Jul 24, 2012

Don't Blame Social Security

     From WOAI:
Knowing how tight money is at the federal level one local company is questioning Social Security spending right here in San Antonio. The agency has decided to move one of its offices .... The two locations are just seven miles apart.

"The figures we're talking about are astronomical,” Henry Bonilla, former US Representative, told us.

Henry Bonilla is a consultant for MAGI Realty. Since June of 1985 the Social Security Administration has been one of their tenants. But back in February SSA signed a new lease agreement with another company. ...

The new lease agreement says before moving in Social Security will pay to renovate the building off San Pedro. The cost for improvements is $1,749,169.

But rent is also going up. At the old place, found off Woodcock Drive, SSA was paying $500,249 a year for 30,079 square feet. The new location has 32,369 square feet and Social Security will pay $1,062,089 a year for the first ten years. ...

We reached out to the Social Security Administration to ask about the costs associated with their new move. A representative out of Dallas sent us this response: "This office is hiring more judges and more staff to serve the public. The prior location could not accommodate the need for additional space."
      There is one thing anyone considering this story needs to know immediately. For better or worse, Social Security wasn't responsible for this leasing decision. That's done for all federal agencies by the General Services Administration (GSA). Social Security has a say but it's GSA's call.
     The reason for this move may be as simple as the one indicated by the Social Security spokesperson -- the agency needed more space than it could get at its old location. Obviously, there could have been other problems with the old location. We just don't know about that. The article also mentions the difference in the rental rates at the two sites. Undoubtedly, this article is giving the rental rate on the old site at the rate Social Security was paying under its old lease. What rate was MAGI offering on a new lease? What sort of renovations were they willing to do to get a new lease and who was going to pay for those renovations? That's often the game when you're negotiating office leases.
     Leasing office space is a complicated matter. I've done it for spaces a fraction the size of the one being discussed here. Even with the help of a good realtor who specializes in representing commercial tenants, I've found it confusing. It's way different from leasing an apartment. We do know that GSA handles lots and lots of leases. The agency has an incredible amount of experience in handling office leasing matters. Historically, the problem at GSA hasn't been making bad decisions on leases. The problem has been how long it takes GSA to make decisions on leases.
     Hiring a former Congressman to lobby for you on a federal office space lease? I hope this is not a common thing.
     If you've got such a great office space, why would you worry so much about losing a tenant? Wouldn't you expect to find a new tenant soon enough?

1 comment:

Anonymous said...

I agree. There may be a waste of taxpayer's money or there may not, but the landlord who is losing a tenant is not a credible witness as to the terms of the new lease.