Concerns Mount As Feds Sell Huge D.C. Buildings Without Plan For Future

The transformation of 250 acres between the National Mall and D.C.’s southwest waterfront is poised to be one of the most impactful redevelopment efforts in the history of the nation’s capital. 

The government this year has begun to sell some of the first of many brutalist mid-century behemoths that define the neighborhood in both their size and emptiness.

In March, the General Services Administration sold a nearly 1M SF structure near L’Enfant Plaza to a private developer. The next in line, the L-shaped Liberty Loan building at the Tidal Basin, is under contract, with the buyer reportedly looking for financing. And more big properties are slated to follow.

As the GSA starts to sell these buildings, no overarching plans have yet been released to dictate how the redevelopment of the neighborhood will take place and guide what it will look like decades from today.

But the government is moving forward with speed, and that’s causing concern among public and private leaders in D.C.’s urban development arena. 

“Getting these buildings off their books as quickly as possible in order to save on maintenance costs seems to be what’s driving a lot of their decisions,” Shalom Baranes Associates founder Shalom Baranes, an architect who has worked on federal buildings including the ongoing White House ballroom project, told Bisnow.

“And I think that tends to look really good in the short term but doesn’t look so good in the long term, if you ask me.” 

Sources tell Bisnow there are private conversations and public summits taking place across various parties in the city — public and private — to figure out strategies to put in place to guide the redevelopment. 

But as the government continues its divestment from the neighborhood, selling off buildings to the highest bidder with no apparent strategy, some in the development and planning community are calling for it to hit the brakes.

“I would rather see them take their time and do this right the first time, as opposed to some sort of speed-to-market disposition, being acquired by capable and motivated developers, but without really the ability to tie one site to the other together,” said Cushman & Wakefield Chairman Darian LeBlanc, a broker who works on government agency leases.  

The GSA didn’t respond to Bisnow’s inquiries into its disposition process.

The Push And Pull

In addition to the 1M SF office building that sold in March and the building under contract, the GSA has earmarked four others for accelerated disposition: the Department of Housing and Urban Development’s Robert C. Weaver Federal Building, the Wilbur J. Cohen Federal Building, the Department of Agriculture's South Building and the Department of Energy’s James V. Forrestal Building.

The GSA has made no indication it will sell these in a manner any different from the first two: hiring brokerage firms to market the buildings and soliciting bids from private developers.

And the agency has said it is “moving full speed ahead” to “modernize and rightsize” the government’s portfolio in an effort to save taxpayers money on costs for underutilized property. The Public Buildings Reform Board found in March that the federal government has $50B of deferred maintenance expenses in its owned portfolio.

“There's sort of a push-pull dynamic that's at play here,” LeBlanc said. “The federal government wants to get these buildings out of its control, off of its rolls, because they have to maintain them.”

But those who are focused on the neighborhood itself say creating a vision and coordinated redevelopment effort should be the priority. 

“There's a set of resources that seem like it’s actually urgent that they're in place here: research, the convening, the understanding more globally, advocacy for certain legislation as it comes forward,” said Steve Moore, executive director of the Southwest Business Improvement District.

While the southwest federal corridor has long been a hard-to-navigate concrete jungle used mostly by the federal workforce, its location between some of the world’s most-visited museums and landmarks on the National Mall and glistening waterfront development The Wharf makes it an attractive redevelopment opportunity. 

“The buildings are so large, and the submarket itself is so large and significant that individual redevelopments might not get you where you want to go,” said Transwestern Managing Director of Agency Leasing Lucy Kitchin, who authored a September 2024 report showing the transformation potential of the southwest neighborhood.

Developers buying these buildings with no overarching plan in place means they’re taking on an enormous amount of risk — risk that draws low prices from any number of investors who may not have the city’s best interest at heart. 

“And the concern is, Jesus, does this mean anybody with a Gmail address and $25M can buy one of these buildings? That's our worry,” Moore said. 

In its 2027 budget, Mayor Muriel Bowser’s office is proposing a fund that could be used for a variety of improvements to the federal southwest area, including as a rebate to the developers repositioning buildings.

In an email to Bisnow, a spokesperson for the Office of Deputy Mayor for Planning and Economic Development said the goal of the fund would be a "flexible, long‑term financing strategy that helps these areas transition from office‑dominated corridors into vibrant, mixed‑use communities over time.”

“The real question is how do we position these assets with a plan that investors can see themselves or see their investment kind of producing a return,” D.C. Deputy Mayor for Planning and Economic Development Nina Albert said at a Bisnow event last month, adding that it would help the federal government get “top dollar” and help the District attract businesses.

Dalian Development, which purchased the nearly 1M SF Regional Office Building in March, paid just $24.3M for the property — less than $26 per SF. Dalian said it has preliminary plans to convert the property into a mixed-use development, which could potentially include residential, retail and a museum use. 

Dalian didn't respond to Bisnow’s request for comment on if it supports larger planning efforts for the area.

The DMPED spokesperson said the agency expects to “work closely” with the developers buying these federal properties “to ensure the sites are repositioned in ways that support the broader vision for a vibrant, mixed‑use Southwest corridor.” 

A Menu Of Options

One initial planning effort is taking shape on Capitol Hill, where senators are working on draft legislation to create an ownership body that would control the federal southwest properties and assume control of their redevelopment. 

PRP Real Assets President Paul Dougherty, a longtime developer in the city who has been working with local and federal officials on these planning efforts, discussed this initiative onstage at a Bisnow event last month. 

He said Sen. Bill Hagerty’s office has been working on a bill based on the 1970s law that created the Pennsylvania Avenue Development Corp., a federal agency charged with overseeing the namesake corridor.

Hagerty’s office didn’t respond to Bisnow’s request for comment.

Onstage, Dougherty said the draft language was delivered to the White House and D.C. officials. He declined to provide further details about the legislation.

A source familiar with the draft legislation and working on the disposition process confirmed that these efforts are underway. The source told Bisnow the potential bill would create an entity that would take ownership of the properties and help transition them through zoning and historical restrictions to get to a place where they would be less risky for the private sector to redevelop.

The legislation has yet to be introduced, and it’s unclear who all the players behind the effort are, but the source told Bisnow it is being led by the private sector.

At Bisnow’s event, Dougherty said he is trying to convince the GSA’s leaders to stop selling buildings until an entity like this is put in place.

“If it's done the way it's been done now, these fire sales that are going on, that's just not the way to do it,” he said.

“We’re in a hodgepodge execution here. You have people buying buildings that are not fully capitalized. They frankly don't know what they're getting their hands on, and this has to be done in a more coordinated effort through a PADC type of entity.”

Sitting next to Dougherty onstage last month, Deputy Mayor Albert told the audience she does “think there’s a redevelopment authority opportunity.”

Southwest BID’s Moore said he has heard people advocate for a PADC-type entity. He told Bisnow it “solves a lot of unanswered questions” and said there’s “comfort” in the fact that it’s been used before.

A legislative effort to create a development authority-type entity would take time and political capital and would produce far-from-certain outcomes — flying in the face of the speed that the GSA appears to be aiming for with its sales. 

And there is the possibility that developers may be warded off by the prospect of a drawn-out process. 

“There should be collaboration and vision because it needs to be coherent, because that's exactly what's needed between these two important segments of the city,” Transwestern’s Kitchin said. “But at the same time, the planning of that can't represent a process that’s so cumbersome that it turns individual investors off.” 

Industry leaders suggested other ways the disposition process could be a more coordinated, planned effort, without an elongated legislative process. 

One option is the GSA could ground-lease the parcels to select developers.

“Especially the ones closer to the Capitol, that’s like beachfront property being at the base of the Capitol,” Baranes said. “And the idea the federal government would let go of this land strikes me as not being a wise move in the long term.”

The government has ground-leased properties before, such as The Old Post Office Building on Pennsylvania Avenue that turned into the Trump International Hotel in 2016 and is now the Waldorf Astoria.

Another option is for the D.C. government to purchase the properties directly and then execute a redevelopment plan. 

LeBlanc, who said he would prefer to have a plan in place first, said D.C. absorbing the properties could be a work-around if the GSA continues with the disposals. 

“The D.C. government can be that intermediary where they can take control of these sites, stabilize them, work with the development community, with envisioning master planners or what have you,” he said.

The mayor’s office appears to be pursuing this strategy.

The same fund in the mayor’s budget proposed to offer the redevelopers of these federal properties rebates would also allow the District to purchase southwest federal properties.

The District had been interested in buying the 1M SF Regional Office Building — which ended up being purchased by Dalian Development — for park space. But it lacked the funds and authority to do so, the Washington Business Journal reported last month.

Regardless of how the disposition process plays out, there will almost certainly still be some sort of planning process for the area. The National Capital Planning Commission, as the entity that oversees federal land usage, would be involved, regardless of how the GSA ends up offloading the properties. 

NCPC began informal talks with the D.C. mayor’s office and the GSA about a year ago, when it was clear the effort to offload federal buildings was gaining some momentum, Diane Sullivan, who has served on the National Capital Planning Commission since 2007, told Bisnow. 

But they’re now “getting more serious” and “looking at doing something a little more formal,” she said. 

“The most important thing that NCPC and the District can do right now, while GSA is figuring out where these agencies need to go, is to focus on really improving the streets, the park system, the infrastructure around this entire area,” Sullivan said.