Short Term Lease Extension LGA38099

Justification for Other Than Full and Open CompetitionJustification for Other Than Full and Open Competition - Extension U.S. General Services Administration GSA Region 04 Leasing Division - Branch 4PR1B JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION LEASE NUMBER: GS-04B-LGA38099 PROJECT NUMBER: 7GA2284 Agency Name: Department of Housing & Urban Development (HUD) A/B Code: 8600 1. IDENTIFICATION AND DESCRIPTION OF ACTION BEING APPROVED. The General Services Administration currently leases 123,370 rentable square feet (RSF) of office space with a Common Area Factor (CAF) of 1.177014960, yielding 104,816 ANSI BOMA Office Area square feet (ABOA), storage space, and 24 structured parking spaces, at Five Points Plaza, 40 Marietta Street, Atlanta, GA 30303-2812 under lease GS-04B-LGA38099 for the Department of Housing & Urban Development (HUD). The lease expires March 19, 2019. Approval is requested to negotiate a lease extension with the incumbent Lessor without full and open competition for continued occupancy of this location for a four (4) years, two (2) years firm term. 2. DESCRIPTION OF THE SUPPLIES OR SERVICES REQUIRED. The current lease agreement for the Department of Housing & Urban Development (HUD), located in Atlanta, GA expires March 19, 2019. GSA is preparing Prospectus PGA-01-AT19 in support of this extension requirement. HUD is relocating from this leased space to Federal owned space at the Martin Luther King Building, 77 Forsyth Street, Atlanta, GA 30303. Proposed extension term and rental rates are as follows: Term: Four (4) years; two (2) years firm term extension Projected Occupancy: March 20, 2019 thru March 19, 2023 Early Termination: 120 days written notice to Lessor after 2 year firm term. 1st Year Rental Rate: $28.87 PRSF Proposed Total Annual Rent: $3,561,587.49 Proposed Maximum Building Size: 123,370 RSF / 104,816 ABOASF Parking: 24 structured secured GOV spaces Delineated Area: Federal Center CEA Downtown Atlanta, GA The estimated annual cost Year 1 of this Lease LGA38099 is $28.87 per RSF; Total Annual Rent Year 1 is $3,561,587.49 which the Operating Rent is subject to annual CPI Adjustments. The following blended rates apply: 2 Years Firm Term: $28.87 PRSF x 123,370 RSF = $3,561,587.49 x 2 years = $7,123,174.98 2 Years Non-Firm Term: $28.87 PRSF x 123,370 RSF = $3,561,587.49 x 2 years = $7,123,174.98 For a Total Contract Value for four (4) years = $14,246,349.96 3. IDENTIFICATION OF STATUTORY AUTHORITY. a. 41 U.S.C. Section 3304 (a) (1). b. GSAM 570.405 (c)(1). 4. DEMONSTRATION THAT THE ACQUISITION REQUIRES THE USE OF THE AUTHORITY CITED. FAR 6.302-1, which implements 41 U.S.S. Section 3304 (a)(1), permits contracting without providing for full and open competition when the property or services needed by the agency are available from only one responsible source and no other type of property or services will satisfy the needs of the agency. According to GSAM 570.405 (c)(1), this authority may be used for lease extensions where the agency occupying the leased space is scheduled to move into other Federally controlled space, but encounters unexpected delays in preparing the new space for occupancy. Please refer to Section 5 for an explanation of the unique qualifications of the current lessor. 5. DESCRIPTION OF EFFORTS TO SOLICIT AS MANY OFFERS AS PRACTICABAL. HUD has occupied the space under Lease LGA38099 since March 20, 1999. A lease extension is required to allow HUD to have their space in the Martin Luther King Federal Building, 77 Forsyth Street, Atlanta, GA 30303 built out to their specifications. If other space was leased for the extension period through the competitive process, the Government would incur build-out, relocation costs and double move costs, first to their temporary and then to the permanent Federal space. A double move would create an administrative and financial hardship and disrupts agency operations. Furthermore, the Government would incur additional costs for the agency's tenant improvements. GSAM 505.202 (b) (3) (ii) exempts lease extensions from the usual advertisement requirements. CoStar was utilized in a market comparison to determine contiguous space that could meet the requirement, and comparable market rental rates. However, a solicitation for expressions of interest was post on FedBizOpps on May 1, 2018 for 21 days with a closing date of May 22, 2018 for a two (2) years, one (1) year firm term. An amended FedBizOpps advertisement was posted on May 29, 2018 for 21 days with a closing date of June 18, 2018 to increase the lease term to four (4) years, two (2) years firm term. The delineated area is the Central Employment Area (CEA) of Atlanta, GA. Only the incumbent Lessor provided a qualified expression of interest by the FBO ad closing deadline that could meet the Government's minimum requirements. 6. DEMONSTRATION THE ANTICIPATED COST WILL BE FAIR AND REASONABLE: The market analysis below is reflective of current GSA leases as well as other private sector rental rates. The quoted blended rental rate of $28.87 per RSF falls within the range of the market analysis of $19.50 to $34.75 per square foot. All rental rates in the analysis are fully serviced. Each building is Class A in the downtown Atlanta CEA including the Federal Center market with space built out comparable to that of the subject property. 7. DESCRIPTION OF THE MARKET ANALYSIS CONDUCTED: A CoStar Market Research Report was produced on 11/21/2017 within the CEA/CBD/Federal Center delineated area of Atlanta, GA. CoStar yielded three (3) potential properties: 1 - 600 Peachtree St NE Bank of America Plaza Atlanta, GA 30308 Fulton County Building Type: Class A Office Space Avail: 628,582 SF Status: Built Apr 1992 Max Contig: 305,127 SF Building Size: 1,330,000 SF Smallest Space: 7,594 SF Typical Floor Size: 23,500 SF Rent/SF/Yr: $31.50-$38.00 Stories: 55 % Leased: 79.0% Expenses: 2016 Tax @ $1.68/sf; 2009 Ops @ $11.76/sf, 2011 Est Ops @ $4.86/sf Parking: 1,416 Covered Spaces are available; Ratio of 2.00/1,000 SF 2 - 34 Peachtree St NW 34 Park Tower Atlanta, GA 30303 Fulton County Building Type: Class A Office Space Avail: 184,726 SF Status: Built 1961, Renov 2005 Max Contig: 161,233 SF Building Size: 299,538 SF Smallest Space: 900 SF Typical Floor Size: 11,042 SF Rent/SF/Yr: $19.50 Stories: 30 % Leased: 38.3% Expenses: 2016 Tax @ $0.58/sf, 2012 Est Tax @ $1.75/sf; 2010 Ops @ $5.46/sf, 2012 Est Ops @ $7.00/sf Parking: Ratio of 1.00/1,000 SF 3 - 250 Williams St NW American Cancer Society Center Atlanta, GA 30303 Fulton County SWC Baker St NW & Williams ST NW Building Type: Class A Office Space Avail: 141,886 SF Status: Built Sep 1989 Max Contig: 127,690 SF Building Size: 998,770 SF Smallest Space: 1,617 SF Typical Floor Size: 110,444 SF Rent/SF/Yr: $16.00-$24.00 Stories: 9 % Leased: 86.0% Expenses: 2016 Tax @ $2.04/sf, 2012 Est Tax @ $2.34/sf; 2010 Ops @ $9.28/sf, 2012 Est Ops @ $9.45/sf Parking: 1,035 Covered Spaces @ $138.00/mo; Reserved Spaces @ $165.00/mo; Ratio of 1.00/1,000 SF Three (3) Class A office buildings in delineated Atlanta CEA/Federal Area could potentially meet the physical requirements. However, the price differential between the current location and lowest range potential relocation opportunity at $19.50 PSF would still be insufficient savings for the government to recover move and replication costs during the short-term four (4) years; two (2) years firm term extension. 8. OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL AND OPEN COMPETITION: Relocation to another facility would involve significant down-time for HUD. In addition, the Government would be forced to spend double TI costs as well as double move expenses for furniture, telephones, computer systems and security systems. It is in the best interest of the Government to maintain occupancy of the agency's current location while GSA builds-out the Federal space at the Martin Luther King Federal Building, 77 Forsyth Street, Atlanta, GA 30303. 9. COST BENEFIT ANALYSIS RESULTS: A Cost Benefit Analysis conducted on June 18, 2018 indicated that it would not be cost beneficial for the Government to relocate HUD from their current location for a short-term four (4) years; (2) years firm term. HUD remaining at the current location under a lease extension will save the Government approximately $1,688,784.00. It is projecte the agency may relocate to the Federal owned space prior to the expiration of the 2nd year of the firm term. 10. STATEMENT OF ACTIONS TO OVERCOME BARRIERS TO COMPETITION: N/A - HUD's long-term housing plan is to relocate into vacant Federal space at the Martin Luther King Building, 77 Forsyth Street, Atlanta, GA 30303. 11. CONTRACTING OFFICER'S DETERMINATION AND CERTIFICATION: I hereby certify that the above information is complete and accurate to the best of my knowledge and belief. Taking into account the lack of available space and the extraordinary move and replication construction costs associated therewith the blended rate of $28.87 per RSF for four (4) years; two (2) years firm term offered by the existing Lessor, Nakash Five Points, LLC, 1400 Broadway, 15th Floor, New York, NY 10018 falls within the market range of $19.50 to $34.75 PRSF for a full service lease which the Contracting Officer has determined to be fair and reasonable. Concurrence: Legal Review: Regional Competition Advocate: