■REAL ESTATE Real Estate Dot Gov When doing business with government, one expects certain amount of bureaucracy and a slow process, in exchange for guaranteed payment. It can be said that landing a government agency or a public school as a tenant strengthens credit rating of real estate asset immediately: they “always pay on time,”stay in place for a long time, and generally use a facility less than a private sector tenant. But “buyer beware” – before any landlord or broker can close a deal with a dot gov, they better be prepared for a few twists and turns in the road. For one, to conduct any business with city, state or federally chartered agency, an entity may have to be GSA-certified, and the process to get certified is long and grueling. It simply means that once you have received such blessing, you may now bid to provide services to the government. But can you afford it? It is said that to be a landlord to public sector agency, one must have deep pockets. For one, the leasing process takes forever. Even after all business points of a deal have been agreed upon, it may take longer for an entity like CUNY to approve a lease than it would take for a multi-billion dollar company. There are good reasons beyond bureaucracy for this. For one, unlike in all other real estate transactions where the landlord provides and dictates the lease, government issues the lease using their own template. Such lease contains many unusual items, like a right to cancel the lease in case the particular branch or department were to get de-funded or de-commissioned, making it bit hard for landlord to accept. Then there are a slew of requirements, from unrestricted access and beefed up ADA requirements, to security and construction specs, as well as design standards and exterior signage, all of which must meet that agency’s specific guidelines. Normally much of the construction and design specs do not need to be in such detail in the lease. However, since the budget and payout process of a government agency is extremely slow and requires multiple signatures, every penny should be accounted for to avoid going back to ask for more later. There are some tricks to be used to expedite things. For example, anything that the landlord pays for directly is simpler and faster. If government tenant were to order furniture, fixtures and hire contractors, they would need to follow a bidding process that may take months and even years to complete. So, instead, the landlord may be asked to pay for and coordinate all the up-front costs and then be reimbursed 30 to 90 days later. But such up-front bills, when combined with core construction, could run into hundreds of thousands, even millions of dollars – hence the reference at the beginning of this paragraph: can an average landlord afford to put in this much cash before receiving even one penny of rent? For those who like the stability and can afford it, the wait is usually worth it. Yes, it is counter intuitive for landlord to send a signed lease before the tenant does and it takes a lot of patience to negotiate every detail with a committee of 12 different departments and stakeholders, but when you know that your tenant will always pay the rent and always does everything by the book, you put up with all the up-front headaches. Another benefit that comes from dot gov’s aversion to change is stability. It is often expected that government agency or a school will eventually take on more space in the property, or even take over all of it at some point, assuming all the expenses and signing up for 20 or more years of paying rent, making the real estate asset very stable and low-maintenance. In addition, once you make a deal with particular people or branch of government, they tend to prefer doing business with you again. The same goes for brokers and architects and contractors, some of whom specialize in working with city state or federal agencies, or public schools. After all, if you have passed the muster once, and put up with all their quarks and demands, chances are you’d do it again. And in that one area the public sector starts to resemble private business – relationships are important and help skip some of the ticker tape. Price becomes a lesser consideration and comfort level or trust between people, not private and public entities make the world go round. by david dynak David Dynak is a real estate broker at First Pioneer Properties and an LIC resident. He’s lived in Western Queens since 1993. ABSOLUTE CLEANERS SERVICING ALL L.I.C. BUILDINGS WITH OUR FREE NO HASSLE VALET PICK UP & DELIVERY RIGHT TO YOUR RESIDENCE • Custom Dry Cleaning • Shirt Laundering • Tailoring & Alterations • Leather & Suede • Wash & Fold Service • Drapery Cleaning • Houldhold Items • Free Box Storage www.absolutecleaners.net 4-71 48th Ave. • 7 18.392.3139
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