Photo of Reginald M. Jones “The risk for lessors is that GSA’s methodology differs from the plain language of the lease,” Jones writes.

WASHINGTON, DC—The General Services Administration has used an unexpected tactic to avoid paying operating cost increases to REITS, commercial developers and other commercial landlords that lease real property to the federal government.

Imagine you are at the tail end of a long term lease. The lease includes an operating cost escalation clause to cover the cost increases in the Consumer Price Index over the life of the lease.  During negotiations over a lease extension or renewal, GSA conveniently omits any discussion of resetting the base, against which those cost increases have been measured historically.

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