Federal Board Considers Offloading 3 Downtown Boston Office Buildings
A trio of federal office buildings totaling roughly 2.7M SF in downtown Boston are costing taxpayers hundreds of thousands of dollars per employee to operate, according to the independent body charged with shrinking the government's real estate portfolio.
The Public Buildings Reform Board is considering disposing of the three buildings — the John F. Kennedy Federal Building, the John W. McCormack Building and the Thomas P. O’Neill, Jr. Federal Building — and it held a meeting in Boston Wednesday to discuss their fate.
The board is working to prepare its next slate of recommendations for federal property dispositions after releasing a list this spring. Members said they see these Boston buildings as opportunities for federal cost savings and as properties that could further the city's goals, like housing creation and the revitalization of downtown.
"The lights are on, but nobody's home," PBRB member Nick Rahall said at the meeting, held in JLL's office at One Post Office Square.
"The Federal inventory of office space is open for employees, but few employees are returning to work. This means that taxpayers are paying enormous, enormous sums to provide for the few who do come to work in a place."
The PBRB, established by Congress in 2016, is made up of House-appointed, bipartisan members: former General Services Administration Public Building Service commissioners Dan Mathews and David Winstead, former Congressmen Mike Capuano and Nick Rahall, and real estate developers Talmage Hocker and Jeffrey Gural.
Before making its recommendations, the board is considering how federal agencies in the buildings could consolidate within the city.
"We're looking at different scenarios, moving three buildings into two, three buildings into one, maybe even moving some or all into leased space," Winstead said. "We're certainly looking at the lease option as a scenario that is worth further consideration."
The board has cited several reasons for the buildings' high operating costs, including the millions in deferred maintenance that they have racked up and their low occupancy creating inefficiencies.
The JFK Federal Building at 15 New Sudbury St. costs the federal government $309,212 per person during low attendance periods on average, according to PBRB. If the building's deferred maintenance were to be addressed, it estimates that the operating cost would be much lower at $55,477.
Board member Dan Mathews said all of the federal workers who come into Boston take up roughly one-quarter of the space the government is paying for.
"But those buildings require hundreds and hundreds of millions of dollars of congressional appropriations to renovate, which is never going to happen," Mathews said.
As for the future of these buildings, there are several options.
They could be redeveloped into housing. The McCormack Building is a prime target for redevelopment due to its narrow footprint, location in the heart of the Financial District, and the fact that it's in the best condition of the three, Mathews said.
Mixed-use redevelopment could also be in play for the "Tip" O'Neill Jr. Building that is walking distance from TD Garden, which has already spurred a large amount of redevelopment and economic activity in the area.
The board is looking at additional properties elsewhere in the state as potential disposition candidates.
Other contenders include the 11 Channel St. Warehouse and Parking Lot, the Philip J. Philbin Federal Office Building in Fitchburg and the U.S. Customs and Border Protection Building in New Bedford.
PBRB released its most recent round of recommendations in May, identifying 10 federally owned properties around the country for disposition, and the Trump administration approved the recommendations.
One Boston building was on that list: the Captain John Foster Williams Coast Guard Building on Atlantic Avenue. The 63K SF building, constructed in 1918, is home to the U.S. Coast Guard's New England headquarters.
Once the disposition is complete, the Coast Guard plans to move to a new location in the city. The move was prompted by the need for modern office space, and the existing building had $28M in deferred maintenance and would have cost another $91M to modernize, the Boston Globe reported.
The May PBRB report also previewed the next Boston buildings it would consider for consolidation: in addition to the JFK, O'Neill and McCormack buildings, it is looking at a lease for the SEC Regional Office at 33 Arch St.
Capuano warned that Boston's office market is likely bottoming out, impacting the sale prices the government would get for the buildings.
"We can sell the building, but if we only get $1 for it, is it worth selling at this point?" Capuano said. "The likelihood of us selling all three buildings, in my opinion, is probably not very high, but if we did, that would have an impact on the local market."
