This is Part 2 of the seventh installment of Bisnow's DEI Data Series, an ongoing investigative project that examines the diversity of the boards and executive leadership of the biggest companies in commercial real estate. To read Part 1 of this year's series, click here. To read previous years' entries, click here.

Commercial real estate owners that lease space to the government have found themselves at the center of the Trump administration’s efforts to dismantle the scaffolding of diversity, equity and inclusion initiatives. 

The White House has demanded that landlords pledge not to engage in DEI programs if they want to secure or retain the government as a tenant. The ultimatum, distributed through lease amendments on existing contracts and baked into new deals, has rattled operators, who have been left with little choice but to navigate new bureaucratic hurdles and reevaluate their internal policies or risk losing federal dollars.

Legal experts say the shift, and other executive orders targeting DEI, will make it easier for federal agencies to back out of leases if a landlord is found to have violated new anti-DEI policies. 

This unprecedented exit option introduces a slate of new risks for landlords and injects even more uncertainty into the 180M SF of federal leases that were long viewed as one of the safest bets in real estate.

“Objectively and divorced from politics, this is a very concerning development in the real estate industry,” Curran Legal Services Group attorney Hadeel Masseoud, who works with government contractors, told Bisnow. 

Attorneys general from 19 states and the District of Columbia have sued to block the executive order from March 26 titled Addressing DEI Discrimination by Federal Contractors. The directive impacts any business working with the General Services Administration, the agency that controls the federal government's real estate and works with everyone from construction and IT firms to landlords, brokers and property managers.

The order dictates that federal contractors pledge that they “will not engage in any racially discriminatory activities.” And it requires them to make internal records available to regulators to verify compliance, adding a new layer of oversight for corporations to ensure they aren’t engaging in DEI-related activities that the White House says are discriminatory. 

Within a month of the executive order being signed, the GSA had incorporated a new anti-DEI clause into new government leases. At the same time, landlords with existing government leases started receiving bilateral lease amendments asking them to agree to the new anti-DEI policy, with a July 24 deadline. 

“This is still playing out in real time, so we don't know exactly what the ramifications will be,” said Cushman & Wakefield Executive Vice Chair Darian LeBlanc, who leads the firm’s government leasing group. “But I certainly think that it’s a troubling trend by the federal government to attempt to implement policies retroactively on people that they're currently doing business with.”

A GSA official confirmed to Bisnow that the agency updated its leasing clauses and templates “to incorporate the required language.”

“The updated language is included in GSA's General Clauses and is incorporated into new lease solicitation and award packages,” the official said in a statement. “For GSA’s existing lease portfolio, GSA issued lease amendments to affected lessors to incorporate the new requirements."

White House spokesperson Allison Schuster, in response to an inquiry from Bisnow, declined to comment directly on the executive order affecting landlords but framed it as part of President Donald Trump’s greater anti-DEI efforts. 

“President Trump was resoundingly elected with a mandate to end divisive, racist policies and restore merit and efficiency,” she said. “DEI ran rampant during the Biden Administration, and Americans ultimately paid the price for these destructive policies with a restricted labor pool, higher operational costs, and workforce inefficiencies. The Trump Administration will always promote equal treatment under the law for every American, regardless of race or ethnicity.”

Casting A Wide Net

The GSA leases 180M SF across the country on behalf of federal agencies, deals that were considered as safe as government bonds until the start of Trump’s second term — when Elon Musk’s Department of Government Efficiency raced to exit agreements and shrink the federal footprint. 

That effort didn’t result in the dramatic cuts that were promised, but the GSA has continued working to consolidate offices and shed space in the months since. The effort has created volatility for firms that lease to the government and worsened the financial stability of federally leased assets. 

Two REITs that have the federal government as their largest tenant, Easterly Government Properties and JBG Smith, have suffered stock price drops of 17% and 26%, respectively, since Trump’s inauguration. The S&P 500 has risen 28% over that span. These companies didn’t respond to Bisnow’s requests for comment.

More than $10B in CMBS loans are backed by properties the federal government leases, and those loans have faced higher-than-average distress. Trepp found in March 2025 — at the height of the DOGE cuts — that more than 18% of loans backed by federally occupied properties were delinquent, roughly double the overall office delinquency rate. 

The volatility that federal landlords face has been compounded this year by the DEI executive order. 

The agreements the GSA is asking landlords to sign include broad language around DEI that could be taken to implicate activities from charitable giving to holding employee resource group meetings, forcing landlords to dissect every activity within their organization to ensure they are meeting the requirements, attorneys told Bisnow. 

The agreements also include a flow-down provision, they said, meaning subcontractors like maintenance and management providers are also covered and making landlords responsible for compliance. 

“It’s applicable to a broad range of activities like recruitment, employment, contracting,” Masseoud said. “And then, it sort of places the lessor on having to defend something in the negative, have to prove a negative.” 

Experts say that while the new regime creates significant hurdles for compliance, it's also going to be difficult for the government to enforce the rules. 

Ascertaining compliance would be a time-consuming process for an already strained federal workforce, said Holland & Knight partner Gordon Griffin, who specializes in GSA leases and real estate matters involving the federal government. 

The Public Buildings Service, which oversees the federal government’s owned and leased space, reduced its workforce by 45% between September 2024 and November 2025, according to an April 2026 report from the Government Accountability Office.

“No new funds have been appropriated to pay for any monitoring or enforcement, which means that an already-reduced workforce at GSA (and other agencies) will now have to find a way to incorporate this into their workflows,” Griffin wrote in an email.  

The new lease amendments are bilateral, attorneys told Bisnow, which means that both parties must sign for them to be valid.

The late July deadline to have all existing contracts updated to include the anti-DEI clause passed without fanfare, Griffin said. 

“Some landlords have accepted the clause, a number of landlords have refused,” Griffin wrote. 

There’s been no evidence that the government has responded to those who have declined to sign, he said. 

But if the government does choose to step up enforcement, there are a number of serious implications for landlords. Noncompliance can serve as the basis to bar lessors from securing future government contracts. 

“That's very unusual and a very severe consequence,” Masseoud said. 

It also creates a path for the government to terminate leases. This would make GSA leases less of a safe bet for investors, hindering property owners from getting financing for or selling properties leased to government tenants, Masseoud said.  

“This is going to make government leasing very, very difficult to obtain financing,” she said. “You’re making a noncancelable lease essentially cancelable. It's going to put a chilling effect on lessors just being able to get funding, so that is a very big deal.”

LeBlanc said the real estate industry is viewing this as a “short-term problem” that won’t have an impact on government leasing as a whole unless it persists. 

“If this turns into a long-term problem, then, yeah, this could have significant impact in terms of the way that federal buildings that are occupied by the federal government are traded, how they are financed, how they are underwritten,” he said. “But we’re nowhere near that yet.”

One Piece Of The Puzzle

The president signed an executive order on the first day he returned to the Oval Office that sought to end “radical and wasteful government DEI programs,” and the administration has since maintained a regular cadence attacking DEI initiatives. 

In the face of increased scrutiny, firms inside and beyond the commercial real estate space are shifting policies or rebranding initiatives to avoid running afoul of the regulations. 

Advocates from commercial real estate and beyond have spoken out about the marked pivot that some companies have made away from empowering marginalized groups. Many, including some of the largest CRE giants, have been rebranding employee resource groups and office policies that used diversity-forward language to instead be more all-encompassing and inclusive.

The order Trump signed on Inauguration Day, Executive Order 14151, directed federal offices to terminate any roles or government divisions focused on diversity in an attempt to excise diversity initiatives from the federal government. 

The president followed the Inauguration Day executive order with a Jan. 21 order that required federal contractors to certify that they were not operating “any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” It also called on federal contractors to end all diversity and equity programs and mandates to keep their contract.

Trump's moves unraveled what had been decades-old equal opportunity protections in employment, representing a "seismic event" for firms, said Cara Yates Crotty, the co-chair of the DEI compliance group at labor law firm Constangy. 

“Contractors have been preparing lawful affirmative action plans for decades. The legality of it really had not been questioned”

Landlords, contractors and other firms working with the GSA face new legal exposure as a result of the raft of executive orders.

The order requiring lease amendments raises the possibility of False Claims Act liability for firms that don’t sign on, a charge that often results in sizable monetary penalties, attorneys told Bisnow. 

The Trump administration has already used the False Claims Act in a new way to go after other types of government contractors, including IBM and Deloitte, which have reached settlements this year for $17.5M and $21M, respectively. 

“The risks are substantial,” Griffin wrote. 

Holland & Knight published public guidance for federal contractors to determine whether or not to sign the lease agreement but said there’s no single solution and that each firm will have to determine how their company structure looks and what compliance with the orders would entail.

Masseoud said her practice is advising clients who have existing leases not to “automatically” sign the agreement. If they do sign on, it's suggested that landlords try to negotiate additional funds to pay for the costs associated with compliance.

There is no monetary compensation associated with the new reporting and compliance obligations, and Masseoud and the Holland & Knight memo both recommend that landlords try to negotiate monetary compensation to cover the cost of compliance. 

Landlords working to win the government as a new tenant don’t have a choice about whether to sign, since the language is already written into the contracts. 

But for existing leases, the GSA is attaching the language or references to the language into new routine lease amendments, giving those landlords little option but to sign.

“They'll throw that in there and make it difficult for the contractor to refuse to sign it, because it's contingent on getting paid,” Masseoud said.

It’s unclear what impact the latest mandate will have. It could get overturned by the next administration or by the court case underway. Either way, it could have a “chilling effect on hiring anybody of a certain race or ethnicity,” Masseoud said.

LeBlanc said he doesn’t expect the mandate will result in a widespread changing of corporate practices. But he says landlords ignoring the lease amendments “is not something that will, I think, make this situation go away.”

“The government seems content to continue to throw this at the lessor community in an effort to somehow upload these provisions into the existing contracts,“ he said. “So this is going to be an ongoing problem.”