The hybrid and remote work paradigms spawned by COVID, coupled with the severe downsizing of the federal workforce, are resulting in a surfeit of federal office space, both owned and leased. Add the aging of the federal inventory and the growing cost and impact of decades of deferred maintenance, and literally hundreds of government properties nationwide have the potential to be vacated and disposed of. And yet, in the world of federal real estate, there persists the sense that despite all the alignment on the need for action, the federal government is still struggling to effectuate the changes everyone agrees it so desperately needs. A brief survey of the landscape underscores the challenges the government faces as it continues its halting efforts to modernize and right-size its real property portfolio.   

The Office of Management and Budget’s Reduce the Footprint and Freeze the Footprint initiatives of 2012 and 2015, respectively, arguably began the process of reigning in government space requirements and were quite successful at the agency level. But the lack of meaningful change in the size of the portfolio led to great congressional disenchantment, particularly with the General Services Administration’s real property disposal program. That led to the Federal Assets Sale and Transfer Act of 2016, which expedited parts of the disposal process and established the Public Buildings Reform Board to facilitate the identification of properties for disposal. Following COVID, low levels of building utilization further spurred Congress to pass the USE IT Act in 2024, which required agencies to track their space utilization and gave GSA more authority to relocate agencies out of underutilized buildings.   

Fast forward to today and there has been meaningful progress. Per USE IT and further direction from OMB, agencies are reporting their utilization data; agencies now are considering sharing space in each other’s buildings; GSA is accelerating the process of preparing buildings for disposal; and GSA now is using commercial real estate brokers, not only to market major properties for disposal, but to actually conduct the sales as well. All of these steps make great sense and represents marked change from past practice.   

It seems clear that the structural imbalance between the size of the government’s owned portfolio and the funding available to maintain it now is widely recognized, and the shift of agencies to smaller, leased spaces will continue in earnest. This long-in-the-making alignment between Congress and the administration should be a harbinger of a long overdue, and potentially more rapid, realignment of the federal real estate portfolio.    

Unfortunately, the typical headwinds remain. For example, even in the best of times, federal real estate has struggled to gain the attention and focus needed to effect meaningful change. Administrative matters typically take a back seat to program and policy issues, and staffing and funding, both for GSA and the agencies, are more challenging than ever.  

But much hard-earned momentum has been built around the needed transformation of the federal real estate portfolio, and there are still opportunities to sustain it. Ideally, GSA, with support from OMB, would work aggressively with agencies to firm up strategic housing plans based on new staffing levels. Centralized funding, perhaps along the lines of a revolving fund paid back by agency rental payments, would enable agencies to conduct the GSA-directed relocations and consolidations necessary to adapt their real estate footprints to their new staffing needs. This would allow for the release of older, inefficient buildings and the acquisition of newer, leased space as necessary. With OMB’s focus and attention (and extensive contract support), GSA could greatly expand use of existing tools like its exchange authority, “administrator’s discretion,” ground leases, negotiated sales and more, to facilitate more private sector-like transactions and trim the portfolio more aggressively. 

In this ideal world, GSA would also proactively expand its coordination with local governments, especially in Washington, D.C., to understand the likely future use and zoning of these now-surplus properties. That would enable GSA to address its statutory obligations for historic preservation and environmental mitigation from a “best value” standpoint. From there, GSA could then perform its due diligence to ensure that the sales maximize values while avoiding market saturation and other negative community impacts. With top-down direction, focus and resources, the potential exists to finally get to a leaner and more productive portfolio for government agencies, better outcomes for the communities, and better values for taxpayers.    

Adam Bodner is a principal at ABodner Consulting and is vice president of the Federal Real Property Association. The views expressed are his own. 

The post Reducing the government’s real property portfolio: Meeting the moment first appeared on Federal News Network.