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Anatomy of a GSA Lease
 Rental Rate
The majority of GSA leases are full service gross leases- the landlord is responsible for the payment of real estate taxes, property maintenance, insurance and utilities. All of these costs are included in the contract rent amount GSA pays to the landlord. The majority of GSA leases have flat rental rates over the term of the lease. However, some developers are now including periodic rental rate increases. Depending on the specific GSA Region in which the lease is awarded, GSA leases will or will not contain an operating cost escalation clause and/or a property tax escalation clause.
Operating Cost Adjustment
Starting with the second year of a lease and each year thereafter, GSA pays adjusted rent changes in operating costs, including cleaning services, supplies, materials, maintenance, trash removal, landscaping, water, sewer charges, heating, electricity and certain administrative expenses attributed to occupancy. To determine the base rate for operating costs, GSA uses the landlord’s annual cost estimate to operate the building provided during the competitive bid process and prior to award.
GSA uses the Cost of Living Index to determine the amount of adjustment. The adjustment consists of the base rate multiplied by the percent change in the Cost of Living Index. The percent change is calculated by comparing the index figure published in the month of the lease commencement date with the index figure published in the month which begins each successive 12-month period. GSA measures the Cost of Living Index with the Department of Labor revised Consumer Price Index for wage earners and clerical workers, U.S. city average, all items figure, published by the Bureau of Labor Statistics. Any adjustments are treated as additional rental payments to the landlord.
Property Tax Adjustment
Stated policy by GSA in regards to a property tax adjustment is to pay “only on those taxes which are assessed against the building and/or the land upon which the building is located, without regard to benefit to the property, for the purpose of funding general Government services”. The base year taxes are established at either the first 12-month period coincident with full assessment or a negotiated amount that reflects an agreed upon base for a fully assessed value of the property. Any adjustments are treated as additional rental payments to the landlord.
Adjustment for Vacant Premises
If GSA fails to occupy leased space for any reason prior to lease expiration, GSA continues to pay rent but usually at a reduced rate pre-negotiated prior to lease award. The reduction usually equates to no more than ten percent (10%) of the gross rental rate and relates to reduced operating costs for utility usage and janitorial services.
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