Major Papers and Studies by Dr. Dennis Eisen

  1. Major Differences Between GSA and Commercial Real Estate Leases: This 5-page paper dating from 2014 lists close to thirty ways in which GSA leases differ from their private-sector counterparts. The list is not meant to be complete, and each item must be understood in the context of the numerous decisions and interpretations handed down by the Civilian Board of Contract Appeals. Nevertheless, it provides a neat summary of practical use for practitioners entering the field of Government real estate.
  2. Statutory and Delegated Leasing Authorities Available to Federal Agencies: The US GSA was granted dominion over all real estate matters of the federal government commencing with the Federal Property and Administrative Services Act of 1949. This exclusivity is not without exceptions, however. Many federal agencies and other governmental units have their own independent statutory leasing authority, permitting them to acquire leased space, as established either through their enabling legislation or through one or more appropriations acts. GSA also has the authority to delegate leasing authority to agencies under categorical, special purpose, and provider of choice delegations. This 6-page article, last updated in about 2010, pulls together the full spectrum of such authorities.
  3. Footprint: A Computer Model for the Analysis of Freeze the Footprint Alternatives: The Footprint Model is an Excel spreadsheet program which was created in 2014 to assist the major participants in Federal real estate in conducting a rigorous analysis of the savings generated by any action proposed under the Government's Freeze the Footprint or Reduce the Footprint directives. The model was created by Dr. Dennis Eisen, the original developer of GSA's TAPS program for enabling comparisons of lease vs. build alternatives for space acquisition, and which remains in use today at GSA and at other agencies with delegated or statutory authority.
  4. Survey of Appropriation and Cancellation Risks in State Leases: This 6-page report describes the results of a survey conducted by Dr. Dennis Eisen in 2003 for the appropriation risk associated with state leases throughout the country. By appropriation risk is meant the possibility of a lease for real property being canceled by the State for failure to appropriate the required leasing funds for that year on the part of the state legislature. The report also covers cancellation risk, by which is meant the possibility of a lease for real property being arbitrarily terminated by the State with a certain number of days notice for any (or no) reason at all.
  5. Classification and Scoring of Federal Leases: This 11-page paper last updated in 2010 describes the rules by which every real estate lease entered into by a Federal agency must be properly reflected in the agency’s budget. The manner in which a lease is accounted for depends on whether it is classified as an operating lease, a capital lease, or lease-purchase. An operating lease represents temporary rental of general-purpose space without substantial recovery by the owner of construction or acquisition costs. A capital lease represents a rental of such long duration or high payment that all or most of the owner’s construction or acquisition costs are in fact recovered during the term of the lease. And a lease-purchase includes leases in which ownership is to be transferred to the Government during or shortly after the end of the lease period, or if the Government has the option to purchase the property at a price that is less than fair market value.
  6. GSA Lease Rollover Rates: This 8-page report dating from 1995 examines the rollover rates for GSA leases in buildings met two independent investment criteria: (i) GSA leases in buildings over 30,000 square feet of net usable space in which the aggregated space leased by GSA constituted 90 percent or more of the building’s total occupiable space, and (ii) the same for buildings over 60,000 square feet of net usable space. This was the first such lease renewal study performed by Dr. Dennis Eisen and took a long time to conduct because GSA leasing data was not available online.
  7. GSA Lease Renewal Study and Addendum: This study was conducted in 2000 as an update to the prior one of 1995 to determine the lease renewal rate of GSA leases scheduled for expiration between 1996 and the year 2000. The renewal rates observed were very low, and in an effort to explain the possible reason(s) for this the results of the basic study were broken out according to the particular Federal agency assigned the space under their occupancy agreements. The "black swan" effect that caused these results to be substantially below the renewal rates observed in the prior study of 1995 did not become clear for some time thereafter. As it turned out, the disparity was due in great measure to the introduction of the Can’t Beat GSA’s Leasing Program in the mid-1990's. This program gave Federal agencies the option to conduct their own leasing activities rather than go through GSA, and several of them elected to do so, thereby becoming the direct lessee of record. Thus, while it appeared that a high number of GSA leases were not being renewed, what was happening in numerous instances where the GSA lease lapsed was that a lease agreement for continued occupation of the same space was simply entered into by and between the building owner and the Federal agency involved, and there was no way of estimating the extent of this phenomenon from the GSA lease inventory data base alone.
  8. Renewal Rates and Rental Changes in GSA Leases 2004-2005: This highly detailed, 27-page paper examined the lease renewal rate of and corresponding change in rental rates in GSA leases that occurred during the one-year period ending on March 14, 2005. During that time interval GSA undertook 502 lease actions representing continuation of occupancy and 111 lease actions representing discontinuation of occupancy, for an overall renewal rate of 502 out of the 613 total cases surveyed, or 81.9% on a nationwide basis. When broken out by space size, the renewal rate varied from 70.3% for small spaces (10,000 to 25,000 square feet) to just slightly under 90% for both medium sized spaces (25,000 to 50,000 square feet) and large spaces (over 50,000 square feet), although was 83.0% for very small spaces under 10,000 square feet. When broken out by region, the variation in renewal rate was very large, ranging from a low of 63.2% in region 8 to over 95% in regions 1, 2, 6, and 11, with a high of 97.2% observed in region 6.
  9. Renewal Rates in GSA Leases Expiring in 2010: This 8-page paper established the rate of lease renewal for a wide range of GSA leases that were due to expire during the one-year period from January 1, 2010 through December 31, 2010. Examination of the 461 GSA leases for 10,000 or more rentable square feet with lease terms of 5 or more years expiring in calendar year 2010 revealed that 84.8% of them were renewed.
  10. GSA Lease Renewal Rate Studies 1996-2014: This 4-page paper is a recap of several investigations of the GSA lease renewal rates conducted over the 18-year period from 1996 to 2014. Because each such study in its day was predicated on different benchmarks with regard to treatment of extensions, holdovers, size brackets, lease terms, single versus multiple tenants, and other factors, the results obtained do not constitute a rigorous time series examination of GSA renewal rates over that time period. Nevertheless, what has emerged from this effort is a fairly clear picture of the historical renewal rate for small, medium and large leases, as well as the impact that unanticipated "black swan" events can have on them.
  11. The Impact of Holdovers on the GSA Lease Renewal Rate for FY 2009: This 5-page paper is an analysis of 1,949 lease actions in FY 2009 that were conducted by GSA which concluded that in 205 instances the premises were vacated during the year, for an exit rate of 10.5%. It did not follow from this that the renewal rate was 89.5%, because 264 of the 1,949 cases reflected instances where the lease had expired but the government continued to occupy the space, without even a temporary lease extension in place, for a holdover rate of 13.5%. A significant proportion of these holdovers were expected to result in near-term exits, thus having a negative effect on renewal rate. Only time will tell how many of these 264 holdovers would actually result in exits. To estimate how many of these holdovers will result in exits versus being resolved and renewed, the holdovers in GSA’s space inventory at the end of fiscal years 2006, 2007, and 2008 were identified and individually tracked to determine what proportion resulted in renewal arrangements versus near-term exits. There were a total of 341 holdovers so identified, and by tracking them through time, it was observed that 32% of them resulted in exits, which had the effect of establishing the lease renewal rate as 85.1%.
  12. Renewal Rates for Large GSA Leases: This 6-page paper examined the renewal rate for 41 GSA leases for 100,000 or more rentable square feet with lease terms of 5 or more years expiring in calendar year 2010, and revealed that 90.2% of them were renewed. Although the lower lease term limit of 5 years eliminated the effect of short-term swing space, renewal rates were nevertheless seen to vary with lease term, with leases of 5 to just under 10 years having renewal rates of 87.5%, and leases of 10 years and over having renewal rates of 90.9%. To increase the confidence level of the results, the renewal rates for the 57 leases with lease terms of 5 or more years that were between 50,000 and 100,000 rentable square feet were also investigated. These were determined to be 86.0% on an overall basis, thus reinforcing the 90.2% figure for the over 100,000 square foot category, as it is well established that renewal rate is directly related to increasing size.
  13. Rent History of GSA Leases FY2001-FY2016: This one-page chart shows the history of GSA rental payments from fiscal 2001 through fiscal 2016, and shows the number of GSA lease, annual rent payments, rentable square feet, rent per square foot, and annual percentage increase in the unit rent payments. It shows that the average annual GSA rents increased by 2.94% over that 16-year period, whereas the CPI inflation rate averaged just 2.04% over the same period.
  14. Lease Renewal Study of GSA Leases that Expired in 2014: This four-part paper is a detailed study of the renewal rate of the 501 GSA leases with lease terms of at least five years and for spaces of at least 10,000 RSF. What complicated the analysis was that 190 of them (37.9%) were short-term extensions, almost all of continued as extensions into 2015, with a resulting value of 88.8% for the continuation rate by count and 83.1% by rentable area. To estimate the true renewal rate, two approaches to projecting the ultimate disposition of the lease extensions were formulated: these were a retrospective analysis that resulted in overall lease renewal rates of the expiring 501 leases of 64.3% by count and 58.0% by rentable area, and a prospective analysis that resulted in overall lease renewal rates of 73.0% by count and 57.9% by rentable area. On this basis it was concluded that 58% of the 501 expiring leases in 2014 will have been replaced by long-term leases five years later by 2019 on the basis of rentable area. How accurate this projection was will be determined in 2019. As pointed out, there are many factors that will affect the ultimate renewal, including mandates such as Freeze the Footprint and the Federal Real Property Management Reform Act that was finally enacted in late 2016.



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