The newly inaugurated Trump administration is reportedly mulling the sale of two-thirds of the federal government’s office properties to the private sector.
The Wall Street Journal, sourcing its coverage from unnamed “people familiar with the transition operations,” reports the federal General Services Administration (GSA) manages a portfolio of 370 million square feet nationwide. But many of these properties are either empty or underused, with many buildings deteriorating due to a lack of maintenance.
Offloading the properties requires the GSA to either make them available free or at a reduced cost to government entities – the GSA does not keep whatever profits might be generated by the sales. But generating interest in the properties could be a challenge – many of the buildings were built in the 1970s and have been in disrepair for decades.
A GSA spokeswoman responded to the report by stating, “GSA continues to work to right-size the federal portfolio and is committed to optimizing space in federal buildings.” She added that the agency could speed these efforts along with more funding from Congress, she added.
The Wall Street Journal also quoted Don Peebles, a Washington, DC-based developer, who predicted that roughly three-quarters of the 70 million square feet of office space the GSA leases from private landlords in the nation’s capital would likely be canceled. Peebles warned this could disrupt Washington’s office property market.
“Buildings will sell for 30 cents on the dollar,” Peebles said. “It’s a paradigm shift. There will be a dramatic reset on property values.”
Photo: Seattle Federal Office Building, courtesy of GSA
