The U.S. Government's Relationship With Office Real Estate Is Changing

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The U.S. Government's Relationship With Office Real Estate Is Changing

In his first few days in office Trump has already made a lot of major changes, some of which will have implications for how the federal government will deal with its office real estate. Besides his twenty six executive orders, President Trump issued an executive menu that said, “Heads of all departments and agencies in the executive branch of Government shall, as soon as practicable, take all necessary steps to terminate remote work arrangements and require employees to return to work in-person at their respective duty stations on a full-time basis, provided that the department and agency heads shall make exemptions they deem necessary."

Bringing federal employees back isn’t the only change. Trump has also signaled that he is considering selling two thirds of the government’s office portfolio. Recent reports show that the federal government's offices average around 12 percent occupancy. Many government buildings have poor services and are in need of upgrades. Currently the federal government’s offices are owned by the GSA. While Trump has praised the organization in the past, his relationship with it has soured after it turned in information to the special council investigating Russian interference with the 2016 election.

If the government does decide to sell some of its less occupied offices to private owners it isn’t clear what kind of deals it would make. Currently around 7,500 government buildings are vacant and another 2,200 are partially empty. This would mean a lot of underperforming real estate would change hands in a short time span. Some worry that fire sales of government office buildings in markets like Washington D.C., where they are highly concentrated, could bring down the value of other office real estate. One thing is certain, once the government disposes of these assets it will be hard to buy them back. If Trump does want government employees back working in the office, he might wait to see exactly how much office space is needed before putting the GSA’s assets up for sale.

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