GSA Insiders Predict Biden Will Bring Agencies Back To D.C., Restart FBI HQ Search
The federal government controls the largest office portfolio in the D.C. region, and its real estate arm is expected to chart a new course under President-elect Joe Biden's administration.
Two former commissioners of the General Services Administration's Public Buildings Service under the Obama administration and one former GSA general counsel, all of whom now work in private sector roles that interact with the agency, came together on a Bisnow webinar Tuesday to share their predictions for the Biden administration.
One key issue for the D.C. real estate market is the idea of relocating federal agency offices away from the nation's capital, a practice that accelerated under President Donald Trump's administration.
In June 2019, the U.S. Department of Agriculture announced plans to relocate the Economic Research Service and the National Institute of Food and Agriculture, totaling 500 jobs, from D.C. to the Kansas City region. The following month, the Department of the Interior revealed plans to move over 300 employees from the Bureau of Land Management headquarters in D.C. to Grand Junction, Colorado.
FD Stonewater Managing Director Norman Dong, who served as PBS Commissioner from 2014 to 2017, predicted that not only will the Biden administration avoid new relocations away from D.C. but that it may be able to reverse the moves the Trump administration announced.
"I'm pretty certain that we're going to see an end to the practice of relocating agency functions to other parts of the country," Dong said. "And I'm actually going to go out on a limb here and speculate that you may actually see these functions coming back to Washington, D.C."
"I think that's because the Biden administration is going to be looking to restore these bureau headquarters functions back to the nation's capital as the seat of government," Dong added.
Gensler principal Bob Peck, who served as PBS Commissioner from 2009 to 2012 and is now co-leader of the government practice group for the architecture firm, said he agreed with Dong's prediction. He said he wouldn't be surprised to see the Biden administration reverse the relocations Trump announced, if it is still possible.
"I think that certainly headquarters functions are going to stay in D.C.," Peck said. "There are some functions that can go outside D.C., but I don't think it will be a strong policy initiative for the Biden administration."
One of the challenges with moving agencies to other cities is the ability to keep the positions fully staffed, Dong said. After the USDA move was announced, CNN reported that agency employees protested during a meeting with Agriculture Secretary Sonny Perdue, and the American Federation of Government Employees released a statement opposing the move.
"If you look at what happened with the USDA and the BLM relocation, there weren't a significant number of employees from the [national capital region] who accepted the relocation package and moved out to Kansas City and Colorado," Dong said. "You've got to think about how well these functions have been staffed since they moved out."
Another major GSA action that could affect the D.C.-area real estate market would be a revival of the plan to build a new FBI headquarters.
The Obama administration's GSA had narrowed its search to three sites in the D.C. suburbs, but the Trump administration canceled the search in July 2017. It then proposed keeping the FBI on the J. Edgar Hoover Building site on Pennsylvania Avenue by demolishing and rebuilding the headquarters, but Congress didn't approve that plan, leaving the project in limbo.
Dong, who worked on the search while he was PBS commissioner, said he expects the Biden administration will revive the project and seek out a location in the suburbs.
"I think the incoming administration provides an opportunity to breathe new life into the FBI program," Dong said. "I think we'll go back to that suburban location approach."
He also said he expects the Biden administration will learn lessons from the previous search and decide not to try to execute an exchange with a developer for the Hoover Building site as part of the same deal.
"This time, I don't expect the GSA to add complexity to the effort by layering in an exchange of the Hoover Building," Dong said. "I think the exchange overcomplicated the original FBI proposal. I think next time around, you'll see GSA likely to dispose of Hoover separately to maximize the proceeds of the sale of that asset."
Peck, who again endorsed Dong's prediction, also noted that the FBI has relocated some of the headquarters staff that it had planned to put in the new expanded headquarters, so the new proposal could be smaller than the 2.1M SF campus it had envisioned during the last search.
"With security and other considerations, a suburban location probably makes a lot of sense," Peck said. "The District in this case would probably like to see the site go to private ownership so it can be a tax generator and a generator of activity on Pennsylvania Avenue, which could use it."
While the GSA may change course on some initiatives under the new administration, experts think there are some Trump-era policies that it may continue. One such policy is the agency's prioritization of opportunity zones and other distressed communities when selecting sites.
"It would seem to me that this kind of incentive-driven approach to fostering development in these zones would make abundant sense," MacKichan said. "I would think that any administration would view it favorably and continue with it, as I would hope they do."
Dong also said he views the opportunity zone program as bipartisan, adding that the GSA has looked to catalyze urban development for decades under Democratic and Republican presidents.
"The incoming Biden administration may take a slightly different approach in terms of the specifics on implementation, but I think we'll continue to see a strong emphasis on the importance of investing in these underserved neighborhoods," Dong said.