1. Erin Armstrong PBS Pricing Desk Guide: Recent Updates Client Solutions Division 77 Forsyth Street, SW Suite 110 Atlanta, GA 30303 404.331.3584 www.gsa.gov March 28, 2012

2. 2 What We’ll Cover Today Pricing Updates –Release of space –Penalty for project cancellation –All lease construct projects are now by default non-cancelable –Application of TI allowance to movable walls GSA Public Buildings Service

3. Release of Space Customers cannot release space (leased and federally owned) within the first 16 months of an OA term. –Example 1: Customer provides written notice to release space 6 months into a 5 year cancelable OA. Customer pays rent for the first 16 months. –Example 2: Customer provides written notice to release space 14 months into a 5 year cancelable OA. Customer pays rent for the first 18 months. –Example 3: Customer provides written notice to release space 20 months into a 5 year cancelable OA. Customer pays rent for the first 24 months. 3 GSA Public Buildings Service

4. Release of Space Revised PDG language (changes underlined): 5.3.1.Four-Month Space Release Right With 4 months’ written notice, tenant agencies have the right to release space to PBS when all of the following conditions are met: There is no longer a need for the space The space is in marketable blocks (see section 5.3.2) The space is not designated as non-cancelable in the tenant agency OA (see sections 2.15.2.A and 5.2 for definition of non-cancelable) The tenant is at least 16 months into their occupancy term Tenant agencies should submit their written notice to PBS immediately upon their intent to release space. PBS will continue to charge Rent for cancelable space during the first 16 months of an OA term. These Rent charges will removed if PBS finds a backfill tenant, only to the extent to which the backfill tenant agency’s Rent (not including TIs) covers the total Rent obligation of the vacating agency. 4 GSA Public Buildings Service

5. Release of Space Regional PT Directors retain the ability to approve PBS accepting return of space with less than 4 month notice via a Regional pricing deviation. However, the first 12 months of rent after rent start cannot be waived. 5 GSA Public Buildings Service

6. Penalty for Project Cancellation Update the penalty for a customer cancelling a project after contract execution and prior to rent start to align with the new 16-month restriction. Revised PDG language (changes underlined): 5.1.2.After Contract Execution, Prior to Rent Start For cancelable assignments only, if a tenant agency decides to cancel its plans for occupancy after PBS obligates the government to a contract and before rent starts, then the tenant agency is liable for the lesser of these costs: –The 16 month rental obligation had it occupied the space, plus the unamortized balance of the tenant improvements (TIs), or –In the case of a lease, the lease buyout costs, or –In the case of federally owned space, the total project costs incurred 6 GSA Public Buildings Service

7. OAs for Lease Construction The OAs for any lease construct project will be designated non-cancelable unless a cost benefit analysis clearly demonstrates that the market conditions support GSA assuming the vacancy risk and the Regional Commissioner agrees to the designation in writing. Revised PDG language (changes underlined): 5.2. Non-Cancelable Space Non-cancelable space is characterized by the low probability of PBS finding a backfill tenant due to specific qualities of the space, including: –Remote or not easily accessible location –Lease construction –Special-purpose use or buildout necessitating significant capital outlays to retrofit the space to a more conventional use –Unusual term –Lack of any realistic federal need for the space, other than the requesting tenant agency –Any other factors that would significantly impair PBS’ ability to backfill the space 7 GSA Public Buildings Service

8. Application of TI Allowance Revised PDG language (changes underlined): 2.5.9. and 3.6.9. Application of Tenant Improvement Allowances The TI allowance (general and customization components) may be used only to pay for items that are real property, or which become real property when attached or affixed to the building. The TI allowance is not available to fund personal property such as furniture, microwaves, refrigerators, artwork, personal computers, audiovisual equipment, televisions for conference rooms, phone handsets, or physical relocation expenses of personal property. PBS lacks the authority to use budget activities that fund the TI allowances for personal property purchases. Modular wall systems that serve as the functional equivalent of drywall partitions and belong to the building owner at the end of the occupancy term may be purchased with the TI allowance. 8 GSA Public Buildings Service

9. 9 Region 10 Northwest / Arctic Jessica Best 253.931.7977 Region 9 Pacific Rim Nia Brown 415.522.3203 Region 7 Greater Southwest Mike Llewellyn 817.978.2042 Ann Marie Sushinsky 303.236.5363 Region 8 Rocky Mountain Region 6 Heartland Patti Comstock 816.823.1684 Erin Armstrong 404.562.1954 Region 4 Southeast Sunbelt Region 5 Great Lakes Kim Barnes-Staples 312.353.3283 Region 1 New England Bryan Hodgkins 617.565.5808 Region 2 Northeast & Caribbean Region 3 Mid-Atlantic Tim Kusniez 215.446.5863 Joe Passero 212.264.9888 Region 11 National Capital Tracy Shycoff 202.260.1098 National Space Pricing Specialists Kelly EllisonTrina Hughes Carlos Salazar 202.208.7007303.236.8000 x2223816.823.2305 Pricing Points of Contact GSA Public Buildings Service

10. 10 GSA Public Buildings Service Questions?