There might be a flood of federal office buildings hitting the market soon

Propmodo Daily

Greetings!

In today’s email, we listened to a congressional hearing so you didn’t have to. With many Federal agency offices at less than 25 percent capacity, there could be a flood of Brutalist office buildings hitting the market soon.

Multifamily buildings have come a long way since the pandemic. In order to highlight some of the innovations that are changing the multifamily industry we have selected five of the country’s most innovative multifamily buildings in this month’s innovation showcase.

This week’s Propmodo Technology focus on security continues as we explore how cloud-based security systems are improving commercial property security, streamlining operations, and enhancing tenant satisfaction.

There Might Be a Flood of Federal Office Buildings Hitting the Market Soon

The largest office occupier isn’t a financial service firm or a tech giant; it’s the Federal Government. Federal agencies occupy more than 500 million square feet of office space nationwide. For perspective, the entire Washington D.C. area has only 370 million square feet of office space. Thanks to yesterday’s hearing by the U.S. Senate Committee on Environment and Public Works, some of that office space might soon be for sale or lease.

The hearing addressed the oversight of public buildings. During it, Public Buildings Service Commissioner Elliot Doomes discussed the government’s options for its offices. He cited a recent Government Accountability Office report that found 17 out of 25 Federal agencies had offices at less than 25 percent capacity. This provides an opportunity to reduce expenses, as the Federal government spends $2 billion annually on operating its office footprint and another $5 billion on leases.

Those numbers might not remain so high for long. Doomes has been working with a team to identify which offices can be consolidated. “We're bringing our workspace experts to work with these agencies to say, ‘How often are people in? What kind of work do you do? Maybe you don't need all that space,’” he said. Doomes also noted that 50 percent of GSA-managed leases are set to expire by 2027.

The government has already shed 8 million square feet of real estate over the past four years, but this is only a fraction of what they are likely to relinquish. They are still developing a plan to effectively shrink the government’s office portfolio and are even considering co-working locations. “If you're in a telework posture and you don't need this office space all the time, we'll offer you a place where you can go, meet with your employees, and work on projects without permanent space,” Doomes said.

There is already a glut of office spaces for lease in most markets, so the possibility of more coming online could mean harder times ahead for the office sector. However, for those with cash, it could be a great time to buy unique government buildings that have rarely been on the market before.

Multifamily Innovation Showcase

Multifamily real estate is at a turning point, with high demand but slowing rent growth and rising costs. Nearly half of U.S. markets saw rental prices drop, and inflation and interest rates are squeezing owners. Despite these challenges, the industry is innovating with efficient designs, new services, and impressive amenities. Increased competition and new developments are driving these changes. Our showcase, with the support of Elevated Living, highlights unique multifamily properties addressing current industry challenges.

What’s Happening in Commercial Real Estate

Decoupling together
The Denver Metro Realtor’s Association has released a memo denying allegations that they were profiting from the recent sale of their local MLS to a private company.

Energy tour
The Secretary of Energy is promoting the Department of Energy’s incentives package to help buildings around the country fund their energy upgrades.

Green collar
A recent survey shows that elevator installers are now the highest-paid trade workers in the U.S.

Propmodo Technology

Commercial property owners face security risks that can affect tenant safety, reputation, and property value. Cloud-based security systems provide integrated solutions for alarm systems, access control, video cameras, and analytics, enhancing security, streamlining operations, and reducing costs through remote management and automation. They also offer flexibility, boost productivity, improve resource allocation, enhance tenant engagement, and create healthier workplaces.

Check out this week’s Propmodo Technology focus on Security with the support of our friends at Avigilon.

What to Watch

Join us on Tuesday, July 30th, for a Propmodo Live webinar where we will explore the latest office occupancy trends reshaping workplace performance and utilization. We'll delve into shifting demand patterns, highlight success stories from various sectors, and discuss the effects of hybrid work models on occupancy and operational strategies.

In case you missed it, watch yesterday’s webinar video about multifamily strategies and what to expect in H2 2024.

Overheard

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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