The General Services Administration sold the Georgetown heating plant in Washington at auction for $19.5 million. The site will be redeveloped with high-end condominiums. (gsa.gov)
On May 13, the General Services Administration accepted a bid of nearly $3.3 million for the 221,000-square-foot James F. Battin Courthouse in Billings, Mont., after a flurry of late bidding pushed the final price up from $2.1 million. The five-story building has been vacant since last year and is contaminated with asbestos, which can be costly to remove.
Two months earlier, the Georgetown heating plant in Washington sold at auction for $19.5 million. The building has cost the government $3.5 million over 10 years in maintenance costs, but it will become high-end condominiums.
As real estate markets continue to heat up, the General Services Administration is seeing an uptick in demand for excess federal properties, with sales of buildings already eclipsing the previous year.
In fiscal 2012, GSA sold 79 properties for $37.5 million. So far in fiscal 2013, GSA has auctioned off 28 properties for $37.7 million. The agency is selling an additional 88 properties on its website.
The administration has identified nearly 14,000 excess or underused federal properties that cost the government $190 million annually to maintain. Congress has been putting increasing pressure on agencies to shed excess properties and cut costs.
“GSA is moving aggressively to dispose of excess properties, and we are currently hosting auctions, requesting industry input and offering proposed exchanges so we can put even more excess and underutilized property to new uses,” spokesman Dan Cruz said.
GSA also plans to issue a blanket purchase agreement this summer that will allow all federal landholding agencies to purchase a wide range of real estate services — including property disposal and appraisals — through a single GSA contract. The agreement will offer a streamlined approach and better prices to agencies looking to get rid of excess property, according to the agency.
“The sale of surplus federal real estate not only saves taxpayer dollars, but also puts properties to new uses at the local level, sparking commercial economic activity” and shrinking the federal real estate footprint, said GSA Region 5 Administrator Ann Kalayil, who oversaw the sale of the former Twin Cities Army Ammunition plant to the city of Arden Hills, Minn.
Heather Worthington, deputy county manager for Ramsay County, which partnered with Arden Hills on the purchase of the property, said the plant is the largest piece of undeveloped land in the region. It will eventually become a mix of residential, commercial and industrial properties.
“I think the deal was a good one both for the federal government and the county,” Worthington said.
Bob Peck, former public buildings commissioner at GSA, said agencies have some properties they may want to sell at a good price, but the driving force is getting rid of nonperforming properties to avoid high maintenance costs.
“The goal is not so much to make a big profit on the properties as to get them out of the inventory, so they can stop having to spend to maintain them,” Peck said.
Chris Roth, international director for real estate company Jones Lang LaSalle, which helped to market and sell the Georgetown heating plant, said the market has improved in recent years.
He said while most excess federal properties require environmental cleanup or extensive renovations, there remains high interest from the private sector to redevelop them.
“I would call it a good time to be selling,” Roth said.
The challenge in selling federal properties is that they are rarely used for their original purpose, which means marketing the facilities to a wide variety of companies, he said.
While GSA has made great strides to identify and sell excess properties, agencies across the government need a process similar to the Defense Department’s base realignment and closure process to dispose of large numbers of properties, Roth said.
Among excess properties that GSA has sold this year:
■The 38-year-old federal building in Moscow, Idaho, netting $2.4 million.
■Two NASA buildings in Fairview Park, Ohio, that totaled nearly 200,000 square feet across 10 acres. They sold for $1.2 million.