Trump Administration Weighs Selling Federal Office Properties

On the first day of his second term, President Donald Trump mandated a full return to the office for federal employees. However, behind the scenes, his administration is reportedly evaluating a significant reduction in federal office space.

According to a report from the Wall Street Journal, the administration is considering selling two-thirds of the federal government’s office properties to the private sector. This could mean over 200 million square feet of office space hitting the market, out of the 370 million square feet managed nationwide by the General Services Administration (GSA), the federal agency responsible for government properties.

The impact could extend to leased office space as well. The federal government leases 70 million square feet in Washington, D.C. alone, much of which may face termination. Real estate developer Don Peebles estimated that as much as three-quarters of that leased space could be canceled under the Trump administration.

“GSA continues to work to right-size the federal portfolio and remains committed to optimizing space in federal buildings,” said a GSA spokesperson.

Efforts to reduce underutilized government properties are not new. A 2023 report from the Government Accountability Office highlighted ongoing inefficiencies in federal office utilization. However, the Trump administration’s focus on cutting government spending appears to be fast-tracking these measures.

The move comes at a critical time, coinciding with Trump’s mandate requiring most federal employees to return to their offices. Critics have suggested this dual approach—selling off office space and requiring in-office attendance—could be a strategy to reduce the federal workforce through attrition, particularly as the administration has also implemented a hiring freeze.

If these office sales and lease reductions proceed, landlords in Washington, D.C., are likely to feel the greatest impact. The GSA’s sales process often involves steep discounts, which could send ripples through the region’s commercial real estate market.

“Buildings will sell for 30 cents on the dollar,” Peebles told the Wall Street Journal. “It’s a paradigm shift. There will be a dramatic reset on property values.”

The potential selloff reflects a significant shift in the government’s real estate strategy and could have lasting implications for both federal workers and the commercial real estate market, particularly in Washington, D.C.

Source: WSJ