Building and Planning Services

Private Sector Leased Office Space

Frequently Asked Questions

1. How do I acquire private sector leased office space?

2. How do I obtain real estate services tenant representation?

3. Where do I obtain ADOA’s approved “boiler plate” lease format for leasing privately owned office space?

4. What is a full service lease?

5. What is a net lease?

ARS § 41 – 792. D. provides the Arizona Department of Administration (ADOA) authority to approve all state agency leases for privately owned office space, except for state universities

The goals of the ADOA private sector leasing administration program are to:

• Ensure state agencies are leasing space in the most economical manner.
  
  
• Achieve format consistency of state lease contracts. ADOA provides its Building System agencies with an approved “boiler plate” lease format.
  
  
• Maintain an accurate database for leased office space that supports timely and precise lease data upon request of external stakeholders, including the Governor’s Office of Strategic Planning and Budget (OSPB) and the Joint Legislative Budget Committee (JLBC).

1. ADOA has a contract with a real estate services tenant broker. Agencies are required to utilize these services when initiating a new lease and when renewing, amending (except for administrative amendments), and/or re-casting (renegotiating) an existing lease. The contract prohibits entering into an oral or written contract for private sector lease representation with any other real estate broker.
   
   
2. Every agency in the ADOA Building System must submit its proposed lease to ADOA General Services Division (GSD), Building and Planning Services (BPS), for review and approval.
   
   
3. All new and renewal leases must conform to ADOA’s approved “boiler plate” lease format. Lease form exceptions must be reviewed and approved by ADOA in advance of finalizing lease negotiations.
   
   
4. All lease documents must conform to the legal requirements established by the Arizona Attorney General’s Office (AG). ADOA will forward a copy of the agency’s proposed lease to its assigned AG counsel for “approval as to form.” Agencies with dedicated AG’s Office legal counsel cannot circumvent the requirement for approval by ADOA’s AG.
   
   
5. ADOA will provide notification in the event its boilerplate lease document is revised reflecting new and/or updated lease clauses and added or deleted statutory requirements, etc. Agencies renewing a lease previously made and executed using an outdated lease document must renew the existing lease utilizing the most current version of the ADOA lease document. 
   
   
6. ADOA will not approve leases for a term greater than five years, unless approved in advance by ADOA.
   
   
7. ADOA recommends a “flat” lease rate for the term of the lease. ADOA will consider only minimal lease rate increases for approval.
   
   
8. Lease payments are initiated by warrant at the end of each month (“in arrears”). See General Accounting Office (GAO) Technical Bulletin 99-2. ADOA will not approve lease terms that require months or years lease costs paid in advance.
   
   
9. The Lease Cost Review Board (LCRB) forecasts two-fiscal years of an estimated average square foot dollar cost for leasing privately owned office space. Any proposed lease rate (including base rent, occupancy taxes, real estate taxes, janitorial services, utilities, and parking) that exceeds the LCRB established lease rate must include a written justification for the proposed lease rate. Factors for the justification include, but are not limited to, the following:
   
   
   1. The availability of suitable lease space in the vicinity of the space requirement. Please include the actual market area that was considered, including the specific mile radius.
   2. Include the lease rate quotes the agency received from other lessors that exceed the amount of the proposed rate for comparable and suitable private lease space.
   3. Identify special requirement or program specific needs for “store front” or other types of premium space, such as retail mall space.
   4. Identify special needs that are not normally covered in a full service lease rate.
   
   
10. Any agency requiring assistance in locating private lease space, negotiating a new or renewal lease, renegotiation of existing lease terms, or other lease-related inquiries, should contact BPS at least 180 days prior to the desired commencement of the lease.
    
    
11. An agency must complete and include an ADOA Lease Transmittal Form with each lease submitted for approval. The agency must complete all sections of the Lease Transmittal Form to provide the total known or estimated operating costs associated with the lease. Examples of operating costs include lease occupancy taxes, janitorial services, and utilities.
    
    
12. To obtain more information about agency leasing of privately owned office space, please contact Ryan Maxwell, ADOA State-Wide Leasing Coordinator at 602-542-1941 or ryan.maxwell@azdoa.gov.

Privately owned office space: Private sector lease space in which a state agency conducts or houses a component of its services, including storage and laboratory functions.

Amendment: The revision or change of an existing lease.

Addendum: The addition of terms, conditions, or clauses to an existing lease.

Full Service Lease: The base rent includes all costs associated with use of the office space; e.g., base rent, occupancy taxes, janitorial, utilities, and parking.

Net Lease: Beyond the base rent, a net lease does not include one or all of the costs usually associated with a full service lease including, but not limited to, occupancy taxes, janitorial, utilities, and parking.

State Agency Space Memo

Jones Lang LaSalle Letter