ICE Looks To Offload $700M In U.S. Warehouses As Detention Overhaul Unravels

The Department of Homeland Security's plan to go on a $38.3B spree to acquire warehouses across the country and convert them into detention facilities is reversing course.

Now, the government agency wants to sell or give away seven out of the 11 facilities it spent $1B acquiring over the last year, marking the collapse of the most aggressive expansion of federal detention infrastructure in U.S. history.

DHS is looking to either sell or give the warehouses, which it spent more than $700M on, to other government agencies. The agency plans to move forward with four facilities, though it is unclear which ones, and intends to buy facilities from private prison companies with which it already has contracts, according to documents obtained by The New York Times.

“From day one, DHS has remained singularly focused on removing the worst of the worst criminal illegal aliens from the United States and is always evaluating the best methods to do so,” a DHS spokesperson said in a statement.

“These heinous criminals, once arrested, should be removed at lightning speed, not housed on American soil at the taxpayer’s expense. DHS is moving swiftly to utilize EXISTING detention space with our state and county partners.”

The decision comes more than two months after the department decided to halt its plan to acquire industrial warehouses and retrofit them into detention centers.

DHS launched the program — which was started under Secretary Kristi Noem before she was fired and replaced with former Oklahoma Sen. Markwayne Mullin — to expand its capacity to 92,600 beds by the end of November.

Shortly thereafter, the program was paused after Mullin expressed doubt about it.

Last month, the DHS inspector general launched a probe into the controversial program, with plans to look into whether existing facilities were meeting standards and how contracts were awarded during Noem's time as secretary.

It is unclear exactly which properties the agency plans to sell beyond warehouses in Michigan and New Jersey, the NYT reported.

There are also a handful of other assets, including in Williamsport, Maryland, and Surprise, Arizona, that the agency has either halted working on or where there has been little visible progress, The Washington Post reported in May.

Maryland Attorney General Anthony Brown sued DHS in February over its failure to conduct environmental reviews before purchasing a $102M warehouse outside Williamsport. A federal judge subsequently froze the conversion of that facility, and similar legal challenges were pending in New Jersey, Michigan and Arizona — the same states where DHS is now looking to offload properties.

The reversal puts more than $700M in industrial assets back into circulation.

The sellers — among them Rockefeller Group, Fundrise, Blue Owl Capital and PCCP — offloaded properties that had struggled to find tenants amid record industrial vacancy, with DHS paying 11% to 13% above market for the portfolio.

But local pushback arose almost instantly as many locales tested ways to legally resist or halt deals.

Now those same assets, having been partially retrofitted for detention use, face an uncertain path back to the market, and it remains to be seen whether buyers will discount properties associated with one of the federal government's most contested real estate experiments.