Earlier this month Dakotafire Media published a couple of very good articles about the ownership arrangements for post offices. It’s an important issue, since about three-fourths of the country’s post offices operate in spaces leased by the Postal Service.
As noted in a recent OIG report, the Postal Service leases more than 23,000 buildings — about 79 million square feet of interior space — and pays more than $800 million annually in rent. According to the OIG, there are many cases where the Postal Service is paying more than fair market value.
The second of the Dakotafire articles looks at this same issue and comes to a similar conclusion — post offices often rent for more than comparable commercial property in the community.
The first Dakotafire article examines a related question — the relationship between lease costs and where the owner of the building is located. Focusing on several hundred post offices in North and South Dakota, the Dakotafire analysis revealed a correlation between the rental rate and lessor location. Generally speaking, if the lessor lived near the post office, the Postal Service paid a lower rent. If the lessor lived relatively far away, the Postal Service paid more.
That’s a significant finding, and if it were true on a nationwide basis, it would be a good argument for encouraging the Postal Service to lease locally when possible. As it turns out, however, what’s true for leases in the Dakotas doesn’t seem to be true for the country as a whole.
Nationwide, lease rates with local lessors are not much different than the rates for more distant lessors. In fact, in terms of average cost per square foot, the Postal Service pays in-state lessors more than it pays out-of-state lessors.