Inside A 'Chaotic' Year For The Federal Office Portfolio
The commercial real estate sector came into the year bracing for drastic cuts to the footprint of the largest occupier of U.S. office space: the federal government.
President Donald Trump in his first days in office took big, unconventional steps to swiftly reduce the government's massive, nationwide office portfolio. These dizzying actions grabbed headlines for weeks and threw the industry into panic.
In the months after, those initial moves were mostly walked back.
What followed was a period of much slower decision-making as the Department of Government Efficiency fizzled and federal real estate leaders departed. As the year progressed, uncertainty about agency office needs and the shake-up of government real estate officials meant progress to shrink leases and offload owned buildings has been slow.
“It was a chaotic year,” said Transwestern Managing Director Lucy Kitchin, who represents owners of government-leased real estate.
Another top government office broker, Cushman & Wakefield Executive Vice Chair Darian LeBlanc, described the year as “unusual.”
He said within the leasing market and the federally owned portfolio, officials at the General Services Administration and the individual government agencies have intersected to make things “slow and unpredictable.”
Trump signaled this would be a year of disruption for federal real estate within a week after winning the election. On Nov. 12, he announced that billionaire Elon Musk would lead the Department of Government Efficiency, stating it would “dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.” Trump signed an order establishing DOGE on his first day in office.
Within the first few weeks, DOGE announced slates of leases it said it would be terminating. The majority of those terminations have since been rescinded.
On March 4, the GSA, which oversees federal real estate, uploaded a list of more than 440 properties slated for “accelerated disposition,” including multimillion-square-foot agency headquarters.
Less than 24 hours later, that list was revoked.
The about-faces flooded the market with confusion at a time the GSA was shrinking, with employees taking the administration’s deferred resignation offers or being laid off.
And just as hundreds of thousands of federal employees were leaving, the remaining workers were required to come back to the office full time, throwing agencies’ eventual space needs up in the air.
Some of the year’s biggest federal real estate splashes came in the form of announced headquarters moves, including the Department of Housing and Urban Development and the Federal Bureau of Investigation. The law enforcement agency’s headquarters has been a political football for years, and this year, Trump scrapped a plan to move it to Maryland, saying he would relocate it to a federal building previously occupied by the U.S. Agency for International Development.
In its efforts to reduce its owned portfolio, the GSA is taking action on properties already earmarked for sale by the last administration, while it has slated some new assets for disposal and approved 7M SF for accelerated disposition.
Federal real estate experts tell Bisnow they expect these efforts to eventually pick up steam in 2026, as agency needs become clearer and permanent leadership takes shape.
“But right now, I think there's too much uncertainty for the GSA, really, to functionally be able to do much of anything,” LeBlanc said.
The Changing Face Of The GSA
For the agency managing federal real estate, the year has been turbulent.
President Trump appointed Stephen Ehikian as the GSA’s acting administrator and deputy administrator and Michael Peters as its Public Buildings Service commissioner in January.
They both left mid-year before Ehikian could be confirmed.
Michael Rigas, a former State Department official, immediately stepped in to replace Ehikian as an acting administrator, and Andrew Heller stepped in as a temporary replacement for Peters in August.
Meanwhile, Rigas is set to be replaced with the Trump administration's permanent pick for GSA administrator, Edward Forst, who was confirmed by the Senate on Thursday evening.
“It's unusual to see the GSA go the better part of a year without a permanent appointment of leadership,” LeBlanc said.
And like many other agencies, there has been a mass employee exodus at the GSA.
The number of full-time Public Buildings Service employees has slid from 5,655 to 3,126 this year alone, Rep. Rick Larsen, a Democrat from Washington state, said at a congressional subcommittee hearing last week.
“There’s a lot of institutional knowledge that has departed the agency,” LeBlanc said. “And I think they’re going to be dealing with the loss of that brain trust in the coming weeks, months and years.”
The agency has also shifted from a system with 11 regional offices to a centralized one.
“We have now moved to a simpler, centrally managed structure that brings teams together by function while still supporting our work across the country,” Heller said in a statement. “Today, PBS is operating in a structure that will lead to successfully executing our efforts to consolidate and optimize our lease footprint.”
The Leased Portfolio
In early February, DOGE announced on Musk's social media platform X that it had canceled 22 leases equating to $44.6M in cost-savings for the federal government.
It then proceeded to create a website showing a Wall of Receipts, a regularly updated tally of the cost-savings it said it was undertaking: grant programs, budget line items — and leases.
By early March, the number of lease cancellations climbed to 748 — 9.6M SF, equating to what the administration said would be $660M in savings.
But as more information about the leases came to light, it turned out DOGE was claiming credit for leases that were already slated to come to a natural end in the near future.
Of the 748 leases DOGE claimed to have canceled in early March, 615, or 89%, had reached their termination date, according to an analysis from CoStar.
“In terms of really active leases that were canceled and that were a surprise to the landlord, from my observation, there weren't very many instances of that happening,” Transwestern's Kitchin said.
DOGE also began walking back its termination announcements.
“You had a lot of owners that received notices that leases were going to be canceled, only to get some sort of communication that that termination was being rescinded,” Kitchin said. “And I think that happened more, much more, than receiving a cancellation notice that is permanent.”
Nationwide, the effort ended up terminating a variety of small leases in their soft term, and of agencies that didn’t align with the Trump administration’s platform, brokers said.
In the D.C. region, LeBlanc could think of only one major lease cancellation that was unexpected: the 290K SF full-building footprint that the U.S. Agency for Global Media was set to take on Pennsylvania Avenue.
“It appears that this administration has no use for the work that USAGM covers, and so that lease is terminated,” LeBlanc said.
By March, lease termination announcements were tapering off, and the second half of the year saw relatively little activity on that front.
Musk departed DOGE in April, and the entity disbanded in November.
JLL’s tracker, last updated at the end of July, shows DOGE canceled 384 leases nationwide, totaling 4.8M SF, or 2.7% of the GSA’s inventory. It announced another 484 lease terminations that were then rescinded.
Overall, the GSA’s national leased footprint has decreased from 173.6M SF last December to 170.6M SF in October, according to Avison Young, while in the D.C. region, it shrunk from 42.9K SF to 40.7K SF.
A GSA spokesperson said the agency has generated around $730M in “cost avoidance” through changes to its leased portfolio this year.
“GSA is taking a proactive approach to delivering value for our client agencies and the American taxpayer by optimizing our lease contracts,” Crofton Whitfield, assistant commissioner for the GSA’s Office of Leasing, said in a statement.
Meanwhile, new leasing activity has been slow, brokers said.
Most of the new prospectus activity has been for Veterans Administration offices, and most of the net new leasing is related to immigration and homeland security, Kitchin said.
LeBlanc said he expected to see more agency moves from owned to leased space — but just one such move has been announced: HUD’s relocation across the river to Virginia.
The department is taking over the National Science Foundation’s lease in Alexandria, officials announced June 25. In mid-November, the government signed a lease for the NSF to backfill federal leased space nearby.
HUD’s 1.1M SF brutalist building in D.C.’s federal southwest corridor, in turn, is slated for disposition.
“We've had that one example of that, but that’s the only example so far that we’ve seen, and it’s not immediately clear what else we’re going to see,” LeBlanc said.
The Owned Portfolio
In the same vein as its lease termination announcements, in early March, the GSA put out a list of 443 federally owned properties — mostly office buildings — it said it would be evaluating for disposition.
The nearly 80M SF of assets included headquarters for the FBI, Social Security Administration, Census Bureau, Department of Agriculture and Department of Justice.
It estimated the assets had $8.3B in recapitalization needs and that disposing of them could save $430M in annual operating expenses.
A day later, that list was taken down. A spokesperson told Bisnow at the time that the agency had received an “overwhelming amount of interest” for the assets and that it planned to republish the list soon.
In a congressional hearing that day, members of a House subcommittee said the moves by GSA and DOGE were creating “chaos” and “mass confusion” in the real estate market for agencies, lawmakers and the public, and expressed frustration at the lack of transparency.
The agency has since slowly added a few dozen properties back to the page, but the uploads stopped in May.
The GSA has made incremental progress on offloading properties that were already targeted for disposal under previous administrations. On Wednesday, it sold a vacant Army Reserve center in New Mexico, and in August, it offloaded the former U.S. Geological Survey campus in Menlo Park, California.
The Menlo Park asset was approved for disposal in 2020 at the recommendation of the Public Buildings Reform Board, the entity Congress created in 2016 to advise the federal government on real estate reductions.
“All the board members have been very concerned about the speed in which, historically, these recommended assets have hit the market, PBRB member David Winstead told Bisnow.
A GSA spokesperson said the agency has disposed of 90 buildings totaling 3M SF this year.
“GSA is committed to removing excess and underused property from our inventory, to not only save money, but help GSA focus on the properties we do need to support our federal customers' missions,” Flavio Peres, assistant commissioner of the GSA’s Office of Real Property Disposition, said in a statement.
The GSA has also enlisted private brokerages to sell a few substantial D.C.-area assets.
In May, the PBRB released its third round of disposition recommendations — a dozen assets totaling 7M SF. That week, the Office of Management and Budget gave its stamp of approval.
Though most of the buildings on the list had already been announced for sale by the GSA, the PBRB’s recommended dispositions can now be fast-tracked.
The list included the Department of Energy’s 1.7M SF Forrestal Building, which had long been eyed for disposition.
The PBRB is required to unveil one more round of dispositions before it sunsets at the end of 2026. Members told Bisnow this week the next slate will be substantial.
At the beginning of the year, PBRB members said they expected the Trump administration to be a more willing collaborator than previous administrations — and willing to move faster.
This week, they said their expectations proved correct.
Dan Mathews, a PBRB member and former PBS commissioner under the first Trump administration, said his experience working with the administration this year compared to 2024 was “a thousand times better.”
“Look at the outcomes,” he said. “We had a very substantial set of recommendations approved by the administration this year, when for the last four years, we had zero recommendations approved.”
But the lack of permanent leadership has stifled progress.
“The last few months when the GSA has not had permanent political leadership at the administrator or commissioner level, it has slowed the collaboration,” Mathews said.
“I really can't understate the importance of leadership within an agency,” he added, “because the career staff, while they may be very capable, they just often don't feel empowered or in having the role to make sort of big, long-term decisions, so they defer.”
He’s hopeful that will soon change.
Mathews said the Trump administration’s mandate that all federal employees come to the office full time was a critical milestone in assessing the government’s long-term needs and starting to make real estate decisions based on those.
The GSA should receive key data in January from agencies outlining their occupancy of federal space. If that occupancy falls below 60%, they must make plans to consolidate to meet that threshold.
PBRB members said they’ve come to a better understanding of just how much deferred maintenance is needed — and the financial burden that creates.
By its most recent estimate, PBRB says the federal portfolio has $50B in deferred maintenance and repair liabilities, while the GSA receives $600M annually to address those needs.
“The unique potential now is that a lot of uncertainty has been lifted, and we have an administration that prioritizes real estate issues,” Mathews said. “So, I think the opportunity for the next two years is really quite significant to do great things and set up these local markets for success in the long run.”
