WASHINGTON, DC-President Barack Obama will sign a memo Thursdaythat will require federal agencies to eliminate $8 billion inbuilding costs by the end of the 2012 fiscal year, according to the Washington Post.

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The order is for the federal government’s nationwide realestate holdings. Government operations in the Washington, DCarea, however, will no doubt be closelyscrutinized. Besides selling off the approximate 14,000 vacantbuildings that the government owns or consolidating the55,000, or so, that have been deemed underutilized, the neworder is also likely to mean a stepped up aggressiveness inhow GSA negotiates leases with private sector landlords.

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That, more than any other development stemming from this order,is likely to have the biggest impact on the DC area. Inmany respects, the government is not a particularly savvyconsumer of commercial real estate, Joe Brennan, head of JonesLang LaSalle’s Government Investor Services group, tellsGlobeSt.com. It often waits until a lease is near expirationor has expired before it will renegotiate the terms, hesays--something that causes complications on both sides of thetable. This new order, he speculates, will likely lead to anend to that procrastination.

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Private sector tenants have been taking advantage of thecurrent market by renegotiating leases early--why not thefederal government, Brennan says. The government "is soprocess driven--if they could push that aside and be a littlemore nimble, they could be a powerful force."

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The government has already become a savvy negotiator for newleases, he adds. In NoMa, "the federal government camein, negotiated very aggressive deals and the investors inthose buildings weren’t happy about it." Brennan tellsGlobeSt.com that on a net effective basis, the government struckdeals in the mid- to high-$30s per square foot. "That isa very good rent for DC," he says.

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