KDC’s extensive development expertise, commitment to sustainability and financial capacity make it an ideal partner for the General Services Administration (GSA), which handles the real-estate-related needs for most federal agencies and serves as the government’s landlord. KDC has partnered with Oklahoma City-based M.L. Harris & Company to aggressively pursue GSA projects and has already been awarded the assignment to develop a facility for the Federal Bureau of Investigation in Salt Lake City.
Working with the federal government not only provides KDC with a steady source of development opportunities, but it also offers the opportunity to work on unique and complex projects that increase the company’s knowledge base, according to Don Mills, an executive vice president with KDC. “GSA projects often require sophisticated building technologies, cutting-edge sustainable elements and enhanced security features,” Mills notes. “Working on these projects allows us to refine our process, as well as learn new things that we can share with our private-sector clients so they end up with even better facilities. In that sense, it benefits everyone for us to partner with the GSA.”
Federal Agencies Continue to Expand
The federal government is, by far, the nation’s largest tenant. The GSA owns or leases 9,600 assets and maintains an inventory of more than 362 million square feet of space, according to a report issued by the House Transportation and Infrastructure Committee.
Although the GSA’s funding has decreased significantly during the past two years, and the organization is under political and taxpayer pressure to reduce expenses by maximizing its existing portfolio, there are certain federal agencies that require specific accommodations that cannot be found within existing buildings. Moreover, many GSA tenants — the U.S. Drug Enforcement Agency (DEA) and U.S. Immigration and Customs Enforcement (ICE), for example — are not suited for multi-tenant properties because of the type of traffic they bring to the buildings.
“While the government would like to occupy space in existing buildings to help the real estate markets, the reality is that, in order to meet the special needs of certain agencies, the GSA is forced to construct new buildings,” explains KDC Southeast Division President Larry Wilson.
As a result, the GSA continues to seek out partners for new development projects. “The government has money to spend, and KDC has positioned itself to meet the needs of the GSA,” says Mark Harris, principal and owner of M.L. Harris & Company, which was awarded its first GSA project in 1990. Historically, the GSA has preferred to build and own its facilities; however, its approach to new development has evolved to favor privatization. “The federal government has realized that it’s more efficient to hire the private sector to develop its projects and to act as the landlord,” Harris adds.
Building a GSA-Inclusive Platform
KDC got its first taste of working with the GSA in 1999 when it developed a U.S. Environmental Protection Agency (EPA) building in Kansas City. The 217,436-square-foot regional headquarters facility, which was built with environmentally-sensitive materials and an eye toward sustainability, features a four-story open atrium, a fitness center, a cafeteria and a data center.
The EPA project marked KDC’s only GSA-related development activity until it was awarded the assignment for the Salt Lake City FBI building. During that period, the company worked with the GSA in a pure landlord capacity, rather than as a developer. For example, the U.S. Postal Service and the U.S. Small Business Administration are tenants in KDC’s CentrePort project in Fort Worth, Wilson notes.
KDC decided to pursue GSA projects more aggressively in 2008 when the recession cast a pall over commercial development activity in the private sector. “We were seeing a lot more government-related activity than in the private sector, and we thought it would be a good idea to focus on GSA business,” Wilson recalls. “We made a conscious decision to pursue build-to-suit leased projects with the GSA, and since then, we’ve realized that it’s a line of business that we want to pursue in all economic environments because of the steady volume of work available.”
Partnering with GSA Pros
But winning GSA deals, whether they’re leases in existing buildings or new developments, is difficult. Since most commercial property owners consider the federal government to be a highly desirable tenant — they like Uncle Sam’s credit — GSA projects receive many bids, Harris says. He estimates that new development projects routinely attract 20 or more bidders.
But it’s not just the number of bidders that makes GSA projects so difficult to win — it’s also the government’s preference to work with companies it has worked with extensively, Harris explains. That’s why KDC — despite its previous experience with the GSA through the Kansas City EPA project — decided it needed a partner who had a lengthy and successful track record working with the GSA. “We determined that, in order to be effective, we needed to have a partner, and we were fortunate to be introduced to Mark Harris,” Wilson says. “Mark brings a strong knowledge of the bidding process for GSA, how to formulate responses and how to propose the projects.”
KDC also carefully reviewed previous GSA projects to determine which design and construction firms were winning GSA bids and eventually built a team that collectively boasts nearly a century of experience working with the GSA. The team working on the Salt Lake City project, for example, includes Rees Associates, an Oklahoma City-based architecture firm; and VCC Construction of Atlanta. Both companies have a successful track record with the GSA.
In addition to KDC’s exceptional design and construction team, Harris says the company boasts several differentiating characteristics. “KDC has the technical abilities, as well as the staff and the support to handle the federal government’s unique requirements,” he points out, adding that KDC also is a leader in the green movement, which is a priority for the federal government.
Perhaps most importantly, KDC has the money to tackle some of the GSA’s larger and more complex projects. “The GSA wants to feel confident that its partners can perform financially if they’re chosen to do a project,” Mills notes. “We’ve heard repeatedly that the universe of companies the GSA used to work with has dwindled quite a bit because those companies are struggling to get projects financed. We have not had any issues with that because we’ve got a very strong balance sheet and an excellent relationship with the real estate lending community. That’s a big selling point — for the GSA to know we’re in good financial condition.”
In fact, Wilson contends that KDC’s financial capacity allows the company to provide a better deal to the GSA — and, ultimately, taxpayers. “Our ability to finance projects at a lower cost than the competition gives us an edge,” he asserts. “We feel like we can exceed the GSA’s requirements at a cost that is compelling, delivering a project that will allow our federal agencies to operate at the highest level while also making good use of taxpayer money.”
FBI’s Most Wanted: A New Home
Soon after KDC and M.L. Harris & Company began bidding on GSA projects, the team won its first assignment — the new Federal Bureau of Investigation (FBI) field office building in Salt Lake City, Utah. Construction on the 165,000-square-foot facility began in March 2011.
Located on the west side of Salt Lake City, the four-story building will house roughly 300 federal employees. The project also includes a structured parking deck.
The new building, which represents M.L. Harris’ sixth FBI development project, is part of a 10-year plan to replace or modernize 39 FBI field offices and four major resident agency facilities across the country. The bulk of these projects are being accomplished
through build-to-suit lease construction. The FBI will occupy the new Salt Lake City building through a 20-year lease with KDC and M.L. Harris.
Currently, the FBI field office is situated in a highrise in downtown Salt Lake City that does not meet the agency’s security requirements, according to KDC Southeast Division President Larry Wilson. The new building is blast-proof and will require more than 4 million pounds of steel and 7,000 yards of concrete.
Designed to achieve LEED Gold certification from the U.S. Green Building Council, the facility will feature building materials that contain at least 30 percent recycled content and will be extracted and manufactured within 500 miles of the project site. It will showcase an ornamental staircase capped by a pyramid-shaped skylight, providing natural light deep into the interior of the building.
The project is scheduled for completion in October 2012.