The Federal Government Has 6M SF Of Office Space In Massachusetts. Here's What Could Be At Risk

As the federal government’s massive portfolio of owned and leased office space has been thrown into uncertainty, Massachusetts has a series of major properties that could be at risk.

The state has 115 federal office leases totaling 1.7M SF in privately owned buildings and another 4.3M SF of federally owned buildings, according to Bisnow’s analysis of General Services Administration data.

Many of the leases are small, but 43 of them are more than 10K SF and 17 are over 20K SF. The largest lease is the FBI’s 220K SF Boston field office.

Elon Musk’s Department of Government Efficiency released batches of federal leases that it claimed to have canceled, then backtracked on some of them last week. After that reversal, an updated JLL tally found there were still 657 federal leases around the country totaling 8M SF that had been terminated, including more than a dozen in Massachusetts.

Among the sizable canceled leases are ones for 21K SF in Northborough, 37K SF in Lowell and 72K SF in Hadley. The Northborough building is owned by Carruth Capital, the Lowell building is owned by Anchor Line Partners, and the Hadley building is owned by The Pearson Cos.

"We’ve been DOGE-ed," Christopher Egan, president of Carruth Capital, told the Worcester Business Journal about the Northborough lease.

Anchor Line and Pearson didn’t respond to requests for comment.

The GSA earlier this month released a list of 443 "non-core" federally owned buildings around the country that were being considered for disposition, but the list was quickly pulled off its website. The agency said a new list would be posted soon, and this week it updated the page with eight buildings that had previously been announced for disposition, noting that it would "post additional assets regularly."

The federal government owns 17 buildings totaling almost 4.3M SF across Massachusetts, according to Bisnow's analysis. A handful of the state's buildings were on the original disposition list, including the John F. Kennedy and Thomas P. O'Neill Jr. federal buildings in Boston and the Volpe National Transportation Systems Center in Cambridge.

Reports have also emerged this month of federal agencies closing offices in Boston.

The Department of Education announced March 11 that it was laying off more than 1,300 employees, some of them in Boston. The Boston Business Journal reported the Education Department is closing its office at 5 Post Office Square, a federally owned building known as the John W. McCormack Post Office and Courthouse.

The McCormack building is home to 10 federal agencies, including the Environmental Protection Agency, U.S. Citizenship and Immigration Services and the Centers for Disease Control and Prevention.

The Small Business Administration on March 6 announced it is vacating space at the Thomas P. O'Neill Jr. Federal Building on Causeway Street. The SBA said it is moving regional offices out of several sanctuary cities that don't comply with President Donald Trump's mass deportation efforts.

The leases the federal government is canceling are primarily ones that have upcoming expirations or termination rights, leaving several other Boston-area spaces at risk. 

The Federal Aviation Administration leases 92K SF at 1200 District Ave. in Burlington and has a termination right date of October 2028. The Securities and Exchange Commission's 59K SF Boston office at 33 Arch St. has a termination right date in August 2026. And a 104K SF Army Corps of Engineers lease at 696 Virginia Road in Concord expires in March 2027.

The Burlington building is owned by National Development, the Boston building is owned by Nuveen Real Estate, and the Concord building is owned by Bulfinch Cos. Nuveen and Bulfinch declined to comment on the lease. National didn't respond to Bisnow's requests for comment.

"I would fully anticipate there being another round or another few rounds of termination notices that are issued because time has passed now for agencies to then be able to look closer at their requirements and what spaces they might need, so it's possible that you could see additional rounds of termination," said Marcy Owens Test, who leads CBRE's federal lessor advisory group.

However, there has been uncertainty about the status of leases the government says it is terminating. A GSA spokesperson told Bisnow last week that letters of intent to terminate have no immediate effect and more could be rescinded.

This is creating confusion for landlords that are trying to get ahead of potential vacancy in their buildings, Darian LeBlanc, who leads Cushman & Wakefield's government services team, told Bisnow.

"The big problem that we're having is, because of the confusion in the marketplace, it becomes very difficult to market space that is currently under lease to the federal government, because replacement tenants are not necessarily going to take you seriously in terms of your marketing of the space because they're not sure whether the government will follow through or not," LeBlanc said. 

Owens Test said that for many of the leases that received termination notices, the government might have already had plans in place for where offices would relocate or reasons for why they would shut down. 

"That would seem most of those leases are smaller in size," Owens Test said of the Massachusetts leases included on the DOGE list. "It's possible that the lease was already being negotiated someplace else, or it's possible that they're moving into a federally owned building."

Some Massachusetts landlords have already confirmed that lease cancellations have been rescinded, including the owner of Worcester's Mercantile Center, which is home to the IRS Taxpayer Assistance Center, NBC10 reported. A Springfield IRS center is set to stay open as well.

Other landlords have confirmed lease cancellations, including the owners of the Department of Agriculture's veterinary service office in Uxbridge, the Geological Survey office in Northborough, and SBA's office in Springfield, MassLive reported.

The Boston-area office market, though still seeing high vacancy, has shown signs of positive momentum over the last year. After 10 consecutive quarters of negative net absorption, Boston saw two straight quarters of positive demand in the second half of last year, with Q4 leasing activity totaling 1.9M SF, according to CBRE.

"Boston’s market is a very strong market," Hunneman Executive Vice President Trey Agnew told Bisnow. "These surplus properties will be taken up. It will be utilized, but it will take time." 

LeBlanc said that moving forward, the uncertainty caused by the lease termination notices could change the perception of the government as a stable tenant.

"It remains to be seen how that will affect the long-term desirability of federal leases going forward," LeBlanc said.