Federal Government real estate portfolio underperforms… again
Jun 15, 2010
June 15, 2010
I tend to have a lot of faith in the federal government. Sure, sometimes they’re inefficient but overall I think it’s important to maintain some government control over sectors which are traditionally private sector. But it seems that the federal government, time and time again, is unable to handle its real estate portfolio successfully.
Vacancy rates remained stubbornly high, maintenance costs rose significantly and the government’s return on investment was anemic– raising questions about the business savvy of federal bureaucrats.
Most of the properties contained in the portfolio are in the Ottawa area. The target for the portfolio is between 5-8%, and the return reached 4.8%. And while some of you might think “Ahh, but they were so close!”, there’s another thing. The most recent returns were artificially inflated because of lower property values in the previous year due to the economic downturn.
But a spokeswoman for Public Works, Tricia Van der Grient, had a lot of excuses ready. First, apparently vacancy rates have improved dramatically since the report was issued. Second, she said that the private sector benchmark used to compare results of the governmentally-owned properties versus privately-owned properties is not meaningful. Van der Grient said explained the problem with the comparison to the public sector:
Public Works must respond to…providing office accommodation for to departments dealing with unforeseen situations like H1N1, threats to national security and the need for job creation.
That’s all well and good. But…they set their targets…for themselves. The whole point of having a self-imposed target is accountability. So blaming poor performance on other factors is fairly lame after the fact.