On June 9, 15 leaders with responsibility for millions of square feet of Federal real estate gathered for GII and the McKinsey Public Sector practice’s Federal Real Estate and Facilities Roundtable in Washington, DC. In a wide-ranging discussion, participants explored how increase mission performance through real estate programs including defining real estate priorities in support of agency strategy and aligning capital and operational spending to support the priorities.
Context: The US Federal Government's facilities and real estate portfolio is amongst the largest and most diverse in the world, ranging from research labs to secure defense installations. The US General Services Administration (GSA) reports that Federal agencies occupy 273,000 buildings (92% owned) for a total 2.8 billion square feet and approximately $27Bn annual spend in annual operating cost. These facilities are critical to delivering on their respective agency missions but are being severely challenged as the portfolio ages and experiences chronic funding gaps. Identifying approaches for the government to leverage its real estate portfolio to enhance mission performance is a critical opportunity for the next administration and for the leaders of each Department and agency. This peer-to-peer workshop was designed to surface concrete actions on how to improve federal real estate and facilities programs and meet challenging objectives in the future.
Some of the key themes included:
- Real estate decisions provide an important catalyst to enhance agency performance. When considering operational performance improvement, agency executives should look to their real estate program as a tool to increase operational efficiency and agility, collaboration, and even talent attraction and retention. Capital investments provide the opportunity to align broader agency leadership around a compelling narrative in support of transformation
- Real estate portfolios should be assessed based on the outcomes they deliver. Outcome Based Portfolio Allocation allows identification of the investments that have the highest impact on mission performance. Comparing a variety of investment scenarios enables agency leaders and real estate leaders to work together and quickly realign against evolving priority areas. Used in concert with business case scrubbing and end-user feedback, real-estate managers are given the insight to focus their investments in support of mission achievement.
- Complex and changing priorities necessitate tools for rapid adaptation. In an environment where operating priorities, locations, and technologies are rapidly changing, facilities owners need tools to rapidly adapt their capital investments. Portfolio assessments should consider when physical space will be a persistent need for operations and when a facility should remain flexible. Streamlining the leasing process and investing in more flexible workspaces provide a few opportunities to build flexibility when investing capital. Owners should also consider non-capital solutions to enhance the operating efficiencies and improve the utilization of existing facilities when long term uncertainty exists.
- Reimagine real estate in a broader system leveraging private investment and alternative delivery models. Approaches to leverage private investment in real estate and facilities are currently limited in the Federal government. However, many States and other countries have begun to recognize that facilities and real estate are part of a larger system of assets that don’t always require direct government ownership. They leverage a variety of alternative models including Public Private Partnerships to increase investment and provide higher performing facilities. Programs including enhanced use leases and a pilots for Public Private Partnerships are beginning to take hold in the Federal government but have not yet received wide adoption. Re-envisioning programs to increase private investment could enable further increases in mission performance.
 General Services Administration, FY2015 Federal Real Property Profile, https://d2d.gsa.gov/report/federal-real-property-open-data-visualization, Accessed June 10, 2016