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

The order is for the federal government’s nationwide real estate holdings. Government operations in the Washington, DC area, however, will no doubt be closely scrutinized. Besides selling off the approximate 14,000 vacant buildings that the government owns or consolidating the 55,000, or so, that have been deemed underutilized, the new order is also likely to mean a stepped up aggressiveness in how GSA negotiates leases with private sector landlords.

That, more than any other development stemming from this order, is likely to have the biggest impact on the DC area. In many respects, the government is not a particularly savvy consumer of commercial real estate, Joe Brennan, head of Jones Lang LaSalle’s Government Investor Services group, tells GlobeSt.com. It often waits until a lease is near expiration or has expired before it will renegotiate the terms, he says--something that causes complications on both sides of the table. This new order, he speculates, will likely lead to an end to that procrastination.

Private sector tenants have been taking advantage of the current market by renegotiating leases early--why not the federal government, Brennan says. The government "is so process driven--if they could push that aside and be a little more nimble, they could be a powerful force." 

The government has already become a savvy negotiator for new leases, he adds. In NoMa, "the federal government came in, negotiated very aggressive deals and the investors in those buildings weren’t happy about it." Brennan tells GlobeSt.com that on a net effective basis, the government struck deals in the mid- to high-$30s per square foot. "That is a very good rent for DC," he says.