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North Carolina Should Dispose of Unneeded Real Property and Improve Portfolio Management to Reduce Costs (June 2015)

Summary

North Carolina’s Department of Administration (DOA) is responsible for managing the State’s portfolio of real property, consisting of nearly $28 billion in state-owned buildings and land and $65 million in annual expenditures for leased space. From a sample of 49 state-owned and leased properties, the Program Evaluation Division identified unneeded properties that could generate an estimated $14.3 million in one-time revenue and provide $2.6 million in future cost avoidance. PED found the State lacks a systematic process and data to identify unused and underutilized real property, and found DOA has not implemented portfolio management practices. The General Assembly should direct DOA to actively manage the State’s portfolio of real property; improve the completeness, accuracy, and security of the State’s inventory of real property; dispose of the unneeded properties identified in this report; and determine if suitable state-owned space can meet lease requests. The General Assembly should also modify state law to require state agencies to collect, track, and report data on state-owned and leased space and maintain a current facilities management plan.

Final Report

Executive Summary

Recommendations

PED Response to DOA Formal Response

Presentation

Handouts

Relevant Legislation:

  • Session Law 2016-119: An act to require the Department of Administration to actively manage the State's portfolio of real property; to require measurement of the current utilization of state-owned facilities; to ensure the accuracy of the real property inventories maintained by the Department of Administration; and to ensure that the use of state-owned space is maximized before leases are entered into or renewed, as recommended by the Program Evaluation Division of the General Assembly.

Agency Actions:

  • Thirteen properties identified for disposal by PED’s report have either been sold, are under contract, or are on the market. Combined revenue generated by the properties that have been sold or are currently under contract is approximately $6 million.
  • Two of the leases highlighted by PED as opportunities to optimize utilization have been terminated and relocated, generating annual savings of approximately $54,000
  • DOA contracted with CBRE, Inc. to evaluate the State’s current real estate procedures and management structure and to advise how the State can increase efficiencies, reduce costs, and improve service delivery through better real estate management practices. In November 2016, CBRE issued its Phase 1 deliverable, which focused on three recommendations: centralized management of all real estate functions by the State Property Office; a more robust and dynamic data management platform; and updated space standards that reflect current industry trends.
  • Agencies are now required to provide data on utilization in state buildings and leases they occupy using new space standards effective December 1, 2016.

Press Coverage: