DOGE’s Federal Office Lease Cuts Could Be $5B Nightmare

The Department of Government Efficiency (DOGE) has already cut over $170M in federal office leases, and up to $5B in annual reductions are expected.

February 28, 2025

Han Lung

The Department of Government Efficiency has cut over $170M in federal office leases, with more reductions expected.
The US General Services Administration spends $5B annually on 144M SF of leased office space, roughly one-third of Manhattan’s total stock.
An estimated $12B in CMBS loans tied to government-leased properties is at risk due to lease terminations.
Washington, DC, faces the biggest impact, with nearly 25% of expiring GSA leases located in the city.
DOGE has already trimmed 3M SF of space, with another 74M SF set to expire during Trump’s term.

Key Takeaways

The US office sector is already facing new problems as the Trump administration’s cost-cutting Department of Government Efficiency (DOGE), continues to slash office leases nationwide.

So far, DOGE has canceled $170M in leases, targeting underused or vacant properties. The rampant lease terminations threaten office landlords already struggling with high post-pandemic office vacancies, according to Bloomberg.

DOGE says leases worth $32 million cut in this corner of DC

$5B in Rent—Gone

Case in point: The US General Services Administration (GSA), which oversees federal real estate, including Fannie Mae (FNMA) and Freddie Mac (FMCC), spends about $5B annually leasing 144M SF of office space nationwide.

With another $385M worth of leases eligible for termination this year, the US office market could see a surge in empty buildings, many of which are aging and need major upgrades.

DOGE cuts only scratch the surface of expiring office leases

Capital Catastrophe

For office landlords in Washington, DC, DOGE’s aggressive cost-cutting is shaping up to be a major black swan event. Several federal buildings are at risk, including major leases for the Department of Justice, the Federal Energy Regulatory Commission, and the Bureau of Labor Statistics.

Notably, the nation’s capital is home to nearly 25% of the GSA’s expiring leases in 2025. The office availability rate in the capital has already climbed to 24%, up from 16% pre-pandemic, according to Savills.

Ben Miller, CEO of property investment platform Fundrise, warned that DC’s office market could suffer a crisis on par with the 2008 financial collapse. “Other cities have one problem—remote work. DC has two: remote work and the federal government cutting leases,” he explained.

Butterfly Effect

The wave of lease terminations in DC could have far broader financial implications. Barclays estimates that roughly $12B in CMBS loans are tied to government-leased buildings. Some municipal bonds backed by federal leases have already fallen to 50 cents on the dollar.

Historically, government leases were considered among the safest investments thanks to their typically long terms and stable payments. The average government lease runs 14 years, compared to just 5–10 years for private sector tenants.

However, with DOGE’s aggressive cuts, landlords who relied on federal tenants may now face difficulties filling office space for years to come.

Federal office cutbacks could affect all 50 states

Guessing Game

While some office landlords hope to repurpose their aging buildings into residential or multifamily housing, the transition process is slow and costly.

The Trump administration’s push to bring federal workers back to the office could help offset some vacancies. Still, DOGE is effectively working against this effort, and it’s hard to say which force will have the greater impact on the office market in the long run.

One thing’s for sure—with many more lease expirations on the horizon, landlords, lenders, and bondholders will all be closely watching DOGE’s next moves.