- DOGE is ending around 800 federal office leases, with savings estimated at $500M.
- Some agencies, including the IRS, SSA, and USDA, are appealing to exempt certain buildings from the closure list.
- Lease terminations may lead to agency relocations or downsizing, with some agencies negotiating new leases or seeking alternative spaces.
- The federal government’s real estate portfolio has been shrinking for years, with President Biden pushing to reduce underused spaces.
The Department of Government Efficiency (DOGE) is set to terminate nearly 800 federal office leases by June 30, aiming to cut costs and save around $500M.
This move is part of a broader effort to streamline the government’s real estate holdings and reduce expenses, per GlobeSt.
Potential Agency Relocations
A recent report from the General Services Administration (GSA), which oversees federal real estate, revealed the federal government is moving ahead with its plans to close federal office buildings and terminate leases.
The agency has already notified landlords of the terminations, and many of these leases are set to end without penalties.
However, while some buildings are on the chopping block, not all will be shut down entirely. In certain cases, agencies may negotiate new leases, either to downsize their space, relocate, or continue occupying existing spaces under different terms.
Agencies like the IRS, Social Security Administration (SSA), and Department of Agriculture are among those whose buildings are on the cancellation list.
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Tight Moving Timelines
The timeline for moving out of these properties is tight, with many agencies expected to vacate their leased spaces by June 30.
For some, this quick turnaround may present logistical challenges. Chad Becker, a former GSA real estate official, pointed out that some agencies may face difficulties relocating personnel and property on such short notice, resulting in more costs if agencies remain beyond their lease terms.
The Building Owners and Managers Association advised landlords to be prepared to seek rent payments from federal tenants who overstay their leases, particularly in the event of a “holdover period.”
More Federal Downsizing
The reduction of federal real estate has been a long-standing trend, with the government steadily downsizing its portfolio over the past decade.
Earlier this year, President Biden issued a directive requiring agencies to assess the true occupancy rates of their leased spaces and dispose of any underutilized properties. Specifically, agencies have been instructed to eliminate spaces with less than a 60% occupancy rate over time.
David Marroni, a Government Accountability Office official, testified that the push to offload unnecessary government real estate was “long overdue.”
While acknowledging the benefits of reducing the government’s real estate footprint, Marroni cautioned the process must be carefully managed to avoid missteps that could disrupt operations and create unexpected costs for agencies.
