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Federal Govt. Getting Out of Warehouse Business

Could Exit Millions of Square Feet Over Next Five Years
February 10, 2014
The federal government’s main acquisitions and supply services group is revamping the way it does business, a move that could see it exit millions of square feet of warehouse distribution space.

The move comes as the U.S. General Services Administration’s Federal Acquisition Service (FAS) has been coping with reduced budgets.

“In this new environment, GSA must find new ways to provide better, faster and more efficient services to our military and civilian customers,” said Tom Sharpe, Commissioner, FAS. “To that end, we are preparing to make important changes to our business model which will transform the way we provide supplies and services to the government.”

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“We are shifting to a model that uses the capabilities of our vendors to directly support GSA’s customers, simplify federal acquisition, and over the next five years save taxpayers a half billion dollars,” Sharpe said.

“In recent years, we have operated a wholesale supply business that relied on warehouse distribution centers serving U.S. customers as well as customers in Europe, Africa, the Middle East and around the Pacific Rim,” he said. “Along with the distribution centers, GSA also manages several retail stores around the world that stocked inventory from those warehouses. This model is costly, cumbersome and no longer the most efficient or effective approach to supporting our federal partners.”

Changing this system will mean an overhaul of FSA's wholesale and retail supply chain business models. Instead of routing federal agency orders to its distribution centers for fulfillment, the FSA will have its commercial suppliers ship directly to customers and retail stores.

“We will transition out of the warehouse business and GSA will no longer buy, store and ship those retail items,” Sharpe said.

While it is not clear just how much of the federal government’s warehouse inventory is used by the FAS, the GSA controls a total inventory of 25.56 million rentable square feet. It leases 16.1 million square feet and owns the remainder.

Its largest leased facility is a 1 million-square-foot facility at 1900 River Road in Burlington, NJ, which is used for the federal supply service. Its lease expires in December 2020.

The largest facility it owns and classifies as a warehouse is a 1 million-square-foot building at 9700 Page Blvd. in Overland, MO, the Charles F. Prevedel Bldg. 100. At present,, the building has considerable vacancy. The federal government considers about 863,000 square feet of the building available, which would make its vacancy rate about 86%.

FAS provides federal agencies more than 12 million different products and services, and more than $55 billion in information technology solutions and telecommunications services, assisted acquisition services, travel and transportation management solutions, and motor vehicles and fleet services annually.

FAS manages more than 210 thousand leased vehicles, more than 3 million charge cards, and provides personal property disposal services facilitating the reuse of $1.1 billion in excess/surplus property.

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