State Saves $103 Million on Rent
SACRAMENTO, Calif. – The Department of General Services announced today that its nearly two year effort to negotiate cuts to real estate leasing rates has saved state government agencies more than $103 million. Since February 2009, DGS has renegotiated the terms on 224 of the states commercial leases.
“Our lessors were receptive and market conditions were right for the State to save money on its rent,” said DGS Acting Director Ron Diedrich. “This effort achieves real savings for state agencies during these tough fiscal times while also giving lessors the extended tenancy they need.”
DGS real estate officers have been meeting with state agencies and lessors to seek reduced rates on leases that are nearing the end of the contract’s firm term or already in to the soft term. Typically, the state enters into contracts with a four year firm and four year soft term.
Of the $103 million in savings that DGS has negotiated, the department expects that state agencies will see immediate savings of between $20 million in the current fiscal year alone. In 2004, DGS renegotiated the terms on 165 leases and saved the state more than 70 million dollars.