GSA lease terminations causing headaches for landlords
The Trump Administration’s attempt to cancel commercial leases for federal agencies is creating confusion and disruptions for property owners throughout the region.
In one example described by the Washington Business Journal, the General Services Administration sent a notice to Tom Cafferty, president of Commercial Real Estate Services, that it is terminating its lease for an office building at 5301 Shawnee Road in the Alexandria area of Mason District.
The U.S. National Technical Information Service has leased 35,000 square feet in that building, called Shawnee Plaza, since 2009. The lease “clearly states the GSA has no current right to terminate,” the article states.
The National Technical Information Service is a bureau of the U.S. Department of Commerce that maintains and analyzes federal data.
According to the WBJ, “Cafferty spent hours trying to get hold of someone at GSA to rectify the mistake.” When he couldn’t get through to anyone “he engaged his attorney, Bob MacKichan of Holland & Knight LLP, to press the matter with GSA’s general counsel.”
Eventually, he received a two-sentence email revoking the termination notice and confirming the lease remains in full force.
Cafferty told WBJ he’s not going to try to recoup the money he spent on attorney and consultant fees. “I’m just going to write it off as a clerical error, and I think that error came from a zeal to terminate leases. A mistake was made, and it cost me, but I’m not going to pursue it,” Cafferty said.
The Department of Government Efficiency “in its exuberance to slash the federal real estate footprint, has been targeting as low-hanging fruit leases in their “soft” term – meaning they have clauses enabling the government to get out early, often years early, after giving notice, usually 120 days,” the WBJ article states. “Leases transition into their soft term after an earlier ‘firm’ term, during which the government cannot leave early.”
“In Cafferty’s case, a publicly available GSA lease inventory wrongly indicates his soft term began in 2024, when in fact it doesn’t begin until 2029,” it states.
“The government has been sending out a number of lease terminations that appear to be auto-generated and that are mistakenly seeking to terminate leases that are in the firm term,” states a mass email from Holland & Knight. “The government does not have the right to terminate in the firm term.” Bob MacKichan urges landlords who receive these notices to engage counsel and push back.
8 responses to “GSA lease terminations causing headaches for landlords”
Leave a Reply to Cary Cancel reply
Not everyone has the financial means to simply write off the incredibly stupid mistakes being committed by DOGE under the umbrella of “efficiency.” DOGE has no accountability and is making a mockery of the word efficiency.
Ready , fire , aim … There’s a reason for training feds to be diligent and thorough …reinforced over decades of service. It’s slow, it’s snoozing at times. But overall it provides stability.
Agree with Chilidog totally!
Don’t worry landlord, Fairfax Chairman and his merry band will turn your building into a data center…
The Government is lucky that the Lessor did not say the termination was in full force and effect and if the government wished to stay beyond the effective date of the termination the rental rate would increase by $xxx.
So many “termination” notices were sent in error, never mind the ones that were “correct,” but the tenant agency still needed the space and had no plans to vacate.
Almost all government contracts have a “termination for convenance” clause. It is a requirement per the Federal Acquisition Regulation as the government is sovereign. If that is not in the contract then the landlord was smart in the negotiations and it would be a standard mistake for GSA. I’ve lost count of how many times GSA hasn’t been reliable for anything for the Department that I work for. Most professionals that I know and work with GSA describe the relationship as working with the Mob – GSA takes their lick (fee/cut) and you never know what you will get. Don’t get me wrong, there are good and bad people everywhere, but GSA’s business model/ practices need to be more transparent and accountable, if not reformed.
The sad issue is with personnel returning to offices from remote status, if you keep voiding leases, where are you going to put them. Government offices are already overwhelmed by the lack of space in hospitals, office buildings, and cbocs. Some of the positions require privacy but no consideration to that is being given. My heart is saddened by the treatment and discarding of people that serve well and with dedication.