By Carter President Scott Taylor
Georgia voters on Tuesday, November 6, overwhelmingly approved a Constitutional amendment to allow state entities to enter into multi-year rental agreements, which will allow the state to negotiate longer leases.
This is great news for owners of and investors in commercial real estate. Now that the State Properties Commission can sign long-term agreements, developers can use these agreements to secure financing for new buildings when appropriate. Long-term leases with the state of Georgia also will make the occupied buildings more attractive to investors when owners seek to sell or recapitalize a property.
The amendment also is good news for the state because it will strengthen its position when negotiating for a multi-year instead of a one-year lease. Landlords typically offer better lease rates, higher tenant-improvement allowances and more concessions on longer leases.
Previously, Georgia was one of a handful of states in the country that had not modernized its law to allow for multi-year leases of commercial real estate. Now that this law has been modified, it means the following for our state and for those of us in the commercial real estate industry:
- Huge savings of taxpayer dollars. The State Properties Commission estimates taxpayers will save nearly $3.5 million in the first year, and $66 million over ten years.
- Virtually no one in the private sector signs single year commercial leases any more, and now that the state won’t either, we’ll see greater efficiency in government– much like that in the private sector.
- Enhanced landlord interest and more competition to attract state agencies to their properties.