Federal Government Could Sell Two-Thirds of Office Portfolio

On the first day of his second term in office, Donald Trump mandated that federal workers return to their offices. But behind the scenes, his administration may be selling off many of those same offices.

The Trump administration is weighing the sale of two-thirds of the government’s office stock to the private sector, the Wall Street Journal reported. That could put more than 200 million square feet on the market, as the federal landlord — the General Services Administration — oversees 370 million square feet across the country.

GSA leases with the private sector may also be at risk, particularly in the nation’s capital, according to developer Don Peebles. He estimated approximately three-quarters of the government’s 70 million square feet being leased in Washington, D.C. could be canceled by the Trump administration.

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

Efforts to reduce the federal government’s underutilized spaces have been ongoing for years, cast into a brighter spotlight by the Government Accountability Office’s report in 2023. Reductions always seemed likely to follow with the Trump administration, which has put an emphasis on reducing government spending.

But the timing is unusual, as the idea of selling a majority of the government’s office portfolio is emerging in tandem with the requirement for most federal employees to return to their offices. The mandate is expected to drive employees to exit their jobs, an intentional ploy to reduce the federal workforce as the Trump administration also institutes a federal hiring freeze.

The big loser in a massive property selloff and lease capsizing would be D.C. landlords. The GSA needs to go through a specific process to offload properties, which can lead to them selling for next to nothing. That, in turn, could drive down property values for commercial real estate across the district.

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

— Holden Walter-Warner