buildings, housing, classrooms, and security facilities.
alternate single data source with operations and maintenance costs of state owned buildings exists. As a result, we were unable to identify or evaluate the cost to maintain and occupy state owned buildings. We were able to determine that state entities pay an average lease cost for office space of $15.52 per square foot (psf) to private property owners, $13.11 psf to other governments, (e.g., county, city, federal), and $11.73 psf to other state government entities.
Regarding policies for identifying location and space, SPC has established some formal policies and procedures; however, significant space and lease management activities are not documented or maintained in sufficient detail within case files to permit an effective review of operations. For example, analytical activities not documented in case files include the review of state owned property inventory in BLLIP, the methodology used to identify appropriate private property, and the cost-benefit decisions related to selecting a property among multiple options. The lack of documentation limited our ability to determine whether SPC's policies and procedures were followed.
Regarding opportunities for relocation to lower-cost space, we analyzed BLLIP lease cost data and identified cost outliers among properties managed by SPC and those managed by state entities exempt from leasing through SPC. We identified 39 leases/agreements managed by SPC and 29 leases managed by exempt state entities with a cost greater than $20 per square foot within the state. Within the metropolitan Atlanta area, we identified 40 leases managed by SPC and 24 properties managed by entities exempt from leasing through SPC that may be appropriate for renegotiation and reduced rents if above-market rates are not justifiable. Further data and analysis is necessary, however, to expand the analysis to other metropolitan areas and to determine whether or not the above-market rate is necessary to serve clients.
Regarding potential to reduce costs by self-funding tenant improvements (TIs), legal restrictions prevent the state from self-funding TIs in most instances. The Georgia Constitution prohibits state entities from paying for "permanent improvements to private property" unless the improvements can be removed and prohibits SPC and most state entities from entering into multi-year lease agreements. As a result of these two prohibitions, state entities are not legally permitted to pay substantial up-front costs for leased property TIs because the improvement will not depreciate within one year and cannot be removed.
Recommendations SPC should provide more comprehensive management oversight and control of BLLIP data to improve its usefulness for portfolio management.
SPC should establish stronger policies and procedures necessary to provide more transparency of space and lease management decisions.
SPC should conduct additional research related to leases that exceed average market rates to identify opportunities for cost savings.
In its response to this report, SPC noted that this limited data analysis does not reflect all the professional activities associated with real estate portfolio management. SPC provided additional information and explanations for what it thought were the causes of several of the problems identified in this report. In addition, SPC noted many corrective actions that it had already started implementing to address recommendations in this report. Additional information from SPC's response is included in the body of the report following pertinent sections.
State Space Management Policies
i
Table of Contents
Purpose of this Special Examination
1
Background
1
History of State Space Management Policies
1
Organization of the State Property Commission
3
Financial Information
5
Requested Information
What is the balance between state-occupied state owned spaces, unoccupied state
7
owned spaces, non-state occupied state owned spaces, and state-occupied non-state
owned spaces? What is the cost associated with each?
What polices does the state use in determining leased property location and space? 21 Please comment on any areas where an agency could relocate to a lower cost area and continue to serve clients.
How does the state manage tenant improvements for the spaces it leases? Would the 30 state realize savings in rent costs if it self-funded tenant improvements?
Appendix A: Objectives, Scope, and Methodology
33
Appendix B: Primary Use Categories
36
Appendix C: Primary Use Categories Identified as Blank, Vacant, Other Use, and Leased to 37 a Non-State Entity by Entity
Appendix D: Occupancy Status By Entity
38
Appendix E: Occupancy Status of Office Space by Entity
39
Appendix F: Occupancy Status of Office Space by City
40
Appendix G: SPC Space Standards
41
Appendix H: SPC-Managed Office Leases with Costs >$20 Per Square Foot
42
Appendix I: Agency-Managed Office Leases with Costs >$20 Per Square Foot
43
Appendix J: Office Leases Above Market Rates (Metropolitan Atlanta)
44
State Space Management Policies
ii
State Space Management Policies
1
Purpose of this Special Examination
Our review of state policies related to space management was conducted at the request of the Senate Appropriations Committee. Specifically, the committee asked for information related to the following questions:
What is the balance between state-occupied state owned spaces, unoccupied state owned spaces, non-state occupied state owned spaces, and state-occupied non-state owned spaces? What is the cost associated with each?
What polices does the state use in determining leased property location and space? Please comment on any areas where an agency could relocate to a lower cost area and continue to serve clients.
How does the state manage tenant improvements for the spaces it leases? Would the state realize savings in rent costs if it self-funded tenant improvements?
A more detailed description of the objectives, scope, and methodology used in this review is included in Appendix A on page 33. A draft of this report was provided to appropriate personnel within the State Properties Commission, and SPC's pertinent responses have been included throughout the report where appropriate.
Background
History of State Space Management Policies
As shown in Exhibit 1 on the next page, in 2004 former-Governor Sonny Perdue's Commission for a New Georgia (CNG) released a report on the state's space management practices (www.newgeorgia.org/spacemgmt.html). CNG concluded that the state's space management was too decentralized among state entities and improved strategic evaluation and management of real assets was necessary. To improve portfolio management, the task force recommended the state create a central real estate authority (headed by a portfolio management executive) and a central repository of real asset holdings.
In response to the recommendations put forth by CNG, the General Assembly passed legislation in 2005 that created a state property officer position and established the State Properties Commission (SPC) as the state's primary real estate portfolio manager. This legislation also separated SPC from the Department of Administrative Services (DOAS) and substantially reduced the number of state entities legally permitted to purchase and/or lease real property independently (i.e. "exempt entities"). In addition, the legislation expanded SPC's authority to manage the use of administrative space on behalf of state entities and charged SPC with helping non-exempt state entities find appropriate cost-effective space in either state owned or commercially owned property. SPC's stated mission is to advise, guide, and maximize Georgia's real estate portfolio by applying industry best practices in asset, space, and transaction management. In executing this mission for non-exempt state entities, SPC acquires and disposes of state owned real property, identifies appropriate space for entities to occupy, and executes their lease agreements.
State Space Management Policies
Exhibit 1 Significant Events Related to Property Management in Georgia
Spring 2004 Commission for a New Georgia releases report on
space management
Summer 2007 SPC finances study of other state governments'
leasing practices
Winter 2008 DOAS' Risk Management
Services transfers its database to BLLIP
Spring 2010 SPC completes Capitol Hill utilization report
(evaluates space utilization in 14 GBA-
owned buildings)
Spring 2011 External consultant completes report on strategic disposition
(identifies 131 properties for possible
disposition)
2004
2005
2006
2007
2008
2009
2010
2011
Spring 2005 Legislation passes, creating the state property officer position and making
the State Properties Commission responsible for managing state-wide
property, space, and asset management systems
Fall 2006 Building and lease portions of a real property database BLLIP (Building, Land and
Lease Inventory of Property) are completed
Fall 2007 External consultant completes Savannah
metro-plan
Source: SPC Records
Spring 2010 Governor issues Executive Order requiring state entities to complete all fields in
BLLIP
Summer 2011 Governor's Office issues memo requesting state entities complete BLLIP
data
2
State Space Management Policies
3
In 2006, the State Properties Commission (in conjunction with the Carl Vinson Institute of Government) developed the state's first statewide data repository for property--the Building, Land and Lease Inventory of Property (BLLIP). BLLIP data is publicly available from the internet: www.realpropertiesgeorgia.org.
In 2007, the State Properties Commission contracted with a consultant to conduct a survey of other state government leasing practices that identified Georgia's prohibition of multi-year lease terms as atypical. In addition, SPC contracted with a consultant to develop metropolitan strategic plans (metro-plans) for three cities to identify opportunities to consolidate space, renegotiate lease rates, and relocate state entities to more cost-effective locations. A metropolitan strategic plan of Savannah was completed; however, plans for additional cities were cancelled. SPC intends for in-house staff to conduct future metro-plans and will undertake a metro-plan for the city of Decatur during the fourth quarter of 2012.
In 2008, data records for state assets were expanded in BLLIP by incorporating insurance-related data maintained by the DOAS Risk Management Unit on state assets.
In 2010, an Executive Order was signed by the Governor requiring state entities to begin completion of all data fields in BLLIP records by July 1, 2010 to address problems with missing data in BLLIP. In addition, SPC conducted a physical verification of the occupancy status and vacancy rates of 14 GBAowned buildings.
In 2011, a joint memorandum was issued by the Governor's Office, the Office of Planning and Budget, and the State Property Officer reminding state entities of their obligation to complete records in BLLIP for all state owned and leased property. In addition, SPC financed a consultant study that identified 131 properties for potential sale/disposition.
Organization of the State Property Commission
The State Properties Commission (SPC) has a governing board that is chaired by the governor. Other members of the governing board include the secretary of state, state treasurer, state accounting officer, and three citizen members appointed by the governor, lieutenant governor, and speaker of the house. SPC's governing board authorizes acquisitions of state property, grants license agreements for use of state property, and approves sale contracts for dispositions authorized by the General Assembly.
The state property officer (SPO) is appointed by the governor and serves as the executive director of the State Properties Commission and the Georgia Building Authority (GBA). In addition, the SPO serves as the director of the construction division of the Georgia State Financing and Investment Commission (GSFIC). SPC currently has 12 full-time employees. While SPC's fiscal year 2009 budget recommended expanding SPC from 12 positions to 17 (adding five "portfolio management agents"), these positions were never funded, and in fiscal year 2012, SPC's official budgeted position count was reduced from 17 to 12. SPC has three divisions, as shown in Exhibit 2.
State Space Management Policies
4
Exhibit 2 State Properties Commission
AAss ooff NNoovveemmbbeerr 22001111
State Properties Commission Governing Board
Georgia State Financing and Investment Commission Construction Division
State Property Officer / SPC Executive Director 1 Deputy Executive Director
Georgia Building Authority Administrative Assistant
Asset Management Division
(1 employee)
Space Management Division
(3 employees)
Transaction Management
Leasing Division Acquisition/Disposition (Land) Division
(4 employees)
(2 employees)
1 The state property officer serves as executive director of both SPC and GBA (which is attached to SPC for administrative purposes only) and as director of GSFIC's Construction Division.
Source: SPC Records
SPC's Asset Management Division is responsible for recommending strategic changes to improve the value of the state's property portfolio. Duties include establishing a value of state owned and leased real property assets, establishing core and non-core designation for each major asset in the portfolio, determining the total cost of occupancy, evaluating assets, and identifying properties for surplus. According to SPC, the asset management division will begin conducting agency-specific portfolio assessments in fiscal year 2012, with a portfolio plan of the Department of Public Health to be completed during the fourth quarter. In June 2011, a consultant completed a study to identify potential properties for sale/disposition. One-hundred thirty-one properties were initially identified for potential surplus. After consulting with appropriate state entities, SPC asset management division identified 38 properties that were valid sale candidates.
SPC's Space Management Division has authority to manage administrative space for most state entities (O.C.G.A. 50-16-41). Notable exempted entities include the Board of Regents (BOR), the Department of Labor (DOL), and certain authorities and commissions that are legally permitted to initiate and manage their own leases. The Division receives space requests from entities, develops square footage requirements and floor plans, and determines the most appropriate location (state government or private property owner) given the requesting entity's business needs and geographic
State Space Management Policies
5
requirements. In addition, the Division is also responsible for maintaining the state's central data repository of real property. The Building, Land, and Lease Inventory of Property (BLLIP) database was developed by SPC and the Carl Vinson Institute of Government's Office of Information Technology Outreach Services. In fiscal year 2011, the State Properties Commission received 1,072 space action requests (new lease requests, lease renewals, lease renegotiations, lease cancellations, etc.) from state entities. As of August 2011, BLLIP included 15,050 records of state owned buildings and 1,678 records of active leases of non-state owned spaces.2
SPC's Transaction Management Division provides oversight for the state's leased property portfolio and acquisition and disposition services for real property. Lease management involves renewing, renegotiating, or cancelling an existing lease agreement or locating and procuring new leased locations for requesting entities. Division personnel identify available properties that meet the client agency's business and geographic needs and present them to agency personnel. In addition, Division personnel negotiate tenant improvements and the final lease rate on behalf of the requesting entity. Among the 1,010 active leases managed by the State Properties Commission as of August 2011, a majority were for offices (68.2%). The active leases managed by SPC account for 7.9 million square feet and $117 million in annual rent, utilities, and janitorial expenses. The Land Management Division provides services to most state agencies to execute the purchase or sale of real property and/or real property rights. Notable exempted entities include the Board of Regents and the Department of Transportation. In fiscal year 2011, SPC obtained approval for 20 easements, 26 acquisitions, and 26 dispositions/conveyances. Acquisitions require SPC Board approval, dispositions require authorization from the General Assembly together with approval from SPC's Board, and revocable licenses require approval from the State Property Officer and/or the SPC board.
Financial Information
The State Properties Commission (SPC) revenues for fiscal year 2011 were $1.4 million, primarily coming from rents collected by the Georgia Building Authority (GBA) for GBA-owned properties in the Capitol Hill area. In addition, SPC received a one-time state appropriation of $180,000 to contract with a consultant to identify properties for potential disposition and approximately $39,000 from agency reimbursements related to property sales. SPC staff noted that its revenues typically are derived exclusively from GBA rents. The largest expense category for SPC was personal services, which accounted for 71% of expenditures. Exhibit 3 presents the State Properties Commission financial summary of revenues and expenditures for fiscal year 2011.
2 Lease count does not include 135 state leases of space in state owned buildings. BLLIP also contains records of state owned land and other insured assets (equipment), which were not included in this analysis.
State Space Management Policies
6
Exhibit 3
State Property Commission Financial Information
Fiscal Year 2011
Description
Fund Sources State Appropriations1 Other Funds2
TOTAL
Amount
$ 180,000 1,232,913
$ 1,412,913
Expenditures
Personal Services
$ 1,006,158
Contracts
237,895
Real Estate Rentals
96,745
Regular Operating Expenses
29,096
Computer Charges
24,873
Telecommunications
11,286
Employee Travel
4,423
Other
2,437
TOTAL
$ 1,412,913
1 SPC received a one-time state appropriation of $180,000 to contract with an
outside consultant to identify properties for potential disposition. 2 The primary funding mechanism for SPC is a portion of GBA rents. In fiscal year
2011, GBA rents accounted for nearly $1.2 million of SPC funding.
Source: SPC Accounting Records
State Space Management Policies
7
What is the balance between state-occupied state owned spaces, unoccupied state owned spaces, non-state occupied state owned spaces, and state-occupied non-state owned spaces? What is the cost associated with each?
Balance of State Owned and Leased Space The State Properties Commission (SPC) oversees the Building, Land, and Lease Inventory of Property (BLLIP) database. BLLIP is the state's central property data repository and is considered the most comprehensive data set of the state's real property. However, we found significant problems with the data in BLLIP, which limited our ability to fully answer this question. The problems with BLLIP data are discussed throughout this report, and specific recommendations to improve the data are presented on page 19.
BLLIP records (as of August 2011) indicate that the state owns 15,050 buildings3 and has 1,678 active leases of non-state owned space. Expressed as a percentage, 90% of the records in BLLIP are state owned buildings and 10% are active leases of non-state owned space. (See Exhibit 4.) BLLIP records also indicate that among the 15,050 state owned buildings, 5,420 are occupied by state entities and 141 are occupied by non-state entities.4 Over half of the state owned building records in BLLIP indicate the building is unoccupied (8,626 of 15,050). However, in more than half of the records listed as unoccupied (56.6%), the occupancy categorization is irrelevant given the use of the facility (e.g., laundries, radio towers, and water treatment plants). (See Appendix B.) In other instances, the occupancy information is deficient.
Our limited review of the state owned buildings found significant errors for properties listed as unoccupied. For example, several prominent and occupied Georgia Building Authority-owned buildings in the Capitol Hill area (such as the James H. "Sloppy" Floyd building and the Coverdell Legislative Office building) are listed as unoccupied in BLLIP records. In addition, 863 BLLIP records for state owned buildings had occupancy status values which we could not discern (i.e. occupied/unoccupied). We also noted that BLLIP data is largely self-reported by state entities. SPC is responsible for entering data for only a small percentage of properties in the BLLIP database (approximately 6%), those for which it is the leasing agent. SPC contends that the primary responsibility for the accuracy of BLLIP data is with the custodial entity. Finally, during the course of this examination, BLLIP database administrators discovered an issue that could result in a zero value in the "percent occupied" field if no data was entered in the other occupancy fields, which could impact the high number of buildings BLLIP shows as unoccupied.
3 A "building" is defined as a facility owned by the state and/or by state entities and may include property used for a variety
of purposes, including offices, storage buildings, housing, classrooms, and security facilities. 4 92% of the state owned buildings occupied by non-state entities are held by the Department of Natural Resources; most
of these buildings are located in Stone Mountain Park.
State Space Management Policies
8
Exhibit 4 Distribution of State Space
(As of August 2011)
Non-State Owned State-Occupied (1,678 Leases) 10.0%
.324
.10
32.4%
State Occupied (5,420 Buildings)
.008
0.8%
Non-State Occupied (141 Buildings)
.052
5.2%
Unknown Occupancy (863 Buildings)
51.6%
Indicates Building is Unoccupied1 (8,626 Buildings)
State Owned (90% - 15,050 Buildings)
.516
1At least one of two occupancy fields in BLLIP had a "0" entered.
SOURCE: Building, Land, & Lease Inventory of Property, SPC
Primary Use Categories of State Owned and Leased Space BLLIP records include a "primary use" field to identify the primary function of a space. Exhibit 5 presents the six most frequently recorded primary use types in state owned buildings and active leases of non-state owned space. (See Appendix B for a listing of all 44 reported primary use categories.)
We found significant problems with the primary use data that limited our ability to analyze how state owned buildings and leased non-state properties are used. For example, no primary use value is entered for approximately 23% of the BLLIP records. A large majority of these blank primary use values exist in state owned building records (3,792 of 3,859), though some records for leases of nonstate owned space have blank values as well (67). Among state entities with blank primary use values, the Department of Natural Resources accounts for approximately half and the Board of Regents approximately one-quarter. (See Appendix C for a list of all entities with blank primary use values.)
Among non-blank primary use categorizations, "office" is the most common with 1,715 total records (857 state owned buildings and 858 active leases of non-state owned space), "storage building warehouse" is the second largest category with 1,687 records, and "open sheds and pavilions" is the
State Space Management Policies
9
third largest category with 1,197 records. The other primary use categories (which account for 6,864 records) include a wide range of primary uses, such as radio towers, dormitories, and laundry facilities.
Exhibit 5 State Space By Primary Use Description
(As of August 2011)
39 Other Use Types (6,225 Buildings/639 Leases)
41.0%
23.1%
Blank (3,792 Buildings/67 Leases)
.231 .103
10.3%
Offices (857 Buildings/858 Leases)
.409
.101
.072 .044
.04
SOURCE: Building, Land, & Lease Inventory of Property, SPC
10.1%
Storage Building Warehouse (1,669 Buildings/18 Leases)
7.2% 4.4% 4.0%
Open Sheds or Pavillons (1,197 Buildings)
Residences (648 Buildings/96 Leases)
Maintenance Shops (662 Buildings)
State Entities Occupying State Owned and Leased Space BLLIP records identified 48 state entities that either have custody of a state owned building and/or have an active lease agreement for non-state owned space. Exhibit 6 presents the six entities with the highest number of state owned and leased non-state owned properties. (Appendix D provides details on the number and occupancy status of properties by state entity.)
As shown in Exhibit 6, the Department of Natural Resources (DNR) holds the largest number of state properties: 4,997 buildings and 248 leases. The Board of Regents (BOR) holds the second largest number of state properties: 3,406 buildings and 333 leases. As previously noted, BOR is exempt from SPC's authority and may acquire, dispose, lease, and manage space independently from SPC oversight. The Department of Corrections (DOC) holds the third largest number of state properties: 2,137 buildings and 117 leases. In addition, the Georgia Building Authority (GBA) (not
State Space Management Policies
10
shown in Exhibit 6) is the primary building owner and lease manager for property near Capitol Hill.
According to BLLIP records, GBA owns 54 buildings and manages 7.5 million square feet. GBA leases
space to state entities and manages these leases (via memorandums of understanding) independently from SPC.5
Exhibit 6 Owned and Leased State Space By Entity
(As of August 2011)
42 Other Entities (2,206 Buildings/887 Leases)
18.5%
31.4%
Department of Natural Resources (4,997 Buildings/248 Leases)
.314 .224
22.4%
State Board of Regents (3,406 Buildings/333 Leases)
.184
.135 .07
.034
.039
SOURCE: Building, Land, & Lease Inventory of Property, SPC
13.5%
Department of Corrections (2,137 Buildings/117 Leases)
7.0% 3.9% 3.4%
Department of Transportation (1,165 Buildings/1 Lease)
State Forestry Commission (637 Buildings/19 Leases)
Technical College System (502 Buildings/73 Leases)
Locations With State Owned and Leased Space State owned and leased properties are distributed throughout the state. Exhibit 7 presents the distribution of state owned buildings and active leases of non-state owned space by city and occupancy status. The state owns and/or leases property in all 159 counties and in 398 Georgia cities. In addition, the state owns or leases 61 properties outside of Georgia (e.g., Tokyo, Japan).
5 In most instances throughout this report, GBA-managed state owned space is reported with GBA as the entity with administrative custody, not the entity leasing the space. Exceptions are noted.
State Space Management Policies
11
Among Georgia cities, Athens has the most properties overall, with 741. Atlanta has the largest number of leases, with 104.
Exhibit 7
Owned and Leased State Space by City
As of August 2011
State Owned
Non-State Total Properties Owned
City
State Non-State Indicates is Unknown Buildings
Occupied Occupied Unoccupied1 Occupancy Total
Leases Number %
Athens
589
0
93
5
687
Atlanta
274
2
151
11
438
Milledgeville
169
0
272
4
445
Savannah Reidsville
180
0
116
39
335
3
0
319
32
354
Tifton
254
0
63
18
335
Augusta
214
0
56
7
277
Eatonton
198
0
59
18
275
Valdosta
99
0
120
9
228
Waycross
47
0
177
11
235
Macon
79
0
121
9
209
Elberton
27
4
176
1
208
Columbus
84
0
67
16
167
Sapelo Island
50
0
147
0
197
Helen
102
0
77
7
186
Griffin
108
0
44
21
173
Rutledge
119
0
49
12
180
Rome
96
0
68
1
165
Cartersville
19
0
134
8
161
Brunswick
26
1
72
57
156
Statesboro
118
0
23
1
142
Cordele
19
0
137
6
162
Pine Mountain
6
0
161
0
167
Winder
6
1
150
0
157
Stone Mountain
3
119
34
2
158
Carrollton
86
0
44
14
144
Helena
14
0
119
12
145
Albany
88
1
25
2
116
Hardwick
0
0
135
9
144
Forsyth
13
0
124
1
138
Blairsville
78
0
50
2
130
Jackson
10
0
98
26
134
Dahlonega
56
0
38
12
106
Americus
76
0
24
8
108
Garden City
4
0
72
43
119
Warm Springs
13
0
24
79
116
Chatsworth
11
0
93
3
107
Dawsonville
12
0
95
0
107
Lavonia
5
0
96
0
101
Crawfordville All Others2
87 1,978
0
12
13
4,691
1
100
356
7,038
Grand Total
5,420
141
8,626
863 15,050
1At least one of two occupancy fields in BLLIP had a "0" entered.
2379 cities have less than 100 properties each; 21 of these cities are outside of Georgia.
Source: Building, Land, & Lease Inventory of Property, SPC
54 104
34 44
8 21 24 10 29 13 37 11 38
1 1 9 0 13 16 19 31 10 0 9 5 18 0 28 0 5 12 5 19 15 0 2 10 5 2 1
1,015
1,678
741 542 479 379 362 356 301 285 257 248 246 219 205 198 187 182 180 178 177 175 173 172 167 166 163 162 145 144 144 143 142 139 125 123 119 118 117 112 103 101
8,053
16,728
4% 3% 3% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
48%
100%
State Space Management Policies
12
Additional Information on State Owned and Leased Office Space Office space represents the space use category with the most potential for cost savings. Office space is the primary use category with the largest number of BLLIP records, and office space is the largest primary use category for leased property by number, square footage, and total cost. In addition, office space is readily available in the private marketplace when compared to other property categories that have specialized use (e.g., dormitories, laboratories) or location (e.g., located within a state prison or within a state park).
According to BLLIP records, 22.3 million square feet are designated as office space for state entities. Thirteen million square feet are located in state owned buildings, and 9.3 million square feet are located in non-state owned leased property. Expressed as a percentage, 58% of the space with a primary use of office is located in state owned buildings and 42% is located in non-state owned leased property. (See Exhibit 8.) Non-state owned office space accounts for approximately $138.5 million in lease costs annually.
Exhibit 8 Distribution of State Office Space
(As of August 2011)
Non-State Owned State-Occupied (9,271,857 Leased Square Feet)
41.6%
State Owned (58.4% - 13,021,114 Square Feet)
.324
32.4%
State Occupied (7,217,218 Square Feet)
.0111.1%
Unknown Occupancy (237,545 Square Feet)
.415
Indicates Building is
.25
25.0%
Unoccupied1
(5,566,351 Square Feet)
1At least one of two occupancy fields in BLLIP had a "0" entered. SOURCE: Building, Land, & Lease Inventory of Property, SPC
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Significant deficiencies with BLLIP occupancy data (such as inaccurate or missing values for occupancy status, total occupant number, and total capacity) prevented us from conducting a comprehensive analysis of key cost and efficiency performance indicators for state office space such as occupancy rates, square footage per occupant, and cost per occupant. BLLIP records indicated that approximately 43% of state owned office buildings (by square footage) were unoccupied. However, our limited review of state owned buildings reported on BLLIP as unoccupied identified several prominent buildings that were actually occupied. For example, BLLIP data for the James H. "Sloppy" Floyd building and the Judicial building on Capitol Hill indicated that the buildings were unoccupied; however, a 2010 SPC utilization report for the buildings cited an occupancy rate of approximately 80% for the Floyd building and 90% for the Judicial building. In all, we identified 13 office buildings in the Capitol Hill area (encompassing 3.2 million square feet) that were leased to state entities but had BLLIP records indicating they were unoccupied. In addition, nearly all (821 of 858) of the BLLIP records of non-state owned leased office property had no value indicating the number of occupants in the space (a figure necessary to analyze occupancy rates, square feet per occupant, and cost per occupant). In instances when SPC was the leasing agent, BLLIP records had no value indicating the number of occupants for 655 of 689 leases.
BLLIP records identified 45 state entities that have administrative custody of state owned office buildings and/or have office lease agreements with non-state entities. Exhibit 9 shows the six entities with the most office space by square footage. (See Appendix E for a list of all entities and details on the occupancy status and square footage of office property.)
As shown in Exhibit 9, the Board of Regents (BOR) accounts for nearly one-third of the state's square footage used for office space. (As previously noted, BOR is exempt from SPC's authority and may acquire, dispose, lease, and manage space independently of SPC oversight.) The Georgia Building Authority (GBA) accounts for 17.1% of the state's square footage used for office space, which is comprised of 20 GBA-owned buildings in the Capitol Hill area. The Department of Human Services (which is required by state law to maintain an office in every county) accounts for 13.7% of the state's square footage used for office space.
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State owned office buildings and/or non-state owned leased offices are located in all 159 Georgia counties and in 264 Georgia cities. In addition, BLLIP identified 12 leases for office space located outside of Georgia. The six cities with the highest office square footage are shown in Exhibit 10. (See Appendix F for occupancy status and square footage by city).
As shown in Exhibit 10, BLLIP records indicate that Atlanta has the largest amount of office space by square footage (40.8%). Athens has the second largest amount of state office space (7.2%); these are largely properties associated with the University of Georgia.
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Exhibit 10
Owned and Leased
State Office Space By City
269 Other Cities (9,192,356 Square Feet)
(As of August 2011)
41.2%
.408
.412
.072
.033 .029 .023 .023
SOURCE: Building, Land, & Lease Inventory of Property, SPC
40.8%
Atlanta (9,095,888 Square Feet)
7.2%
Athens (1,611,375 Square Feet)
3.3% 2.9% 2.3% 2.3%
Augusta (740,340 Square Feet)
Milledgeville (639,339 Square Feet)
Savannah (509,847 Square Feet)
Decatur (503,826 Square Feet)
Cost of State Owned and Leased Space
State Owned Space Costs BLLIP records do not contain sufficient data to calculate the cost of state owned space. As a result, SPC is unable to track total cost of occupancy for state owned buildings. Consequently, the examination team was unable to identify or evaluate costs for state owned buildings.
Total Cost of Occupancy (TCO) analysis is a method used to establish and track the cost to occupy a property. TCO analysis requires data such as general operating expenses, utilities, and financing costs for a building or facility. The benefits of compiling and calculating TCO data are numerous. According to a recent study conducted by the Wisconsin Building Commission, TCO analysis provides the necessary data framework for "occupancy cost accounting, performance measurement, cost comparison, and benchmarking for strategic and facilities planning processes." SPC staff report that they have made inquiries with the State Accounting Office and the Governor's Office of Planning and Budget to determine whether data required for TCO analysis is available electronically and by
State Space Management Policies
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facility. According to SPC, electronic data necessary to calculate TCO are not currently available at the facility level from a single data source, such as the state's accounting system.
Leased Space Costs A standard method of calculating and comparing lease costs is by converting them into a comparable metric of "cost per square foot" (psf). BLLIP records contain annual cost data for leased property in a form sufficient for analysis; however, users should consider the landlord type when evaluating lease costs since lease costs may not reflect true market rates when the landlord is a government (state, federal, or local). For example, the Georgia Department of Public Safety rents 10 state owned office buildings to the Department of Driver Services for $1.
Exhibit 11 presents the per square foot lease costs for state entities with at least 10 leased office properties. The data is divided into three categories based on landlord type: another state government entity,6 a non-state government entity, or a private landlord. As shown in Exhibit 11, the average statewide rental cost psf by landlord type is $11.73 to state government landlords, $13.11 to other public sector landlords, and $15.52 to private landlords. This analysis includes exempt state entities such as the Board of Regents and the Department of Labor.
Exhibit 11
Office Space Rental Charges by Entity1,2
As of August 2011
State Owned
Non-State Owned
State Owned and Leased to State Entity
Leased from Public Sector3
Leased from Private Sector
Entity Name
Square Number Feet Total
Rent Total4,5
Rent Per Square Foot6
Square Number Feet Total
Rent Total5
Rent Per
Square Number Square
Foot6
Feet Total
Rent Total5
Rent Per Square Foot6
Corrections, Department of
1 89,791 $ 1,116,105 $ 12.43
35 67,878 $ 362,089 $
5.33
68 333,708 $ 4,464,476 $ 13.38
Defense, Department of
13
36,941 $ 609,487 $ 16.50
Driver Services, Department of
14 29,554 $ 86,776 $
2.94
32 149,616 $ 623,573 $
4.17
9 127,861 $ 2,055,212 $ 16.07
Governor, Office of the
10 104,907 $ 1,334,026 $ 12.72
2
7,143 $ 153,186 $ 21.457
Human Services, Department of
3 325,354 $ 4,149,251 $ 12.75
88 1,693,783 $ 25,268,354 $ 14.92
146 1,371,068 $ 19,180,957 $ 13.99
Judicial Branch of Georgia
11 128,307 $ 1,655,382 $ 12.90
2
1,365 $ 12,554 $
9.20
4
28,188 $ 502,208 $ 17.82
Juvenile Justice, Department of
1 13,206 $
1$
0.00
23 45,006 $ 318,296 $
7.07
80 363,349 $ 5,426,326 $ 14.93
Labor, Department of
3 15,942 $ 235,484 $ 14.77
80 773,973 $ 13,293,637 $ 17.18
Natural Resources, Department of
5 121,769 $ 1,497,726 $ 12.30
8 167,555 $ 3,174,940 $ 18.95
Pardons and Paroles, State Board of
5 56,106 $ 606,303 $ 10.81
1
3,621 $ 53,715 $ 14.83
39 167,669 $ 2,105,665 $ 12.56
Public Health, Department of
6 34,133 $ 464,394 $ 13.61
4
37,452 $ 499,338 $ 13.33
Public Safety, Department of
29 87,434 $ 281,715 $
3.22
9 67,512 $ 134,051 $
1.99
2
4,058 $
71,564 $ 17.64
Regents, State Board of
5 91,936 $ 1,234,042 $ 13.42
1
2,221 $ 11,771 $
5.30
68 2,247,710 $ 36,036,988 $ 16.03
Revenue, Department of
2 106,076 $ 1,318,530 $ 12.43
12 507,743 $ 7,979,454 $ 15.72
Veterans Service, Department of
1 11,425 $ 142,008 $ 12.43
37 23,079 $ 23,357 $
1.01
8
6,571 $
68,342 $ 10.40
All Others8
38 1,633,098 $ 19,401,249 $ 11.88
13 119,020 $ 1,645,895 $ 13.83
61 867,692 $ 13,754,925 $ 15.85
Grand Total
125 2,798,964 $ 32,823,112 $ 11.73
250 2,223,176 $ 29,153,533 $ 13.11
604 7,048,681 $ 109,376,704 $ 15.52
1One lease in owned property (Secretary of State) and 4 leases in non-state owned properties (Labor, Regents (2), and Veterans Service) do not include square footage and were not included in
this table.
2Both SPC-administered and exempt agency-administered leases are included in this table. 3Includes the U.S. government and local governments.
4Rent in this category represents what the entity "pays" for rent and is not necessarily representative of the cost of the building. The rent (including utilities and janitorial) is $1 for approximately 20%
of these records.
5Rent shown includes the fields Rent Amount, Utilities, and Custodial. 6Rent Per Square Foot is Rent Total divided by Square Feet Total.
7The average for the Office of the Governor is somewhat skewed by OPB's lease in Washington, DC.
834 entities have less than 10 offices in these categories.
Source: Building, Land, & Lease Inventory of Property, SPC
6 State entity leases of state owned office space are included in this section for comparison purposes. However, the lease records are excluded elsewhere in the report, since the buildings are captured separately under the "state owned" category totals.
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Exhibit 12 presents the per square foot lease costs for cities with at least 10 leased office properties. Atlanta has the largest amount of state owned office space leased to state entities. This space is primarily GBA-owned space in the Capitol Hill area. In fiscal year 2011, GBA charged state entities $12.43 per square foot for standard office space and $14.23 for premier office space. Premier office spaces, such as the Health Building and the Trinity Washington Building, are few in number and have undergone major renovation more recently than standard office space. The private sector leases provide an indication of what the state pays private landlords in various cities. However, these rates may not equal average market rates because the leases may not be representative of the overall market, due to the location and quality of state space and the small number of leases in some cities.
Exhibit 12
Office Space Rental Charges by City1,2
As of August 2011
State Owned
Non-State Owned
City
State Owned and Leased to State Entity
Number
Square Feet Total
Rent Total4,5
Rent Per Square Foot6
Leased from Public Sector3
Number
Square Feet Total
Rent Total5
Rent Per Square Foot6
Number
Leased from Private Sector
Square Feet Total
Rent Total5
Rent Per Square Foot6
Americus
8 50,720 $ 368,481 $ 7.27
3
16,000 $ 142,084 $
8.88
Albany
3 111,871 $ 1,937,294 $ 17.32
8
52,470 $ 614,277 $ 11.71
Atlanta
69 2,606,726 $ 32,606,448 $ 12.51
4 192,900 $ 1,891,834 $ 9.81
52 2,724,698 $ 44,713,200 $ 16.41
Athens
2
5,547 $ 19,436 $
3.50
1 34,840 $ 246,433 $ 7.07
26 297,071 $ 4,976,996 $ 16.75
Augusta
1
1,478 $
1$
0.00
4 85,257 $ 1,217,554 $ 14.28
12
82,891 $ 1,030,740 $ 12.43
Brunswick
1
1,876 $
5,155 $
2.75
2
1,215 $
2 $ 0.00
10
71,402 $ 929,786 $ 13.02
Cartersville
1
980 $
1$
0.00
2
1,481 $ 8,305 $ 5.61
8
54,900 $ 838,398 $ 15.27
Columbus Dalton
1
5,578 $ 43,300 $
7.76
1
5,040 $ 10,816 $ 2.15
19 185,989 $ 2,596,490 $ 13.96
11
73,491 $ 970,758 $ 13.21
Decatur
5 137,578 $ 2,726,280 $ 19.82
9 173,935 $ 3,255,686 $ 18.72
Dublin
4 12,992 $ 127,106 $ 9.78
9
58,479 $ 714,623 $ 12.22
Forsyth
11 28,310 $
7,051 $
0.25
2
7,314 $ 104,788 $ 14.33
Gainesville
1
2,858 $
574 $
0.20
2 16,696 $ 298,369 $ 17.87
11
79,151 $ 1,281,906 $ 16.20
Macon
2
980 $
2$
0.00
6 206,059 $ 3,065,890 $ 14.88
16 120,210 $ 1,529,244 $ 12.72
Marietta
1
4,215 $ 6,746 $ 1.60
12 136,477 $ 2,325,688 $ 17.04
Moultrie
4 50,957 $ 829,097 $ 16.27
6
11,038 $ 119,000 $ 10.78
Newnan
1
2,384 $ 36,235 $ 15.20
5 24,899 $ 128,909 $ 5.18
4
35,648 $ 464,698 $ 13.04
Savannah
1 90,000 $
1$
0.00
4 11,805 $ 48,234 $ 4.09
9 272,648 $ 5,563,070 $ 20.40
Statesboro
1
1,800 $
1$
0.00
4 20,082 $ 408,371 $ 20.34
8
32,285 $ 321,773 $
9.97
Tifton
1
3,200 $ 12,000 $
3.75
6 37,862 $ 343,066 $ 9.06
8
38,856 $ 481,845 $ 12.40
Valdosta All Others7
3
4,253 $
4,083 $
0.96
29 42,994 $ 88,824 $
2.07
2 27,000 $ 318,601 $ 182 1,189,707 $15,172,147 $
11.80 12.75
8
62,778 $ 768,530 $
353 2,460,950 $ 35,633,126 $
12.24 14.48
Grand Total
125 2,798,964 $ 32,823,112 $ 11.73
250 2,223,176 $29,153,533 $ 13.11
604 7,048,681 $ 109,376,704 $
1One lease in owned property (Atlanta) and 4 leases in non-state owned properties (Athens, Macon, Millen, Sandersville) do not include square footage and were not
included in this table.
2Both SPC-administered and exempt agency-administered leases are included in this table. 3Includes the U.S. government and local governments.
15.52
4Rent in this category represents what the entity "pays" for rent and is not necessarily representative of the cost of the building. The rent (including utilities and janitorial) is $1 for
approximately 20% of these records. 5Rent shown includes the fields Rent Amount, Utilities, and Custodial. 6Rent Per Square Foot is Rent Total divided by Square Feet Total 7196 cities have less than 10 offices each in these categories. Of the 564 office leases in these cities, approximately 1/4 (159) are local DFCS offices.
Source: Building, Land, & Lease Inventory of Property, SPC
Problems with BLLIP Data
Improvements to the completeness and accuracy of BLLIP data are necessary to enable the State Properties Commission to fulfill its function as the state's real estate portfolio manager. Missing and incorrect values for key fields in BLLIP limit SPC's (and the examination team's) ability to determine the primary use of many properties, whether or not the property is occupied, the percentage of usable space that is/is not utilized or occupied, and the cost of the space.
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SPC needs to provide more comprehensive management oversight and control of BLLIP data. While SPC is responsible for maintaining the BLLIP database, primary responsibility for the accuracy and completeness of BLLIP inventory records remains with the state entities that hold state buildings and entities that manage leases independently of SPC. Of the 15,050 state owned buildings and 1,678 leases of non-state owned space in BLLIP, SPC is responsible for maintaining data for 1,010 leases (6% of BLLIP records). As of June 2011, approximately 775 employees from more than 50 state entities have permission to enter data into BLLIP.
SPC has not established quality control guidelines for entities that enter data into BLLIP to reduce varying data entry procedures and varied interpretations among users. SPC manages the BLLIP data repository by issuing access privileges (i.e. name and password) to employees of state entities, providing training to state entities and users who request it, and working with the Carl Vinson Institute to maintain the data system and resolve technical issues. Entities submit edited records to SPC personnel, who "approve" them in the system. However, the approval process does not include detailed reviews or verification of the data. SPC does not conduct periodic data quality reviews to identify obvious errors and gaps in the data.
To address holes and gaps in BLLIP data, an Executive Order and other communications have been issued to direct state entities to complete and update BLLIP data. In March 2010, an Executive Order required all state entities to begin completion of all fields in BLLIP by July 2010 (with particular attention to occupancy fields). In April 2010, SPC sent a memo to all state agency heads requesting agency BLLIP records be completed and updated to allow SPC "to identify surplus and underutilized properties, and to provide more cost efficient use of existing work space." Entity compliance was poor, and in August 2011, the Office of the Governor, together with the Office of Planning and Budget and the State Property Officer, issued another memo requesting record completion. This memo emphasized the importance of utilization and condition data "in developing the annual budget, recommending capital expenditures or outlays, and anticipating revenues to the State Treasury." SPC has not specifically targeted the handful of agencies that represent the majority of missing and inaccurate data.
The inadequate controls and management oversight have resulted in significant problems with BLLIP data. Specific problems with BLLIP data fields identified during this examination are summarized below:
Problems with Occupancy Data For 5.7% of buildings and 95.8% of leases in BLLIP, information was not available to accurately identify if the facility was vacant or occupied because there was no value in the applicable occupancy fields. In addition, 57.3% of buildings and 1.4% of leases in BLLIP data indicated facilities were unoccupied; however, many of those had facility categories (primary use categories) for which occupancy was not an appropriate factor. Examples include radio towers, storage sheds, boating facilities, rest stations, and water treatment plants. (See Appendix B for a complete list of primary use categories.)
Problems with Primary Use Data For 25.2% of buildings and 4% of leases in BLLIP, information was not available to identify the type of facility because the "primary use" field had no value entered. In addition, two primary use options comprising another 2% of the buildings in BLLIP had a primary use designation that was not a type of use
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("vacant" and "leased to a non-state entity"). Finally, our review of the 3.7% of buildings and 1.1% of leases classified as "other use" identified that this classification was used more often than necessary. A sample of 10% of properties classified as "other use" identified that 14% did not have a written use specified as required and 50% appeared to fit into one of the existing categories.
Problems with Occupancy Rate Data For Office Space For 66.9% of the office buildings and 100% of office leases in BLLIP, information was not available to identify the occupancy rate of the facility because one or more of the required fields were blank.
Problems with State Owned Buildings Cost Data There is no information on building cost for any of the 15,050 state owned buildings in BLLIP. Therefore, SPC cannot analyze the economy of these facilities in comparison to each other and to properties leased from non-state entities.
Recommendations For Improvement In order to effectively manage the state's real estate portfolio, SPC needs to improve the accuracy and completeness of the BLLIP database. SPC should:
o establish quality control guidelines and review procedures for BLLIP data entry to reduce varying procedures and field interpretations among the various users and entities with permission to edit BLLIP records.
o strengthen information system controls for critical fields in BLLIP to prevent entry of erroneous values and make certain fields mandatory for record submission, particularly those related to use, occupancy, cost, and square footage.
o conduct periodic data quality reviews to detect obvious errors and blank values in the data.
o work directly with the state entities that represent the majority of missing and inaccurate data to improve data completeness and accuracy.
o add a field to identify unused (vacant) versus used space and limit the use of occupancy rate fields to the primary use categories for which occupancy rate calculations are relevant (i.e. offices and not radio towers, storage buildings, etc.).
o determine the most efficient and effective way to collect and maintain data necessary to calculate costs associated with state owned buildings.
Agency response: SPC noted that to improve quality control and to reduce field interpretations related to data entry in BLLIP, it has reviewed the BLLIP user list and provided data entry training on numerous occasions. It also noted that it will develop more detailed written guidance that will be effective in July 2012 and that training will continue to be offered annually. It also indicated that it would review information system controls to reduce error rates in BLLIP data and identify mandatory fields for record submissions. Technical upgrades to BLLIP to implement these improvements will be made by July 2012. SPC noted that the occupancy fields in BLLIP were added in 2010 and that information on the number of occupants for SPC-managed leases is available in original lease request information contained in its lease files. While updates on occupancy figures were not previously required, SPC noted that it will start requiring annual occupancy updates effective January
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2012. In addition, SPC noted that it has added information on primary use for the leases it manages that did not have primary use information in BLLIP. SPC reported that it has contacted agencies with missing BLLIP data and is meeting with the eight agencies that have most of the missing data. SPC also reported that it is working on developing a new field in BLLIP to identify unused (vacant) space. Finally, SPC noted that it has been working on identifying building costs for two years and will continue to seek a TCO solution. It specifically noted that information on costs is not available in BLLIP because it is a data warehouse/inventory tool and not an asset management application. It also noted that it is working with GEFA to obtain data on total utility costs statewide and the number of utility meters the state owns to determine if additional investment in meters is needed. In addition, SPC noted that accurate TCO information will require an investment in metering, amending accounting systems, and changing how agencies categorize operating costs.
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21
What polices does the state use in determining leased property location and space? Please comment on any areas where an agency could relocate to a lower cost area and continue to serve clients.
Lease Policies Impacting Costs Policies related to facility location, facility quality, space standards, and methods for lease cost data review can all impact total lease costs. The two primary factors impacting lease costs are the property's cost per square foot and the amount of spaced leased by an entity. The lease cost per square foot of a facility is, in turn, influenced by both the location of the facility and the quality (or class) of the facility. For SPC-controlled leases, the area leased is determined by the space needed for an entity's employees and the space needed for other activities performed at a facility. In addition, systematic review of lease cost data can help identify potential opportunities for cost savings; SPC's policies related to these factors that may impact state lease costs are described below.
State Property Commission's Authority: SPC has the authority to provide leasing assistance to non-exempt state entities that request administrative space. It should be noted that exempt entities (including the Board of Regents, the Department of Labor, and various authorities and commissions) execute leases independently of SPC and this review did not examine the policies of exempt entities.
Non-exempt state entities submit a request for "space actions" (e.g., new space, lease renewal, lease cancellation, or lease renegotiation) to SPC's Space Management Division. The Space Management Division establishes the space needs of the requesting entity by analyzing information in the space utilization questionnaire, reviewing the inventory of state owned properties, and concluding whether appropriate space is available in state owned property. If the space management unit determines that state owned property is not available or not appropriate given the requesting entity's geographic or core-business needs, the request is forwarded to SPC's Transaction Management Leasing Division and a private lease is sought. As discussed on page 27, we found that exempted state entities had a higher proportion of higher-cost leases.
Property Location Policies Preference for State Owned Space: It is typically more cost effective to utilize existing state owned space than to lease property from private owners. SPC has established a written policy requiring that vacancies in state owned buildings should be given priority over privately owned space when locating state entities. Specifically, the policy requires that SPC will (a) review the inventory of state owned space as part of the space assignment process and (b) assign an entity to state owned space before leasing additional property in the private market if the state owned space satisfies both the "programming needs" and "geographic requirements" of the entity.
SPC has not, however, established procedures detailing the methods staff should use to conduct a review of state owned properties to identify potential vacancies or back-fill opportunities. SPC space management staff indicated that they first review records within the BLLIP inventory database and then conduct follow-up communications (as necessary) with state entities to determine whether or not state space is appropriate and available for
State Space Management Policies
22
locating the requesting entity.7 As noted in the previous finding, the poor data quality of primary use and occupancy status/rate for BLLIP records of state owned buildings significantly limits BLLIP's value for evaluation of the state owned space inventory. After a review of BLLIP data is conducted, staff indicate that they communicate with state entities with property in the general geographic area to determine whether opportunities exist to backfill under-utilized space.
Due to a lack of documentation maintained in the lease files, we were unable to confirm whether staff executed the methodologies reported. We reviewed all requests submitted to SPC for new space during fiscal year 2011 that resulted in locating an entity into a space. We found no consistent documentation of the analytical methods staff report that they conduct in inventorying existing state owned space. We did not find evidence of SPC backfilling state owned property. We did find evidence of SPC directing a requesting entity to GBAowned buildings. We also found instances when SPC co-located requesting entities into a single leased location. We were unable to determine the procedures or methodology used to make any of these decisions, however, due to a lack of documentation in the lease files.
Property Location Policies Requested Geographic Area: SPC has a written space demand policy that states that it will consider the programming needs and "any geographic requirements" necessary for the entity requesting space to provide services. SPC personnel indicate that they communicate with the requesting entity early in the search process to understand the entity's core business and geographic requirements. A requesting entity's geographic requirements could include things such as close proximity to Capitol Hill, an interstate highway, or other state offices.
SPC has not established formal policies or procedures to evaluate the merits of the requesting entity's stated geographic requirements. In addition, SPC staff indicated that no informal evaluation of the merits of a state entity's stated geographic requirements is conducted either. As such, the general geographic area within which SPC begins a search for space is determined by the self-reported geographic requirements of the requesting entity.
Property Location Policies Offering Multiple Alternatives: SPC has established a goal to provide a requesting entity with at least three potential properties to consider when available. However, SPC has not established a policy or procedure detailing the resources or the methods leasing staff should use to conduct a search for property. SPC leasing staff indicated that they use publicly-available real estate databases to initiate a search for property and may rely on prior knowledge of the geographic area under consideration. In addition, staff report that they may communicate with knowledgeable real estate persons in the area under review. SPC leasing staff indicated that they may visit the potential sites with the state entity requesting space to help make determinations about the appropriateness of the space. However, leasing staff are not required to maintain documentation of their methods or to justify why the lowest cost property was not selected.
We reviewed all requests submitted to SPC for new space during fiscal year 2011 that resulted in locating an entity into a space. We found no consistent documentation of the analytical methods staff report for identifying available properties in the geographic area of
7 If the space under consideration is managed by the Georgia Building Authority, SPC does not rely on BLLIP records but instead relies on vacancy reports maintained by the GBA.
State Space Management Policies
23
interest, the criteria used to select properties offered to the requesting entity, or justifications if the lowest cost property was not selected.
Property Quality (or Building Class) Policies: According to SPC staff, as a general rule, state agencies should not be leasing "premium" quality office space due to the high cost typically associated with it. However, SPC has not established formal, written policies restricting state agencies' location in premium space or outlining the steps necessary to justify exceptions to this policy. "Premium" space includes buildings located in prestigious areas and/or using above-standard materials, workmanship, and finishes that typically result in higher lease payments. Neither BLLIP records nor SPC lease files contain data identifying the relative quality or class of space leased by state entities. As a result, we could not specifically identify state entities that may be located in premium class space or evaluate if the premium class space was justified.
Property Space Standards Policies: SPC has established written space standards for state owned or leased office workspace that define the square footage appropriate for various position categories (e.g., manager, professional staff). (Appendix G provides the SPC space standards.) As part of the request for space action, state entities report the number and position category of current (and projected future) employees, as well as any client or ancillary space needs (e.g., bathrooms, storage rooms, conference rooms, break rooms). SPC uses this data to tabulate an approximate total square footage space requirement for the requesting entity. State law gives SPC the authority to manage the use of administrative space, which includes the ability to establish and enforce space standards and assign space based on these space standards. However, SPC does not have a written policy that requires staff to document whether or not all applicable space standards were met when locating a state entity, and due to data access limitations, we were unable to determine the degree to which SPC adheres to its space standards.
We attempted to analyze whether SPC complies with its space standards in all applicable instances. However, the data necessary to analyze space standard compliance (including square footage used for administrative space and position categories) is not available as an electronic data set, and the time required to manually review and extract the data for the 689 office space leases that SPC currently manages prevented us from compiling a complete data set.
As a result of this data access constraint, we conducted a limited review of SPC's compliance with space standards for 10 requests submitted to SPC for new space during fiscal year 2011 that resulted in locating an entity into a space. To determine whether SPC complied with its space standards, we assessed whether the state entity was placed in a space that was no greater than 10% larger than the space identified from the space management unit's space standard report. Our review of the 10 files identified that seven were in compliance with space standards and three were not in compliance with the standards. The three files that were not in compliance did not have any justification for deviating from the standards.
Policies for Periodic Reviews of Lease Costs in Geographic Areas: A metropolitan strategic plan (also known as metro-plan) is a systematic study of the state's inventory of state owned and leased property within a limited geographic area (i.e. a city or county). The overall goal of a metro-plan is to evaluate local real estate markets to identify opportunities to consolidate space, renegotiate lease rates, or relocate state entities to more cost-effective locations. Metro-plans are labor intensive; however, they are an effective
State Space Management Policies
24
means to conduct a thorough and comprehensive analysis of an entire metropolitan area. Metro-plans require a real estate expert to conduct a physical inspection of properties and analyze local market lease rates. While SPC has no policies for implementing metro-plans, in the Commission for a New Georgia's 2010 Implementation Progress Reports 2004 2010, SPC indicated intentions to conduct a pilot metro-plan and noted the benefits of doing so:
SPC will conduct a pilot metro-plan to evaluate all state owned and leased space for state agencies in a defined geographical area. The purpose of such a plan is to assess the space needs of agencies and to determine the most cost efficient method to provide the space. Often, the results of such an analysis lead to the consolidations of leases, colocation of state agencies sharing program requirements and the recommendation to dispose of surplus and/or underutilized real property. The primary goal is to improve asset management and to increase utilization by reducing costs to the state.
We found that SPC has made use of a metro-plan in the past. In 2007, the State Properties Commission contracted with a private real estate consultant to conduct a metro-plan of Savannah for a cost of approximately $60,000. The report took approximately five months to complete and identified the following potential cost savings and facility upgrade opportunities.
o Consolidations The consultant identified an opportunity to consolidate a state entity from three separate suites into a single suite and estimated a potential savings of $21,700 per year in rent costs.
o Relocations The consultant identified opportunities to relocate two state entity offices to improve space from sub-standard facilities and reduce total office space from approximately 28,000 square feet to 18,000 square feet. The consultant estimated that moving costs and tenant improvement costs would break even after 13 years, but that the move would result in a significant qualitative improvement for the entities from substandard office space.
o Renegotiations The consultant identified two rental rates that were greater than 10% higher than market rental rates and suggested that SPC review the cost effectiveness of these leases before renewing them. The consultant estimated an annual savings of approximately $500,000 per year from these renegotiations.
SPC implemented recommendations from the study, including consolidating office space and relocating state entities to improve work environments from sub-standard office space.
SPC staff indicated that they intend to complete metro-plans in the future, with one for the City of Decatur planned for the fourth quarter of fiscal year 2012. It is not clear whether additional staff are necessary to execute this policy goal. It should be noted that SPC staff did conduct a physical inspection of GBA-owned buildings in 2010 to evaluate opportunities to consolidate space.
Policies for Periodic Analysis of BLLIP Data: SPC does not have formal policies for periodically evaluating existing leases to identify potential cost savings. For example, SPC does not periodically collect local market lease
State Space Management Policies
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rates and compare them in aggregate to existing lease costs to identify high-cost property (by geographic region, state entity, or some other attribute). In the next section of this report, for example, we present the results of an analysis of high-cost lease records we identified with current BLLIP data.
Policies for Annual Lease Renewals: SPC has not created any policies or procedures for reevaluating lease costs when the lease comes up for renewal. A state entity may choose to have its lease renegotiated when it submits a space action form for annual renewals. In addition, SPC leasing agents indicated that they may also consider whether a lease cost seems too costly, but SPC has not created any policies or procedures to standardize the cost review process.
Policies for Multi-Year Leases: SPC is not permitted to enter into multi-year lease agreements due to restrictions imposed by the state Constitution (Article VII, Section IV, Paragraph VIII). However, SPC has indicated that multi-year lease agreements may offer opportunities to reduce rents by extending the term during which costs (such as tenant improvement costs) can be amortized and making the state a more attractive tenant for landlords.
Recommendations For Improvement The State Properties Commission needs to develop stronger policies and procedures related to the factors that impact the state's lease costs. Specifically, SPC needs to:
Consider requesting more statutory authority over leases negotiated by exempt entities. For example, SPC could provide independent oversight over high-cost leases that exceed defined limits and could work with agencies to establish parameters for reviewing costs.
Improve its analysis of backfill opportunities in state owned space before leasing private space. SPC should (a) establish policies and procedures to define staff requirements for assessing state owned property inventory and (b) require documentation of the analysis to be maintained as part of the lease file.
Write procedures explaining the goals and standards related to leasing. Specifically, SPC should establish procedures detailing the data collection and analysis techniques that staff should execute to identify private property for state entities to lease.
Adopt criteria to evaluate the merits of a requesting entity's stated geographic location requirements and adopt procedures to formally document SPC staff considerations of general geographic area (and the associated cost implications) as part of the lease file.
Obtain information on market lease rates for geographic areas throughout the state and establish procedures for evaluating market rates and including market rate evaluations in lease files.
Establish working definitions to classify the quality of space occupied by state entities. SPC should also require that state entities provide written justification for leases of "premium" class space and consider requiring formal SPC approval for leases of premium space.
Require that lease files include justification when space standards are exceeded by 10% or more.
State Space Management Policies
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Develop a strategy for performing metro-plans in the future. The strategy should prioritize locations with the greatest potential for cost savings.
Establish policies and procedures for conducting periodic, systematic analysis of BLLIP data records to identify areas for potential cost savings.
Develop a strategy for reevaluating lease costs when leases come up for renewal. The strategy should prioritize leases with the greatest potential for cost savings.
Determine cost savings that might result from executing multi-year lease agreements, including the tenant improvement costs that will be amortized over the term of a multi-year agreement.
Agency response: SPC noted that it would modify its internal tracking system to include two check boxes to document staff consideration of vacancies in state owned space and other back-fill opportunities, which will be effective in January 2012. It also reported that it would develop new policies related to presenting multiple possible locations to agencies that will be published in January 2012. The new policies will provide that leasing staff will make a recommendation regarding location and the agency must provide justification in writing if the recommendation is not accepted. Regarding geographic location, SPC noted that it relies on the agency to determine the best location that will serve its program requirements. It also noted that it would continue to capture market rate data on an annual basis and that its Asset Management Division will use this benchmark to highlight leases for potential renegotiation. It was also noted that SPC reviewed the three leases that exceeded space standards and the variances were justified, and that the two leases that identified by the Savannah Metro Plan that were more than 10% greater than market rates could not be renegotiated. SPC also noted that it was working with a number of agencies to correct key fields in BLLIP and that written procedures for periodic review of BLLIP data will be in place and published in January 2012. New leasing procedures published in January 2012 will also clarify polices for reevaluating leases when they come up for renewal. Finally, SPC estimated that the state could save $37 million over a 10-year period if SPC had the ability to use multiyear leases (however, this estimate does not include potential savings related to exceptional tenant improvements).
Areas Where Lease Costs Could Be Lowered To identify leases where costs could be lowered, we analyzed BLLIP data records to identify "highcost" office leases which had higher than $20 per square foot costs. In addition, we identified higher than average costs in specific geographic areas by comparing available information on market lease rates (as provided by a private real estate firm through SPC) with current state rates for office leases from private property owners. The results of these reviews are presented below.
Highest Cost Per Square Foot Leases: Of the 940 office leases in BLLIP,8 we identified 68 leases of property that were for more than $20 per square foot (see Appendix H and Appendix I for listings of leases for more than $20 per square foot). Information is not typically maintained in lease files to justify relatively high lease rates, and SPC is not required to specifically approve higher than typical lease rates. We requested information from the leasing agencies with higher cost leases and received the comments provided in Exhibit 13 below. While these comments provide insight regarding justification for some of the higher lease rates, more detailed independent review and analysis of the factors impacting the individual lease costs are needed to adequately evaluate the justifications for the higher lease costs. We also noted that only 5.1%
8 Includes only offices in Georgia. Includes subleases that were excluded elsewhere in the report.
State Space Management Policies
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(39 of 761) of the leases executed by SPC had a cost greater than $20 psf, while 16.2% (29 of 179) of the leases executed by entities other than SPC had a cost greater than $20 psf. The significantly higher percentage of higher than $20 psf leases for which SPC is not the leasing agent may suggest that more independent oversight and review of leases could help to control lease costs at exempt entities. However, additional analysis of the specific justifications for the higher lease costs at these entities is needed.
Exhibit 13 Statements on Leases with >$20 PSF Costs
Department of Human Services
Ten of 16 high-cost DHS leases are "maintenance-in-lieu-of-rent" agreements that were-- according to SPC leasing agents--executed without SPC's oversight. Specifically, multiple high-cost leased properties now occupied by DHS were initially established as build-to-suit properties financed by the local county governments and occupied by DHS under maintenance-in-lieu-of-rent (MIL) agreements. For these properties, the state is not able to renegotiate lease costs until the bond issued to construct the property is satisfied. SPC officials currently have a list of DHS MIL properties with dates when the bond will be satisfied. SPC leasing agents indicate that once the bonds are paid, they intend to renegotiate rates. According to SPC, some are currently being renegotiated.
Non-Exempt Agencies
Department of Defense
According to SPC leasing agents, the DoD has a "geographic need" to be located near high-traffic retail locations to conduct recruiting. In addition, some of these properties were classified as "small offices," which were noted as a contributing factor for high-cost leases.
Department of Driver Services
SPC leasing agents indicated that the cost per square foot is artificially inflated because the land lot is likely included in the price. (Land lots are used for conducting driving tests.)
Department of Economic Development
According to SPC leasing agents, these properties host meetings for investment and tourism and represent the image of Georgia for the world. SPC leasing agents indicated agreement with the idea that the business needs of this entity justify higher-end expenditures for the properties.
Exempt Agencies
Board of Regents
BOR reported that many of the high-cost BOR leases either are private-public ventures, function as special purpose facilities (i.e. research facility), or have high-cost business needs (e.g., UGA's Executive MBA Center in Buckhead).
Department of Labor Source: Survey of State Entities
Agency did not verify the accuracy of lease component costs (e.g., utility or janitorial costs). Therefore, the examination team could not conduct analysis of trends and patterns in the cost per square foot for DOL leases.
Higher Than Average Costs In Specific Geographic Areas: We also performed a geographic analysis to identify relatively high-cost office leases in comparison with market rates specific to individual cities. Although SPC does not currently subscribe to any real estate data provider to collect city-specific market data, SPC did receive some information on current metro Atlanta area market rates from a private real estate firm during the examination. The results of the comparison are shown in Exhibit 14. (See Appendix J for details on the leases with above-market rates.)
Leases managed by exempt entities had a higher proportion of above-market rates than SPCmanaged leases. One-third of SPC leases analyzed (40 of 121) were above the market rate, while 46% of agency-managed leases (24 of 52) were above average market rates. This trend could signal that independent oversight by SPC contributes to lower rates. However, more analysis is needed since characteristics of office space held by these exempt entities (Board of Regents and Department of Labor) may justify higher lease rates.
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Exhibit 14
Comparison of State Lease Rates to Market Rates in Metro Atlanta
As of September 2011
Market Rate1
City
(Cost Per
Leases2
% of Leases Range of Lease Costs
Above
Above Market Rate
Square Foot) Below Above Total Market Rate From
To
SPC-Managed Leases
81
40
121
33%
Atlanta
$
20.22
23
6
29
21% $ 20.87 $ 29.28
Canton
$
23.40
1
1
0%
Cartersville
$
21.50
7
7
0%
College Park $
13.84
2
2
100% $ 16.07 $ 16.63
Conyers
$
15.25
1
4
5
80% $ 15.74 $ 23.07
Covington
$
13.32
4
4
0%
Cumming
$
16.98
2
1
3
33% $ 17.74 $ 17.74
Dallas
$
7.28
3
3
100% $ 12.37 $ 13.16
Dawsonville $
18.88
1
1
0%
Decatur
$
19.29
6
1
7
14% $ 22.28 $ 22.28
Douglasville $
16.59
1
1
0%
East Point
$
16.31
2
2
0%
Fayetteville
$
16.64
3
1
4
25% $ 19.52 $ 19.52
Gainesville
$
18.50
5
3
8
38% $ 19.79 $ 21.37
Hapeville
$
11.50
1
1
2
50% $ 19.19 $ 19.19
Jonesboro
$
13.82
3
1
4
25% $ 20.60 $ 20.60
Lawrenceville $
19.11
4
1
5
20% $ 22.76 $ 22.76
Lithonia
$
19.01
1
1
100% $ 24.37 $ 24.37
Marietta
$
14.33
2
7
9
78% $ 16.05 $ 28.99
McDonough $
17.52
3
3
0%
Morrow
$
18.59
2
2
0%
Newnan
$
17.76
2
2
0%
Norcross
$
13.77
1
1
2
50% $ 24.37 $ 24.37
Roswell
$
15.66
1
1
100% $ 23.28 $ 23.28
Stockbridge $
15.65
2
2
100% $ 23.50 $ 68.75
Tucker
$
16.63
1
2
3
67% $ 18.50 $ 18.57
Villa Rica
$
16.00
1
1
100% $ 17.30 $ 17.30
Winder
$
21.00
6
6
0%
Woodstock $
16.67
1
1
100% $ 16.69 $ 16.69
Agency-Managed Leases3
28
24
52
46%
Atlanta
$
20.22
11
12
23
52% $ 20.25 $ 32.62
Canton
$
23.40
1
1
0%
Cartersville
$
21.50
1
1
0%
College Park $
13.84
1
1
100% $ 18.52 $ 18.52
Conyers
$
15.25
1
1
0%
Covington
$
13.32
1
1
100% $ 14.80 $ 14.80
Cumming
$
16.98
1
1
100% $ 18.60 $ 18.60
Dallas
$
7.28
1
1
100% $ 14.00 $ 14.00
Decatur
$
19.29
1
1
2
50% $ 21.75 $ 21.75
Douglasville $
16.59
1
1
0%
Gainesville
$
18.50
3
3
0%
Jonesboro
$
13.82
1
1
100% $ 21.86 $ 21.86
Kennesaw
$
17.17
4
4
0%
Lawrenceville $
19.11
1
1
100% $ 21.66 $ 21.66
Marietta
$
14.33
3
3
100% $ 16.16 $ 19.84
Newnan
$
17.76
2
2
0%
Norcross
$
13.77
1
1
100% $ 22.51 $ 22.51
Peachtree City $
17.34
1
1
100% $ 22.57 $ 22.57
Tucker
$
16.63
3
3
0%
Grand Total
109
64
173
37%
1Market rates for metro Atlanta were provided to SPC by a national real estate firm. We were unable to verify the accuracy of these rates or determine if the averages consist of properties similar to the state's office properties in location and quality.
2Only leases for office space with private sector landlords are included here. 3Agency-managed leases are executed by an entity other than SPC. Some state entities (e.g.,Department of Labor and Board of Regents) have a statutory exemption to SPC leasing authority.
Source: SPC and Building, Land, & Lease Inventory of Property (BLLIP data as of August 2011)
State Space Management Policies
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Recommendations For Improvement The leases over $20 per square foot and the leases that exceed average market rates represent possible opportunities for cost savings. Further research is needed to determine which lease agreements have a cost that is above market rates and is not justified in order to provide services for clients. Although the methodologies adopted to conduct these analyses are relatively simple, they should be systematically incorporated into SPC's standard operating procedures to identify the potential for cost savings.
To ensure that the state is not paying higher than necessary lease rates for properties, SPC should periodically collect market rate data for cities and compare those figures to the cost per square foot figures for existing leases. To ensure that higher than average lease costs are reviewed and justified, SPC should establish a policy and procedure for permitting and documenting the decision to execute a lease at rates that are higher than the established market norm. To facilitate this process, SPC should periodically review BLLIP data for material cost outliers and ensure that those leases have been reviewed.
Agency response: SPC reported that it has reviewed the list of SPC-managed leases with greater than $20 per square foot costs compiled by the examination team and determined that 12 of the 39 leases are candidates for renegotiation. SPC will attempt to renegotiate these leases as they come up for renewal. SPC also indicated that a written leasing procedure will be in place and published by January 2012. It will periodically review leases to ensure high cost leases have been justified per the written procedure. SPC also noted that it has no authority over exempt agency leases that are high-cost.
State Space Management Policies
30
How does the state manage tenant improvements for the spaces it leases? Would the state realize savings in rent costs if it self-funded tenant improvements?
Tenant improvements (TIs) are changes made to a property to accommodate the needs of a tenant. TIs may include things such as floor and wall coverings, ceilings, partitions, telecommunication wiring, air conditioning, and access control. As discussed below, tenant improvements are included in negotiated lease costs and cannot be self-funded by the tenant due to legal restrictions.
Tenant Improvement Policies, Procedures, and Management Tenant improvement costs are included in the negotiated lease cost of buildings. Landlords typically set lease rates to cover a standard level of finish for build-out of office walls, paint, carpet, etc. included in SPC's specifications and guidelines. SPC provides prospective landlords with a seven-page "Specifications and Guidelines" document which defines minimal space and building requirements for factors such as the quality of mechanical and finish materials. SPC noted that requiring multiple bids provides a constraint on landlord charges for tenant improvements and its "specifications" help ensure that leasing agents are comparing "apples to apples" when evaluating bids. However, our review of 10 lease projects processed in fiscal year 2011 identified that five had records of only one bid, two had records of two bids, and two had records of three or more bids.9
SPC estimates that approximately 95% of its leases involve typical tenant improvements that are made by landlords each time they bring in a new tenant or to maintain space occupied by longtime tenants. The remaining 5% involve higher-cost improvements related to the special needs of the tenant, such as a laboratory building requiring specialized wiring and plumbing. SPC does not have any written policies or procedures for handling the estimated 5% of leases that may involve above-standard TI costs. Currently, landlords incorporate the additional extraordinary TI costs into their lease charges. According to SPC leasing agents, the exact cost of non-standard TIs is not typically maintained separately from the overall lease cost.
The Georgia Constitution has two provisions that restrict the possibility of self-funding tenant improvements of the majority of state entities that lease property. First, SPC and most state entities are legally restricted to 1-year lease agreements and are prohibited from entering into multi-year lease agreements. The basis for this prohibition is Article VII, Section IV, Paragraph VIII of the Georgia Constitution, which prohibits the pledging of the state's credit. The Attorney General (AG) has interpreted this clause as preventing multi-year leases, since appropriations of future fiscal years would be committed to such lease agreements. Second, state entities are prohibited by the Georgia Constitution (Article III, Section VI, Paragraph VI) from paying for "permanent improvements to private property," unless the improvements can be removed. When applied to lease agreements, this effectively prohibits the state from self-funding material tenant improvements to private property unless the improvements can be removed upon termination of the lease. Taken together, these legal restrictions effectively prevent state entities that are not
9 One lease was excluded that involved expansion into an adjacent building.
State Space Management Policies
31
exempt from the single-year lease restriction from even considering self-funding tenant improvements.
A limited number of state entities (such as the Georgia Building Authority) have enabling legislation that permits them to enter into multi-year leases. Because of this, GBA may lease a space from the landlord and subsequently sublease it to a state agency. In fiscal year 2011, GBA held 11 multi-year lease agreements on behalf of state entities, but this practice is limited. The identification of all state entities eligible to enter multi-year lease agreements or the relative cost impact that these legal permissions on tenant improvements was not included in this review. However, SPC has indicated that multi-year lease agreements may offer opportunities to reduce rents by extending the term during which costs (such as tenant improvement costs) can be amortized, making the state a more attractive tenant for landlords.
Hypothetical Savings By Self-Funding Non-Standard Tenant Improvements As previously discussed, legal restrictions effectively prohibit most state entities from considering self-funding tenant improvements. However, it is worth noting the theoretical costs and benefits of having the landlord finance or the state self-fund above-standard tenant improvements. Below are three hypothetical scenarios in which the relationship between rental costs, multi-year lease options, and tenant improvements are presented over a 10-year period (see Exhibit 15). In these simplified scenarios, we assume an annual base rental cost of $100,000 ($10 per square foot) and an up-front tenant improvement expenditure of $100,000. The TI charges include construction management charges of 15% (or $15,000) financed over five years at 10% (total interest cost of about $31,600), resulting in total TI costs of about $146,600 (rounded to $150,000). Three ways of handling above-standard TI costs include: (1) costs are incorporated under renewable 1-year lease agreements (current policy), (2) costs are amortized under a 5-year lease agreement (multi-year lease option), and (3) costs are self-funded by the state. It should be noted that this is a simplified example (not based on actual or average costs) and does not incorporate the time cost of money. It is presented only to illustrate the theoretical impact of different ways of handling tenant improvement costs.
o Scenario 1 (Current Policy): The landlord incurs the cost of tenant improvements, and the state does not have the ability to enter into multi-year lease agreements. The landlord has additional risk because a multi-year lease is not allowed and seeks to amortize TI costs over five years. The lease rate is set at $13 per square foot or $130,000 annually, and the rate is not reduced when the TI costs are recovered after five years.
o Scenario 2 (5-Year Lease Policy): The landlord incurs the cost of tenant improvements, but the state has the ability to enter into a 5-year lease agreement. The lease agreement specifically identifies that the cost of tenant improvements are amortized during the term of the first lease ($130,000 per year for five years). The annual cost when the lease is renewed is reduced as the tenant improvement cost is eliminated to $100,000 per year for the second five years.
o Scenario 3 (Self-Funded Tenant Improvement Policy): The state incurs the cost of tenant improvements ($100,000) and the annual rental costs only reflect the base lease cost ($100,000 per year). The state does not have to pay the landlord for construction management or interest costs; however, it has to utilize personnel to manage the
State Space Management Policies
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construction project and has to fund the entire cost of exceptional TI construction in the first year.
Exhibit 15
Comparison of Different Ways of Handling Tenant Improvement Costs
Scenario 1
Scenario 2
Scenario 3
Year
Annual
Annual
Tenant Improvement
Total
Annual
Tenant Improvement
Total
Rent
Rent
Cost
Payment
Rent
Cost
Payment
1
$130,000 $100,000
$30,000
$130,000
$100,000
$100,000
$200,000
2
$130,000 $100,000
$30,000
$130,000
$100,000
$100,000
3
$130,000 $100,000
$30,000
$130,000
$100,000
$100,000
4
$130,000 $100,000
$30,000
$130,000
$100,000
$100,000
5
$130,000 $100,000
$30,000
$130,000
$100,000
$100,000
6
$130,000 $100,000
$100,000
$100,000
$100,000
7
$130,000 $100,000
$100,000
$100,000
$100,000
8
$130,000 $100,000
$100,000
$100,000
$100,000
9
$130,000 $100,000
$100,000
$100,000
$100,000
10
$130,000 $100,000
$100,000
$100,000
$100,000
TOTAL
$1,300,000 $1,000,000
$150,000 $1,150,000 $1,000,000
$100,000 $1,100,000
Note: Presentation includes hypothetical figures presented for illustration purposes only. Cost figures for risk premiums and
tenant improvements were not available for analysis.
Source: Department of Audits and Accounts
As previously noted, data on above-standard tenant improvement costs was not available to determine if actual savings are possible under these theoretical scenarios. In theory, the state could potentially reduce the cost of TIs by specifically identifying TI costs in leases and amortizing the costs over the period of a multi-year lease or by self-funding TIs. However, as previously discussed, multi-year leases are not available to most state entities, and self-funding TIs that involve permanent improvements to private property are not constitutionally allowed.
Recommendations For Improvement SPC should ensure that it uses (and documents) multiple bids to constrain TI costs. It should also develop specific policies for handling and documenting above-standard TI costs. Based on better tracking of exceptional TI costs, SPC could identify if significant TI cost savings might result from the ability to use multi-year leases or from self-funding TIs. This information could then be presented to the General Assembly so it could decide if the potential savings justify the financial risks associated with multi-year leases and self-funded improvements to leased property. In addition, separately documenting above-standard TI costs funded by the landlord could facilitate renegotiation of lease costs once improvements have been paid off.
Agency Response: SPC noted that uniqueness of TIs make them difficult to separate from lease rates but that the cost of some non-standard TI's are maintained in lease files. It also noted that it has re-introduced legislation to authorize SPC to enter into multi-year lease agreements on behalf of state entities. Finally, SPC noted that self-funded tenant improvements are not an industry best practice. Tenants very rarely fund improvements for office space and landlords rarely break-out TI cost from the rental rate. There is little merit to self-funding tenant improvements and self-funding tenant improvements is unconstitutional.
State Space Management Policies
33
Appendix A
Objectives, Scope, and Methodology
The Senate Appropriations Committee requested this special examination of the state policies related to space management. The specific questions that we addressed are discussed below along with the methodology for our analyses.
We conducted this project in accordance Performance Audit Division policies and procedures for non-GAGAS engagements. These policies and procedures require that we plan and perform the engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our project objectives.
General Scope and Methodologies The Building, Land and Lease Inventory of Property (BLLIP) and State Properties Commission (SPC) lease files provided the primary data sources for this examination. We reviewed applicable SPC policies and procedures, interviewed appropriate SPC personnel and personnel from exempted agencies such as the Board of Regents, Department of Labor, and the Department of Transportation. We also reviewed the Georgia Constitution, state law, attorney general opinions, and executive orders. We reviewed relevant management studies and industry best practices related to leasing, tenant improvements, and asset management.
Special Examination Questions What is the balance between state-occupied state owned spaces, unoccupied state owned spaces, non-state occupied state owned spaces, and state-occupied non-state owned spaces? What is the cost associated with each? We received a data extraction of the BLLIP data set on August 18, 2011 from SPC personnel who received it from administrators at the Carl Vinson Institute of Government Information Technology Outreach Services (ITOS). Our review examined only the building and lease subsets of BLLIP. Some leases were for fiscal year 2011, and some were for fiscal year 2012.
BLLIP is considered the most comprehensive single data source for state properties. However, the data (as noted throughout this report) contains significant errors and missing data in fields required to fully answer the research objectives established by the Senate Appropriations Committee. We conducted data reliability testing to ensure that the set was complete. However, we conducted only a limited data accuracy testing which focused mostly on the extreme data outliers. Individual agencies (such as the Board of Regents and the Georgia Building Authority) may have additional data sets for properties in their custody; however, these sources were not collected or incorporated into the analysis due to time constraints.
BLLIP Data Set Cleaning: The BLLIP data set included 15,079 buildings and 1,867 leases. To ensure that each record represented a unique space in the appropriate ownership category (state owned and non-state owned), we excluded records that represented a duplication of space. In consultation with SPC, we determined that 29 records in the state owned buildings data set were duplicate records or required deletion (because the property had been sold or demolished). In the lease data set, 135 records represented state entity intergovernmental agreements (leases) of state owned space, such as GBA-owned space on Capitol Hill. These intergovernmental agreements were not included in our inventory count of space, but were included in cost analyses. In addition, 41 subleases were excluded that would have resulted in double counting of rent and square footage, and 13 leases were excluded because the lease was invalid or no longer active. In total, 189 leases were identified as invalid or duplicate. After excluding these records, the count of unique spaces was 15,050 state owned buildings and 1,678 leases of non-state owned space. This data set was used for the majority of analysis of BLLIP inventory.
State Space Management Policies
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Occupancy Categorization: BLLIP data contains three fields related to occupancy: "total capacity," "total occupancy," and "percent occupied." A significant number of these fields contained blank values, a value of 0, and/or inconsistent logic between values (for example, one record showed 1,446 for total capacity, 95 for total occupancy, and 100% for percent occupied). To categorize property as either occupied, unoccupied, or of an unknown occupancy status, we adopted the following methodology.
o Records categorized as "occupied" are records with a nonzero value for either "total occupancy" or "percent occupied" fields, regardless of whether the values were consistent. For example, if a record had a value of 0 in "total occupancy" and a value of 100% in "percent occupied," the property was categorized as occupied.
o Records categorized as "indicates unoccupied" are records where either the "total occupancy" and the "percent occupied" fields both contain a value of 0, or one field has a value of 0 and the other is blank.
o Records categorized as "unknown occupancy" are records where both "total occupancy" and "percent occupied" have no values inputted.
o Records categorized as "non-state-occupied" are records where the "primary use" field indicates a state owned building is "leased to a non-state entity." In these instances, occupancy fields were not considered.
What policies does the state use in determining leased property location and space? Please comment on any areas where an agency could relocate to a lower cost area and continue to serve clients. We reviewed all written State Properties Commission policies and procedures related to space management and lease management. We conducted a review of internal controls related to activities to establish a requesting entity's lease location and space assignment. We conducted a file review of all properties for which a space request for new space was initiated and an entity was located during fiscal year 2011.
We identified the leases from within BLLIP inventory records with a primary use of "offices" with a cost per square foot that was greater than $20 psf. We selected a $20 psf threshold because it represented properties that were approximately 33% above private market lease rate averages for SPC and non-SPC managed leases. We solicited comment from the leasing entity (e.g., the State Properties Commission, the Board of Regents, the Department of Labor) to confirm the accuracy of the reported data in BLLIP and to comment on the reasons why the high cost property was justified.
We received from SPC a schedule of current market lease rates for cities within the metropolitan Atlanta region. The market averages were provided to SPC by a national real estate firm. We were unable to confirm the methodology used to collect this benchmark schedule. We compared current lease costs in BLLIP to the stated market averages to identify leases that were higher than the stated averages for metropolitan Atlanta cities. (The example provided in this report is an illustration of the type of normative standards and methods that SPC should adopt to periodically review the costeffectiveness of lease agreements and should not be considered a definitive benchmark of current market rates.)
We attempted to evaluate cost-saving opportunities by reviewing the SPC lease files but found that the files did not contain sufficient data for us to assess whether occupied properties were the lowestcost options that satisfied both geographic and business needs of the requesting state entity. We concluded that, due to time limitations and requisite real estate expertise, we could not conduct numerous comprehensive metropolitan strategic plan(s) to identify cost saving opportunities for a region (such as collocation, renegotiation, and relocation actions).
State Space Management Policies
35
How does the state manage tenant improvements for the spaces it leases? Would the state realize savings in rent costs if it self-funded tenant improvements? To review current SPC policies and procedures for managing TIs, we requested policies, interviewed leasing staff, and reviewed files for all the requests submitted to SPC for new space during fiscal year 2011 that resulted in locating an entity into a space. We limited our review of tenant improvement procedures to those of the State Properties Commission for leased properties; we did not examine tenant improvement procedures for state entities exempt from using SPC services to secure a lease (e.g., the Board of Regents, the Department of Labor).
We found that SPC does not have any written policies or procedures to define the objectives of TI management, nor does SPC have any written procedures establishing the tasks that leasing staff should execute in identifying necessary TIs on behalf of the requesting entity, negotiating the cost of TIs, or conducting site visits to ensure the TIs are completed. Therefore, we relied on staff to explain the tenant improvement procedures typically executed. In addition, we conducted a review of state law as it relates to the potential to self-fund tenant improvements. Specifically, we reviewed sections of the Georgia Constitution, state law, and attorney general opinions related to the "gratuities clause" and the "credit clause." The figures used to illustrate the concept of tenant improvement costs under various funding scenarios (including the estimation of a risk premium) are hypothetical and are not based on empirical data.
State Space Management Policies
36
Appendix B Primary Use Categories
As of August 2011
Primary Use Category
Occupancy Relevant?
(blank)
Offices
Yes
Storage building warehouse
Open sheds or pavillions for work, storage, display,
sales, recreation
Residences, house apartments
Yes
Maintenance and custodial operations, shops
Other use (specify)
Classrooms with faculty offices, etc.
Yes
Animal care facilities, kennels, pig parlors, stables,
veterinary facilities
Security facilities, fire stations, patrol posts, fire
towers, guard posts
Yes
Detention housing support (offices, food service,
instructions, security,etc.)
Laboratories
Yes
Boating facilities
Detention housing
Yes
Hotels, motels, short-term occupancy housing
Athletic facilities
Dormitories
Yes
Comfort stations and rest stations
Water/sewage treatment plants, other utilities
Radio Antenna/Towers
Land/acreage
Garages or repair shops
Vacant
Armories
Museums, historic sights, monuments
Leased to a non-state entity
Hospitals, medical centers, nursing homes, medical
examiner autopsy facilities
Yes
Greenhouses
Parking facilities
Student unions, recreation, or entertainment
buildings
Yes
Special training facilities
Yes
Boiler, chiller plants or generating plants
Auditorium conferences facilities
Non-structure, metered energy using system; i.e.,
security lights, camp sites
Libraries
Instructional shops
Laundries
Cafeterias, restaurants, dining halls
Broadcasting facilities
State Occupied
1,158 557 399
175 228 338 116 340
391
29
113 334
14 58 102 194 138 53 13
3
46 10 123 24
94 88 33
54 7
49 42
2 37 12 11 12
State Owned
Non-State Owned
Total Properties
Non-State Indicates Unknown Buildings Occupied Unoccupied1 Occupancy Total
Leases2
Number
%
2,239 279
1,185
395
3,792
21
857
85
1,669
67 3,859 858 1,715
18 1,687
23.1% 10.3% 10.1%
997
25
1,197
1,197
7.2%
405
15
648
96
744
4.4%
293
31
662
662
4.0%
384
59
559
19
578
3.5%
45
3
388
101
489
2.9%
80
9
480
480
2.9%
296
76
401
7
408
2.4%
242 15
291 231 189
74 111 202 209
43 1
120 142
27 114 141
22
377
349
305
17
306
3
294
4
272
249
4
259
20
242
1
47
1
2
168
7
159
150
8
146
141
377
2.3%
10
359
2.1%
23
328
2.0%
6
312
1.9%
1
295
1.8%
10
282
1.7%
26
275
1.6%
259
1.5%
242
1.4%
146
193
1.2%
186
187
1.1%
168
1.0%
2
161
1.0%
150
0.9%
1
147
0.9%
141
0.8%
20
3
117
5
122
0.7%
31
119
119
0.7%
40
73
37
110
0.7%
26
3
83
26
109
0.7%
73
2
82
82
0.5%
22
5
76
1
77
0.5%
19
1
62
1
63
0.4%
39
12
53
53
0.3%
4
41
41
0.2%
17
2
31
10
41
0.2%
27
1
39
39
0.2%
22
34
4
38
0.2%
11
19
30
2
32
0.2%
Golf shop, cart maintenence or club house facilities
7
Manufacturing plants
Retail stores
4
Food processing plants, canneries, abbatoirs,
dairies, etc.
Aircraft facilities, hangars, passenger buildings
5
Computer operations
7
Grand Total
5,420
141
1At least one of two occupancy fields in BLLIP had a "0" entered.
2Subleases of state owned or leased properties were excluded from the list of leases.
Source: Building, Land, & Lease Inventory of Property, SPC
17 17
9
14 4
8,626
1
25
4
21
13
3
17
9
7
863
15,050
25
21
8
21
5 2 1,678
17 14
9 16,728
0.1% 0.1% 0.1%
0.1% 0.1% 0.1% 100.0%
State Space Management Policies
37
Appendix C
Primary Use Categories Identified as Blank, Vacant, Other use, and
Leased to a non-state entity by Entity
As of August 2011
Primary Use Category and State Entity Name
Number of Buildings
(blank)
Natural Resources, Department of Regents, State Board of Technical College System of Georgia Labor, Department of Defense, Department of Agriculture, Department of Forestry Commission, State Human Services Ports Authority, Georgia Public Safety, Department of Corrections, Department of Administrative Services, Department of Juvenile Justice, Department of Community Affairs, Department of Herty Foundation Transportation, Department of Veterans Service, Department of Workers' Compensation, State Board of Building Authority, Georgia Behavioral Health and Developmental Disabilities, Department of Education, Department of Georgia Public Defender Standards Council Public Health, Department of Investigation, Georgia Bureau of Driver Services, Department of Road and Tollway Authority, State Soil & Water Conservation Commission, State
Total Blank
Other use (specify)
1,959 1,049
409 80 77 59 49
19 17 13 12 10
3 7 6 6
5 2 3
3 2 1 1
3,792
Natural Resources, Department of
395
Ports Authority, Georgia
66
Forestry Commission, State
38
Regents, State Board of
12
Behavioral Health and Developmental Disabilities, Department of
20
Agriculture, Department of
7
Corrections, Department of
7
Transportation, Department of
6
Public Safety, Department of
5
Economic Development, Georgia Department of
1
Technical College System of Georgia
1
Veterans Service, Department of
1
Total Other use
559
Vacant
Juvenile Justice, Department of
51
Behavioral Health and Developmental Disabilities, Department of
45
Natural Resources, Department of
23
Transportation, Department of
23
Regents, State Board of
5
Building Authority, Georgia
4
Corrections, Department of
4
Labor, Department of
2
Public Safety, Department of
2
Total Vacant
159
Leased to a non-state entity
Natural Resources, Department of
130
Transportation, Department of
5
Building Authority, Georgia
2
Forestry Commission, State
2
Labor, Department of
2
Number of Leases 1 11 7
31 1 5 6 1 3
1 67
19
19
2
2
Total Properties
1,960 1,060
416 80 77 59 49 31 19 17 14 12 10 8 7 6 6 6 5 3 3 3 3 2 1 1 1
3,859
395 66 38 31 20 7 7 6 5 1 1 1
578
51 45 23 23
7 4 4 2 2 161
130 5 2 2 2
Total Leased to a non-state entity Grand Total 1123 DNR properties in this category are at Stone Mountain Park.
Source: Building, Land, & Lease Inventory of Property, SPC
141 4,651
141
88
4,739
State Space Management Policies
38
Appendix D Occupancy Status by Entity
As of August 2011
State Owned
State Entity
State Non-State Indicates Unknown Buildings Occupied Occupied Unoccupied1 Occupancy Total
Natural Resources, Department of
834
130
3,895
138
4,997
Regents, State Board of
2,847
336
223
3,406
Corrections, Department of
12
1,894
231
2,137
Transportation, Department of
428
5
720
12
1,165
Forestry Commission, State
44
2
591
637
Technical College System of Georgia
366
136
502
Behavioral Health and Developmental Disabilities, Department of
209
306
3
518
Juvenile Justice, Department of
282
60
342
Defense, Department of
268
60
328
Human Services, Department of
Labor, Department of
14
2
34
83
133
Ports Authority, Georgia
1
59
140
200
Agriculture, Department of
170
28
198
Public Safety, Department of
9
108
3
120
Education, Department of
130
130
Community Affairs, Department of
34
8
42
Administrative Services, Department of
13
15
28
Veterans Service, Department of
1
12
1
14
Investigation, Georgia Bureau of
32
6
38
Building Authority, Georgia
2
2
50
54
Driver Services, Department of
7
3
10
Pardons and Paroles, State Board of
Public Health, Department of
7
2
9
Revenue, Department of
Economic Development, Georgia Department of
5
5
World Congress Center Authority, Georgia
12
12
Herty Foundation
9
1
10
Lottery Corporation, Georgia
Audits & Accounts, Department of
Georgia Public Defender Standards Council
Workers' Compensation, State Board of
Governor, Office Of The
3
2
5
Secretary of State, Office of the
1
1
Soil & Water Conservation Commission, State
2
2
Judicial Branch of Georgia
Banking & Finance, Department of
Correctional Industries Administration, Georgia
2
2
Superior Court Clerks' Cooperative Authority, Georgia
Community Health, Department of
Georgia Firefighters' Pension Fund
1
1
Georgia Peanut Commission
1
1
Insurance, Department of
Law, Department of
Road and Tollway Authority, State
1
1
Sheriffs' Retirement Fund of Georgia
Student Finance Commission, Georgia
1
1
Subsequent Injury Trust Fund
Teacher's Retirement System of Georgia
1
1
Grand Total
5,420
141
1At least one of two occupancy fields in BLLIP had a "0" entered.
2Subleases of state owned or leased properties were excluded from the list of leases.
8,626
863
15,050
Source: Building, Land, & Lease Inventory of Property, SPC
Non-State Owned
Leases2
248 333 117
1 19 73 48 106 15 265 86
1 64
4 24 33 46 17
43 40 10 13
7
10 8 8 8 2 6 5 6 5
2 1
1 1
1
1
1,678
Total Properties
Number
%
5,245 3,739 2,254 1,166
656 575 566 448 343 265 219 200 199 184 134
66 61 60 55 54 53 40 19 13 12 12 10 10
8 8 8 7 7 7 6 5 2 2 1 1 1 1 1 1 1 1 1 1
16,728
31.4% 22.4% 13.5%
7.0% 3.9% 3.4% 3.4% 2.7% 2.1% 1.6% 1.3% 1.2% 1.2% 1.1% 0.8% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
100.0%
State Space Management Policies
Appendix E Occupancy Status of Office Space by Entity
As of August 2011
State Owned
Non-State Owned
Total Properties
State Entity
Occupied
Number
Square Feet
Indicates Unoccupied1 Unknown Occupancy
Buildings
Buildings Square Feet
Number Square Number Square
Total
Total2
Feet
Feet
Leases
Number
Square Feet2
Properties Square Feet % of
Total
Total2
Square Feet
Regents, State Board of
269 4,667,477
3
81,146
Building Authority, Georgia
2 134,252
18 3,669,844
Human Services, Department of
Transportation, Department of
120 763,860
24 423,740
Labor, Department of
14 174,672
5 276,457
Corrections, Department of
16 209,798
Behavioral Health and Developmental Disabilities, Department of
25 560,122
2
20,122
Revenue, Department of
Natural Resources, Department of
57 256,040
35
76,453
Forestry Commission, State
32
74,424
126 394,844
Juvenile Justice, Department of
6
18,305
1
15,367
Driver Services, Department of
6
23,000
3
11,187
Ports Authority, Georgia
19 169,047
Public Safety, Department of
1
2,500
3 112,176
Pardons and Paroles, State Board of
Investigation, Georgia Bureau of
13 118,235
Community Affairs, Department of
1
77,050
Public Health, Department of
2
62,052
Technical College System of Georgia
1
9,446
Secretary of State, Office of the
Teacher's Retirement System of Georgia
1 110,293
Governor, Office of the
3
99,806
Lottery Corporation, Georgia
Economic Development, Georgia Department of
1
3,150
Student Finance Commission, Georgia
1
46,486
Georgia Public Defender Standards Council
Defense, Department of
Agriculture, Department of
15
34,911
Correctional Industries Administration, Georgia
2
34,160
Veterans Service, Department of
1
2,044
Judicial Branch of Georgia
Banking & Finance, Department of
Administrative Services, Department of
2
6,900
Audits & Accounts, Department of
Soil & Water Conservation Commission, State
2
10,696
Superior Court Clerks Cooperative Authority, Georgia
Law, Department of
Education, Department of
1
7,862
Georgia Firefighters' Pension Fund Subsequent Injury Trust Fund
1
10,300
World Congress Center Authority, Georgia
1
7,697
Georgia Peanut Commission
1
7,648
Community Health, Department of
Workers' Compensation, State Board of
Sheriffs' Retirement Fund of Georgia
Grand Total
557 7,217,218
279 5,566,351
1At least one of two occupancy fields in BLLIP had a "0" entered.
22 buildings (Transportation) and 4 leases (Labor, Regents (2), and Veterans Service) do not include square footage.
Source: Building, Land, & Lease Inventory of Property, SPC
5 168,637
3
19,397
1
160
12
49,351
21 237,545
277 4,917,260 20 3,804,096
144 1,187,600
22
470,526
17
209,958
27
580,244
92
332,493
158
469,268
7
33,672
9
34,187
31
218,398
4
114,676
13
118,235
1
77,050
2
62,052
1
9,446
1
110,293
3
99,806
1
3,150
1
46,486
15
34,911
2
34,160
1
2,044
2
6,900
2
10,696
1
7,862
1
10,300
1
7,697
1
7,648
857 13,021,114
71 2,249,931
234 3,064,851
1 282,347
84 789,915
103 401,586
6
25,704
12 507,743
8 167,555
103 408,355 41 277,477
11
71,570
40 171,290
6
44,074
6
68,742
10
71,585
5 114,477
5 110,528
2
7,143
5 111,879
6
55,331
5
38,911
13
36,941
1
250
46
29,650
6
29,553
5
27,198
1
17,834
8
23,415
4
9,389
2
16,581
1
14,888
3
6,602
1
9,374
1
7,100
1
1,800
1
288
858 9,271,857
348 20
234 145 106 120
33 12 100 158 110 50 31 15 40 19
7 12
6 5 1 5 5 7 1 5 13 16 2 47 6 5 3 8 6 2 1 4 1 1 1 1 1 1 1
1,715
7,167,191 3,804,096 3,064,851 1,469,947 1,260,441
611,544 605,948 507,743 500,048 469,268 442,027 311,664 218,398 186,246 171,290 162,309 145,792 133,637 123,923 110,528 110,293 106,949 111,879
58,481 46,486 38,911 36,941 35,161 34,160 31,694 29,553 27,198 24,734 23,415 20,085 16,581 14,888 14,464 10,300
9,374 7,697 7,648 7,100 1,800
288
22,292,971
32.2% 17.1% 13.7%
6.6% 5.7% 2.7% 2.7% 2.3% 2.2% 2.1% 2.0% 1.4% 1.0% 0.8% 0.8% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5% 0.5% 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
100.0%
39
State Space Management Policies
40
Appendix F Occupancy Status of Office Space by City
As of August 2011
State Owned
Non-State Owned
Total Properties
City
Occupied
Number
Square Feet
Indicates Unoccupied1
Number
Square Feet
Unknown Occupancy
Number
Square Feet
Buildings Buildings Square
Total Feet Total2
Leases
Number
Square Feet2
Properties Square Total Feet Total2
% of Square
Feet
Atlanta
46 1,620,590
26 4,402,978
1 154,722
73 6,178,290
56 2,917,598
129 9,095,888
40.8%
Athens
66 1,277,664
1
1,800
67 1,279,464
28 331,911
95 1,611,375
7.2%
Augusta
32 476,861
6 95,331
38 572,192
16 168,148
54 740,340
3.3%
Milledgeville
32 597,872
3 15,201
1 4,842
36 617,915
5
21,424
41 639,339
2.9%
Savannah
21 189,397
4 21,416
5 14,581
30 225,394
13 284,453
43 509,847
2.3%
Decatur
10 157,603
2 34,710
12 192,313
14 311,513
26 503,826
2.3%
Albany
14 287,577
4
6,348
18 293,925
11 164,341
29 458,266
2.1%
Macon
6 58,747
3
6,468
1
160
10
65,375
23 326,269
33 391,644
1.8%
Tifton
18 301,543
2
5,572
20 307,115
14
76,718
34 383,833
1.7%
Columbus
11 152,892
4
9,006
15 161,898
19 185,989
34 347,887
1.6%
Statesboro
22 286,216
1
325
23 286,541
12
52,367
35 338,908
1.5%
Brunswick
5 89,800
6 15,603
5 36,918
16 142,321
12
72,617
28 214,938
1.0%
Forsyth
3
7,244
13 193,882
16 201,126
2
7,314
18 208,440
0.9%
Marietta
3 29,446
2 11,913
5
41,359
13 140,692
18 182,051
0.8%
Lawrenceville
1 13,400
1
7,400
2
20,800
8 151,731
10 172,531
0.8%
College Park
1
7,439
1
7,439
4 157,430
5 164,869
0.7%
Thomasville
5 93,614
3
3,024
8
96,638
7
65,269
15 161,907
0.7%
Covington
2
7,614
1
4,605
3
12,219
6 148,045
9 160,264
0.7%
Kennesaw
4 158,073
4 158,073
0.7%
Gainesville
6 49,555
1 10,327
7
59,882
13
95,847
20 155,729
0.7%
Garden City
11 135,890
4 3,125
15 139,015
15 139,015
0.6%
Americus
8 66,951
2
3,252
10
70,203
11
66,720
21 136,923
0.6%
Rome
8 54,590
1 12,042
9
66,632
5
66,495
14 133,127
0.6%
Conyers
2 14,300
1
600
3
14,900
9 111,830
12 126,730
0.6%
Stone Mountain
2
6,368
2
6,368
2 118,743
4 125,111
0.6%
East Point
2 121,149
2 121,149
0.5%
Waycross
5 59,583
2
4,125
7
63,708
7
56,516
14 120,224
0.5%
Tucker
1 46,486
1
46,486
6
72,557
7 119,043
0.5%
Thomaston
6 83,387
2
4,512
8
87,899
6
20,278
14 108,177
0.5%
Dalton
4 28,278
1
1,039
5
29,317
12
78,531
17 107,848
0.5%
Jonesboro
6 103,766
6 103,766
0.5%
Valdosta
3
5,186
4
5,917
7
11,103
10
89,778
17 100,881
0.5%
Cartersville
5 29,750
1 10,513
6
40,263
10
56,381
16
96,644
0.4%
Fort Valley
8 80,921
1
2,384
9
83,305
3
17,942
12 101,247
0.5%
Cochran
8 85,737
3
5,457
11
91,194
1
4,880
12
96,074
0.4%
Jesup
9 48,680
2
8,853
11
57,533
7
35,550
18
93,083
0.4%
Douglas
3 38,086
1
900
1 4,000
5
42,986
9
47,238
14
90,224
0.4%
Dublin
3 16,909
3
16,909
13
71,471
16
88,380
0.4%
Moultrie
1
4,596
2 20,313
3
24,909
10
61,995
13
86,904
0.4%
Clarkston All Others3
3 74,710 176 773,994
1
7,862
160 500,928
2 8,684
4
82,572
338 1,283,606
449 2,232,288
4
82,572
787 3,515,894
0.4% 15.8%
Grand Total
557 7,217,218
279 5,566,351
21 237,545
857 13,021,114
858
1At least one of two occupancy fields in BLLIP had a "0" entered.
22 buildings (Atlanta, Douglasville) and 4 leases (Athens, Macon, Millen, Sandersville) do not include square footage.
3The 235 remaining cities each have less than 75,000 square feet of office space.
9,271,857
1,715 22,292,971 100.0%
Source: Building, Land, & Lease Inventory of Property, SPC
State Space Management Policies
41
Appendix G SPC Space Standards
Position Category Types
Constitutional Officers, Commissioners, University/College Presidents
Open (O) or Closed (C) C
Executive Directors/Directors,
Deputy Commissioners,
C
University/College Vice-Presidents,
Chief Operating or Finance Officers
Division Directors,
Deputy Directors,
C
Regional Managers,
University/College Directors
Managers,
County Managers
C
Supervisors,
Special Function Professionals,
C/O
Faculty/Instructors
Caseworkers
Team Leaders,
Administrative Staff
O
Professional Staff,
Administrative Staff
O
Hoteling/Visitor Workspace
O
Source: State Properties Commission, Space Standards and Guidelines
Allocated Square Footage 300 250
175
150 120
96 84 36
State Space Management Policies
SPC LEASING AGENT Lease # Entity Name 7702 Corrections, Department of
Address 1 8 Southern Oaks Court
Appendix H SPC-Managed Office Leases with Costs >$20 Per Square Foot
(As of August 2011)
City Savannah
Original Figures Updated Figures Cost Per Sq Ft Cost Per Sq Ft
Additional Comments
$
23.18 $
23.18 See #7208. Savannah Metro Plan recommendation, Co-location of two agencises into one space - Savings to the State by both agencies sharing common and ancillary spaces (lobby, restroom, drug testing lab, breakroom, conference rooms, et cetera.)
6202 6431 6747
6005 6708
6746
Defense, Department of Defense, Department of Defense, Department of
Defense, Department of Defense, Department of
Defense, Department of
2505 Chastain Meadows Parkway 5244 North Henry Boulevard 875 Mansell Road
1820 Ga. Hwy. 20 905 Parkside Walk Lane
3010 Washington Road
Ma ri etta
$
Stockbri dge
$
Ros wel l
$
Conyers
$
La wrencevi l l e
$
Augus ta
$
28.99 $ 23.50 $ 23.28 $
23.07 $ 22.76 $
21.13 $
6745
7315 6043 5937
5936 6009 6422
6126
7279
6091 5454 6035
5262 5366 5414 5356 5834 5260 3534 4829
5688 4001 5174
5253
6001
6067
5784
7271
Defense, Department of
Defense, Department of Driver Services, Department of Driver Services, Department of
Driver Services, Department of Driver Services, Department of Economic Development, Georgia Department of Economic Development, Georgia Department of Human Services, Department of
Human Services, Department of Human Services, Department of Human Services, Department of
Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of
Human Services, Department of Human Services, Department of Human Services, Department of
Human Services, Department of
Investigation, Georgia Bureau of
Judicial Branch of Georgia
Juvenile Justice, Department of
Juvenile Justice, Department of
1075 Whitlock Avenue
6201 Veterans Parkway 149 Riverview Park Road 2800 Canton Road
8040 Rockbridge Road 2211 Beaver Ruin Road 75 Fifth Street, N.W.
75 Fifth Street, N.W.
92 Cohen Walker Drive
446 W. Crogan St., One Justice Square 975 Taylor Street, S.W. 761 Wheaton Street
41 Pulaski Highway 1220 South First Street 92 Cohen Walker Drive 17234 Roosevelt Highway 5710 Stonewall Tell Road 178 Ernest Biles Drive 311 Green Street, N.W. 465 E. E. Butler Parkway
1287 Spur Ga. Hwy. 138 178 Sams Street 100 County Loop Road
201 South Barnes Street
Confi denti a l
104 Marietta Street, N.W.
3408 Covington Highway
3588 Riverside Drive
Ma ri etta
$
Col umbus
$
Ja c ks on
$
Ma ri etta
$
Li thoni a
$
Nor c r os s
$
Atl a nta
$
Atl a nta
$
Warner Robins
$
La wrencevi l l e
$
Conyers
$
Savannah
$
Sta tes bor o
$
Jes up
$
Warner Robins
$
Greenvi l l e
$
College Park
$
Ja c ks on
$
Ga i nes vi l l e
$
Ga i nes vi l l e
$
Jones bor o
$
Decatur
$
Cedartown
$
Qui tma n
$
Atl a nta
$
Atl a nta
$
Decatur
$
Macon
$
21.00 $
20.50 $ 25.35 $ 24.49 $
24.37 $ 24.37 $ 28.71 $
20.87 $
168.00 $
25.58 $ 24.62 $ 24.15 $
23.33 $ 23.15 $ 22.98 $ 22.25 $ 22.06 $ 22.05 $ 21.37 $ 21.01 $
20.60 $ 20.58 $ 20.51 $
20.44 $
21.52 $
20.10 $
22.28 $
23.22 $
4426
7314 7208
Natural Resources, Department of
Natural Resources, Department of Pardons and Paroles, State Board of
4244 International Parkway, Atl. Tradeport Atlanta
Int. Center
400 Martin Palmer Drive
Bruns wi ck
8 Southern Oaks Court
Savannah
$
21.34 $
$
20.05 $
$
23.18 $
28.99 Small office(1550 s.f.)in high traffic retail location(utilities put rate over $20) SPC got reduced significantly in FY 11 and FY 12. 23.50 Small office(1600 s.f.)in high traffic retail location. 23.28 Used for recruiting. Geographic needs of business dictated location near shops.
Premises is in a retail strip center. Rent is based on retail rental rates, not office rental rates in the area. 23.07 Small office(1183 s.f.)in high traffic retail location(utilities put rate over $20) 22.76 Relatively small office(2200 s.f.)in high traffic retail location.
SPC renegotiated for slight reduction in FY 12. 21.13 Small office(1500 s.f.)in high traffic retail location. Premises is in a retail strip center. Rent is based on retail rental rates, not office rental rates in the
area. Center is located at Washington Road at Interstate 20.
21.00
20.50 25.35 24.49
Small office(1375 s.f.)in high traffic retail location(utilities put rate over $20). Agreement terminated as of 1/1/12. Small office(1200 s.f.)in high traffic retail location(utilities put rate over $20) 6 acres of land included in rent(utilities put rate over $20) Lease likely includes acreage for testing. Premises is in a retail strip center. Rent is based on retail rental rates, not office rental rates in the area.
24.37 24.37 29.28
20.87
Lease likely includes acreage for testing Lease likely includes acreage for testing- Landlord likely put in a good bit of TI Full service lease in Class A space-Midtown Atlanta - LL did significant TI. Additional office space needed by Economic Development for other groups to aid in the promotion of Georgia. Corporate headquarters for Econ. Development. "Crown jewel" of state property used to promote Georgia to the investment/tourism to the world.
257.60 MOU between Aging and DHS for workstations in DFCS office - $4200 per work station. DHS-DFCS is subleasing space to a sister division DHS-Aging.
25.58 24.62 24.15
23.33 23.15 22.98 22.25 22.06 22.05 21.37 21.01
20.60 20.58 20.51
20.44
21.52
14.30
22.28
17.86
Lease with County - includes some furniture - SPC currently working on relocating. MIL done without SPC involvment. Build-to-suit project with participation from County. Led to the creation of the Build to Suit manual at SPC. OPB had budget for the building, SPC oversaw construction. SPC did not oversee construction, just the drafting of the agreement. Build-to-suit. MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment. Renegotiation to a significantly lower rate for FY 13 has begun. MIL done without SPC involvment. Build-to-suit project with participation from County. Extremely small office(666 s.f.)in Gainesville - (utilities put rate over $20) Fairly nice office space in downtown Gainesville (utilities put rate over $20). Agency is moving to new location in first quarter of Fiscal Year 2013. High traffic retail area - SPC currently working on relocating to cheaper space(utilities put rate over $20) MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment-currently renegotiating to a standard lease with a lower rate. SPC renegotiating to lower rate for FY 13. MIL done without SPC involvment-currently renegotiating to a standard lease with a lower rate. SPC renegotiating to lower rate for FY 13. Full service lease - SPC got reduced from $27 to $21 for FY 12. Likely extensive build-out paid for by landlord. Full Service lease - SPCcurrently working on getting reduced from $20 to $14.30 for FY 12. Reduced from $20.00 to $14.30. Build to suit unit. DJJ executed without going through SPC. Agency Headquarters, Build-to-suit project with participation from local Development Authori ty. Heavy tenant improvement required to make usable for office work. Recently renegotiated. Property should be removed from list, typographical error in the Utilities paid caused this property to be on your list. Error has been corrected.
21.34 Laboratory space.
20.05 23.18
Build to suit. Flex space 1/2 office, 1/2 warehouse. Full service lease. 95% office space. Model of collocating two entities. Smaller space, but higher per square foot than two leases. Full service lease. Savannah Metro Plan recommendation, Co-location of two agencises into one space - Savings to the State by both agencies sharing common and ancillary spaces (lobby, restroom, drug testing lab, breakroom, conference rooms, et cetera.)
42
6999 Sheriffs' Retirement Fund of Georgia
3000 Ga. Hwy. 42 North
Stockbri dge
$
68.75 $
68.75 Done without SPC Involvment - Sherrifs Retirement Fund pays $1350 for small of in Ga Sherrifs HQ.
Extremely small space thus high rate per sq. ft. Extremely small space thus high rate per sq. ft.
7274 Subsequent Injury Trust Fund
285 Peachtree Center Avenue, N.E.
Atl a nta
$
21.03 $
21.03 Entity is located to workers compensation office for business needs. Commissioner-level office space.
Agency Headquarters, Build-to-suit project with participation from local Development Authority.
6165 Technical College System of Georgia
75 Fifth Street, N.W.
Atl a nta
$
25.46 $
25.46 Quick start program works with the Econ. Development program (See #6126). Entity wants to work next to Econ. Development HQ.
Notes: Original figures were taken from data extracted from BLLIP data set on 8/18/2011. Updated figures are derived from efforts by DOAA staff to confirm the accuracy of square footage and cost from the leasing entity.
State Space Management Policies
NON-SPC LEASING AGENT Lease # Entity Name
Address 1
Appendix I Agency-Managed Office Leases with Costs >$20 Per Square Foot
(As of August 2011)
Original Figures Updated Figures
City
Cost Per Sq Ft Cost Per Sq Ft
Additional Comments
8389 6636 6544 6633 6634 7393 6572 6545 6565 6606 7036 7293
Driver Services, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Lottery Corporation, Georgia Regents, State Board of
6670 7499 7539
Regents, State Board of Regents, State Board of Regents, State Board of
7900 6166 5964
7472
Regents, State Board of Regents, State Board of Regents, State Board of
Regents, State Board of
6049 Regents, State Board of
7390 5819 5957
7506 6015
Regents, State Board of Regents, State Board of Regents, State Board of
Regents, State Board of Regents, State Board of
400 Aquatic Circle
1551 Juliette Road
1700 Century Circle
450 Mall Boulevard
450 Mall Boulevard
150 Evelyn C. Neely Drive
2211 Beaver Ruin Road
151 Ellis Street, CARE Building
2450 Mt. Zion Parkway
755 Commerce Drive
250 Williams Street, American Cancer Society Center 3100 Gentian Boulevard
75 Fifth Street, N.W. 75 Fifth Street, N.W. PPV - Research - Yamacraw
75 5th Street 3475 Lenox Rd., N.E. PPV - Office - Technology Square/EDI
1200 Commerce Drive
75 Fifth Street, N.W.
2350 Sever Road 1095 College Station Road PPV - Office - Tech Square-College of Management 1454 Greene Street 34 Peachtree Street, N.W.
Cummi ng
$
20.65 $
Stone Mountain $
23.34
Atl a nta
$
23.01
Savannah
$
23.00
Savannah
$
23.00
Athens
$
22.69
Norc ros s
$
22.51
Atl a nta
$
22.50
Jones bor o
$
21.86
Decatur
$
21.75
Atl a nta
$ 2,182.66 $
Col umbus
$
54.00 $
Atl a nta
$
Atl a nta
$
Atl a nta
$
Atl a nta
$
Atl a nta
$
Atl a nta
$
Peachtree City
$
32.62 $ 29.46 $ 28.91 $
27.58 $ 23.97 $ 22.65 $
22.57 $
Atl a nta
$
22.30 $
La wrencevi l l e
$
Athens
$
Atl a nta
$
Augus ta
$
Atl a nta
$
30.81 $ 21.34 $ 21.27 $
21.17 $ 22.98 $
17.65 DDS couldn't verify the utilities and janitorial component of costs from BLLIP. Noted that cost includes asphalt needed for parking, a motorcycle training course, the driver's license testing course, and a 400x400 pad on which we conduct commercial driver's license exams.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
17.18 Original figure incorrect.
54.00 Single office GIT is leasing as part of larger suite. Rate includes full service reception and support services. SF does not include access to conference, work, and break rooms, and reception.
32.62 No comment provided. 29.46 UGA subleases three rooms from EDA at existing EDA rate. 28.91 High-end research and technical facility in Midtown Atlanta.
Rent includes parking not reflected in sf. 27.58 No comment provided. 25.72 UGA's Executive MBA Center in Buckhead; Need for Class A space. 22.65 Public Private Venture
22.57 This lease was terminated on August 31, 2011. Operation moved to 100 World Dr., Peachtree City (lease # 8352) at $19.75 PSF
22.30 This is accurate. GATV and EII administrative offices. Need to be situated close to these functions on floors 1 4 of this building.
21.66 Tenant improvement allowance included in prior numbers has been fully paid. 21.34 This is accurate. Limited alternatives close to campus that are less expensive. 21.27 Public Private Venture
21.17 This is accurate. Small business development office 21.09 Lease will expire and not be renewed as of 6/30/2013. Operations moving to Sun Trust Building at 25 Park Place.
7477 6060 7924 6784 6785 7495 5520
Regents, State Board of Regents, State Board of Regents, State Board of Regents, State Board of Regents, State Board of Regents, State Board of Regents, State Board of
5 Public Square 255 E. Hancock Avenue 1150 South Milledge Avenue 1800 Century Place, N.E. 1800 Century Place, N.E. 1100 Brampton Avenue 111 East Liberty Street
Ca rters vi l l e Athens Athens Atl a nta Atl a nta Sta tes boro Savannah
$
20.65 $
$
20.55 $
$
20.49 $
$
20.25 $
$
20.25 $
$
20.14 $
$
20.01 $
20.65 This is accurate. Lease of two offices which includes use of shared conference and break room not part of the leased SF. 20.55 This is accurate. Plan to terminate when Health Science Campus can accommodate. 20.49 This is accurate. Limited alternatives close to campus that are less expensive. 16.30 Square footage was incorrect in original BLLIP data record. 20.25 This space has been vacated 20.14 This is accurate. Small space for a small business development office 20.01 This is accurate. Lease of small suite which includes use of shared conference and break room not part of the leased SF.
5994 6669
Regents, State Board of Regents, State Board of
501 Glouchester Street 3391 Town Point Drive
Bruns wi ck Kennes a w
$
25.22 $
15.09 Updated figure
$
51.38 $
13.00 Prior entry was calculated on a 92,998 SF office building. KSU taking down space as it becomes available; square footage indicated is original take-
down, but rent assumes entire building. Pay $13 PSF for occupied space.
Notes: Original figures were taken from data extracted from BLLIP data set on 8/18/2011. Updated figures are derived from efforts by DOAA staff to confirm the accuracy of square footage and cost from the leasing entity. N/A = Updated figure not reported in time for publication.
43
State Space Management Policies
44
Appendix J
Office Leases Above Market Rates (Metropolitan Atlanta)
September 2011
City
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta Atlanta College Park College Park Conyers Conyers Conyers Conyers Cumming Dallas Dallas Dallas Decatur Fayetteville Gainesville Gainesville
Gainesville
Hapeville
Jonesboro Lawrenceville Lithonia Marietta Marietta Marietta Marietta Marietta Marietta Marietta Norcross Roswell Stockbridge
SPC-Managed Leases
Entity Name
Economic Development, Georgia Department of Economic Development, Georgia Department of Investigation, Georgia Bureau of
Address
75 Fifth Street, N.W. 75 Fifth Street, N.W. Confidential
Lease Number
6422
Rentable Square Footage
4,304
6126 6001
32,599 7,303
Natural Resources, Department of Subsequent Injury Trust Fund
4244 International Parkway, Atl. Tradeport Int. Center 285 Peachtree Center Avenue, N.E.
4426 7274
77,292 9,374
Technical College System of Georgia 75 Fifth Street, N.W.
6165
22,846
Defense, Department of
510 Plaza Drive
4868
2,483
Pardons and Paroles, State Board of 4830 Old National Highway
6758
8,208
Corrections, Department of
365 Salem Gate Drive, S.E.
6710
4,763
Defense, Department of
1820 Ga. Hwy. 20
6005
1,183
Human Services, Department of
997 Commerce Drive
5409
3,378
Pardons and Paroles, State Board of 997 Commerce Drive
5421
2,891
Juvenile Justice, Department of
104 Pilgrim Village Drive
5803
2,500
Corrections, Department of
250 Butler Industrial Drive
7272
4,699
Human Services, Department of
101 Bainbridge Way
6707
3,995
Juvenile Justice, Department of
101 Bainbridge Way
7169
5,252
Juvenile Justice, Department of
3408 Covington Highway
5784
98,220
Human Services, Department of
385 North Glynn Street
4684
2,400
Human Services, Department of
311 Green Street, N.W.
3534
666
Human Services, Department of
465 E. E. Butler Parkway
4829
5,620
Human Services, Department of Revenue, Department of
447 EE Butler Parkway, Gainestown 5848 Office Park 4245 International Parkway, Highwoods 5913 Ctr. III at Tradeport
3,700 43,414
Human Services, Department of
1287 Spur Ga. Hwy. 138
5688
6,400
Defense, Department of
905 Parkside Walk Lane
6708
2,200
Driver Services, Department of
8040 Rockbridge Road
5936
11,320
Corrections, Department of
590 Commerce Park Drive, S.E.
7160
7,500
Corrections, Department of
2275 Northwest Parkway
5272
6,720
Defense, Department of
2505 Chastain Meadows Parkway
6202
1,550
Defense, Department of
1075 Whitlock Avenue
6745
1,375
Driver Services, Department of
2800 Canton Road
5937
9,630
Human Services, Department of
325 Fairground Street
3223
49,000
Human Services, Department of
590 Commerce Park Drive, S.E.
5638
9,818
Driver Services, Department of
2211 Beaver Ruin Road
6009
14,861
Defense, Department of
875 Mansell Road
6747
1,500
Defense, Department of
5244 North Henry Boulevard
6431
1,600
Total Rent
$ 123,551
$ 680,487
$ 157,161
$ 1,649,740
$ 197,135
$ 581,691
$
39,900
$ 136,514
$
75,235
$
27,292
$
56,176
$
45,490
$
44,338
$
61,849
$
49,415
$
69,081
$ 2,188,176
$
46,848
$
14,234
$ 118,067
$
73,210
$ 833,115
$ 131,848
$
50,074
$ 275,913
$ 139,350
$ 122,640
$
44,940
$
28,875
$ 235,844
$ 788,136
$ 157,572
$ 362,215
$
34,918
$
37,600
Cost Per Square
Foot
$ 29.28
$ 20.87
$ 21.52
$ 21.34
$ 21.03 $ 25.46 $ 16.07 $ 16.63 $ 15.80 $ 23.07 $ 16.63 $ 15.74 $ 17.74 $ 13.16 $ 12.37 $ 13.15 $ 22.28 $ 19.52 $ 21.37 $ 21.01
$ 19.79
$ 19.19
$ 20.60 $ 22.76 $ 24.37 $ 18.58 $ 18.25 $ 28.99 $ 21.00 $ 24.49 $ 16.08 $ 16.05 $ 24.37 $ 23.28 $ 23.50
Market % Above Rate1 Market
$ Above Market
$ 20.22
45% $ 38,994
$ 20.22
$ 20.22
$ 20.22
$ 20.22 $ 20.22 $ 13.84 $ 13.84 $ 15.25 $ 15.25 $ 15.25 $ 15.25 $ 16.98 $ 7.28 $ 7.28 $ 7.28 $ 19.29 $ 16.64 $ 18.50 $ 18.50
$ 18.50
3% $
6% $
6% $
4% $ 26% $ 16% $ 20% $
4% $ 51% $
9% $ 3% $ 4% $ 81% $ 70% $ 81% $ 15% $ 17% $ 16% $ 14% $
7% $
21,335
9,494
86,896
7,593 119,744
5,535 22,915
2,599 9,252 4,662 1,402 1,888 27,640 20,331 30,847 293,513 6,912 1,913 14,097
4,760
$ 11.50
$ 13.82 $ 19.11 $ 19.01 $ 14.33 $ 14.33 $ 14.33 $ 14.33 $ 14.33 $ 14.33 $ 14.33 $ 13.77 $ 15.66 $ 15.65
67% $
49% $ 19% $ 28% $ 30% $ 27% $ 102% $ 47% $ 71% $ 12% $ 12% $ 77% $ 49% $ 50% $
333,854
43,400 8,032
60,720 31,875 26,342 22,729
9,171 97,846 85,966 16,880 157,579 11,428 12,560
Stockbridge Sheriffs' Retirement Fund of Georgia 3000 Ga. Hwy. 42 North
6999
288 $
19,800 $ 68.75 $ 15.65 339% $ 15,293
Tucker Tucker
Behavioral Health and Developmental 100 Crescent Centre Parkway Disabilities, Department of
Law, Department Of
2100 East Exchange Place
6069 4960
10,452 $ 14,888 $
194,094 $ 275,428 $
18.57 $ 16.63 18.50 $ 16.63
12% $ 11% $
20,277 27,841
Villa Rica
Audits & Accounts, Department of 150 Stone Street
7481
1,448 $
25,046 $ 17.30 $ 16.00
8% $
1,878
Woodstock
City Atlanta
Banking & Finance, Department of
Entity Name Labor, Department of
645 Molly Lane
5390
3,131
Agency-Managed Leases
Address
Lease Number
Rentable Square Footage
1700 Century Circle
6544
26,553
$
52,267
Total Rent $ 610,985
$ 16.69
Cost Per Square
Foot $ 23.01
$ 16.67
0% $
73
Market % Above Rate1 Market
$ Above Market
$ 20.22
14% $ 74,083
Atlanta
Labor, Department of
151 Ellis Street, CARE Building
6545
10,472 $ 235,620 $ 22.50 $ 20.22
11% $ 23,876
Atlanta
Regents, State Board of
75 Fifth Street, N.W.
6670
48,790 $ 1,591,530 $ 32.62 $ 20.22
61% $ 604,996
Atlanta
Regents, State Board of
75 Fifth Street, N.W.
7499
500 $
14,730 $ 29.46 $ 20.22
46% $
4,620
Atlanta
Regents, State Board of
PPV - Research - Yamacraw
7539
200,459 $ 5,795,550 $ 28.91 $ 20.22
43% $ 1,742,269
Atlanta
Regents, State Board of
75 5th Street
7900
2,555 $
70,476 $ 27.58 $ 20.22
36% $ 18,814
Atlanta
Regents, State Board of
3475 Lenox Rd., N.E.
6166
33,385 $ 800,184 $ 25.72 $ 20.22
27% $ 183,618
Atlanta
Regents, State Board of
PPV - Office - Technology Square/EDI 5964
36,429 $ 825,000 $ 22.65 $ 20.22
12% $ 88,406
Atlanta Atlanta Atlanta
Regents, State Board of Regents, State Board of Regents, State Board of
75 Fifth Street, N.W. PPV - Office - Tech Square-College of Management 34 Peachtree Street, N.W.
6049 5957 6015
32,740 $ 730,086 $ 188,872 $ 4,018,000 $
80,207 $ 1,843,348 $
22.30 $ 20.22 21.27 $ 20.22 21.09 $ 20.22
10% $ 5% $ 4% $
68,083 199,008
69,780
Atlanta
Regents, State Board of
1800 Century Place, N.E.
6785
2,591 $
52,468 $ 20.25 $ 20.22
0% $
78
College Park Labor, Department of
1630 Phoenix Boulevard
6553
48,539 $ 898,942 $ 18.52 $ 13.84
34% $ 227,162
Covington
Regents, State Board of
PPV - Office Space - Newton Campus 6766
105,000 $ 1,553,753 $ 14.80 $ 13.32
11% $ 155,153
Cumming
Labor, Department of
100 Colony Park Drive
6602
3,376 $
62,794 $ 18.60 $ 16.98
10% $
5,469
Dallas
Labor, Department of
101 Bainbridge Way
6604
3,939 $
55,146 $ 14.00 $ 7.28
92% $ 26,470
Decatur
Labor, Department of
755 Commerce Drive
6606
4,148 $
90,219 $ 21.75 $ 19.29
13% $ 10,204
Jonesboro
Labor, Department of
2450 Mt. Zion Parkway
6565
32,544 $ 711,412 $ 21.86 $ 13.82
58% $ 261,654
Lawrenceville Regents, State Board of
2350 Sever Road
7390
60,000 $ 1,848,681 $ 21.66 $ 19.11
13% $ 153,000
Marietta
Labor, Department of
465 Big Shanty Road
6568
27,000 $ 535,680 $ 19.84 $ 14.33
38% $ 148,770
Marietta
Labor, Department of
877 Franklin Road
7461
7,875 $ 127,260 $ 16.16 $ 14.33
13% $ 14,411
Marietta
Regents, State Board of
1640 Powers Ferr Road, N.W.
7520
1,920 $
32,676 $ 17.02 $ 14.33
19% $
5,162
Norcross
Labor, Department of
2211 Beaver Ruin Road
6572
37,040 $ 833,763 $ 22.51 $ 13.77
63% $ 323,722
Peachtree City Regents, State Board of
1200 Commerce Drive
7472
10,567 $ 238,486 $ 22.57 $ 17.34
30% $ 55,255
1Market rates for metro Atlanta were provided to SPC by a private real estate firm. We were unable to verify the accuracy of these rates or determine if the averages consist of properties
similar to the state's office properties in location and quality.
Source: SPC and Building, Land, & Lease Inventory of Property (BLLIP data as of August 2011)
For additional copies of this report, call 404-657-5220 or visit www.audits.ga.gov/rsaAudits