Feds look to unload office space as workers face pressure to resign or return

As President Donald Trump and billionaire Elon Musk continue their pressure campaign on federal workers to either quit or return to in-person work, agencies are grappling with where to house workers who do come back to the office.

Amid the chaos, a small bipartisan group of advisors appointed by former presidents to study the federal office space portfolio hope now may also be the time to achieve a decade-old goal: shedding government buildings they say are too big and too costly to maintain.

“Even before COVID, we saw that federal buildings weren't being fully utilized,” said Norm Dong, a former GSA public buildings commissioner under then-President Barack Obama, interviewed by NBC Washington's I-Team in the days before Trump took office. “I think what we're seeing now is the stars aligning and a greater recognition that, OK, enough talk, now's the time for action.”

Dong said it’s long been clear some of D.C.’s pre-war federal office buildings are too old and too big to meet modern demands. These include many flagship historic buildings housing the major agencies.

“The systems are beyond their useful life … they're going to take some significant investment to bring up to the modern office standard,” he said.

According to estimates from the Public Buildings Reform Board – an independent group tasked with making recommendations about unused federal property – the estimated cost of modernizing the 25 federal buildings in most need of repair is roughly $8.6 billion.

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“You really need to make the tough decisions in terms of: What am I going to keep and what am I going to get rid of?” Dong said. “Because you don't have the money that you need to maintain all the buildings that you currently own.”

The conversation about what to do with outdated federal buildings began long before Trump ordered federal workers to return to the office and Musk inserted himself into core agency functions. It reflects a rare point of agreement between District leaders – who are keen to eliminate economic dead zones and spur downtown revitalization – and budget hawks who say these buildings no longer best serve the government’s mission, and prefer the ease, cost and flexibility of leased office space.

“The intent is really to preserve the historic character of the district in the Federal Triangle and the [National] Mall, but to look at buildings that are …  totally underutilized,” said David Winstead, a PBRB boardmember.

Nearly a decade ago, Congress created the bipartisan PBRB to analyze the federal real estate portfolio across the country and make recommendations about what to keep or sell.

Their work became more complicated when the pandemic sent many workers home and offices were suddenly empty. At one point, a 2023 analysis by the PBRB showed the Department of Labor building had so few people coming to work, it cost taxpayers about $180,000 per employee, just to keep the heat and lights on.

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Bringing workers back to the office may lower that cost-per-person number, but Winstead and others said many of these buildings would still cost far too much to modernize to justify the number of workers there.

In 2021, the PBRB issued its first round of recommendations for properties nationwide, but so far has not made official recommendations about properties in the D.C. area. That said, at a recent public hearing, the PBRB said it’s analyzing about two dozen properties in the District, including the General Services Administration, IRS, Ronald Reagan Building and the Department of Commerce.

Winstead notes 50% of the federal government’s properties in D.C. are historic and cannot be torn down, but those could be sold for redevelopment. Like many, he points to the conversion of a former USDA property called the Cotton Annex that now houses luxury apartments as an example of what’s possible.

The I-Team found there’s widespread agreement the Department of Energy’s Brutalist headquarters, which looms over parts of L’Enfant Plaza, should be considered for demolition in an effort to revitalize the area stretching from the National Mall to the Wharf.

Winstead said none of their recommendations, however, are related to the mission of any agency.

“These are all based on workspace need, based on utilization of buildings, based on cost effectiveness of how to house that federal employee,” he said.

Like Dong, his group says some departments should give up or share some of their property with other agencies, but for years, federal bureaucracies have been reluctant to do it.

That could change as Congress recently passed a law – signed by former President Biden in his final days in office -- that establishes a timeline and benchmark for agencies to report how many people come to the office, making any building with less than 60% occupancy a potential target for sale.

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Some moves are already underway in the District, with Congress recently placing the Wilbur Cohen federal building for sale. The historic and massive building on Independence Avenue houses Voice of America, but is reportedly largely empty. 

“The decision making at the federal level on what buildings to keep and what buildings to dispose of will happen much more quickly, probably within the next year or two because of the clear timeline that the Congress has established,” Dong said.

It’s unclear what role Trump or Musk could play in how that unfolds, or whether they will wait for agencies to report occupancy data now required by law before making decisions about federal office space.

At last week’s PBRB meeting, newly tapped public buildings commissioner Michael Peters acknowledged the government could see up to a 50% reduction in square footage across its portfolio in coming years. And this week, Musk’s “Department of Government Efficiency” took to his social media platform “X” to say it has already cancelled 22 leases for office space.

The I-Team has asked GSA how many leases have been terminated since Trump took office, its plans for housing each returning worker in the short-term and whether it currently has enough office space between leased and owned properties. So far, it has not heard back.

This story was reported by Ted Oberg, produced by Katie Leslie, shot and edited by Jerry Lawlor and Jeff Piper.