Federal agencies across the United States are slated to vacate numerous office spaces starting this summer. This development is the result of an aggressive initiative by Elon Musk’s advisors aiming to cut costs by terminating leases deemed inefficient. The Department of Government Efficiency (DOGE) has made public a list of these cancellations, but internal documents reveal more specifics about when these changes will occur. The General Services Administration (GSA), responsible for managing federal real estate, has listed various leases to end by June 30, with more following in ensuing months.
This swift movement has generated concern, prompting some agencies and politicians to seek exemptions for certain buildings. Major federal bodies like the IRS and the Social Security Administration are facing multiple lease cancellations, along with lesser-known agencies overseeing vital public services. From the Bureau of Reclamation office in Idaho, managing water resources in the West, to a Railroad Retirement Board location in Illinois that offers benefits to railroad workers, many key services might see disruptions.
Although sudden lease terminations do not necessarily result in closures, potential outcomes could include downsizing or relocating. Some agencies are expressing resistance, opting to either negotiate new terms or temporarily operate under the threat of enforced relocation. “There’s going to be initial disbelief,” noted Chad Becker, a previous GSA real estate expert.
According to DOGE, 793 leases are being terminated in a bid to save an estimated $500 million, though these figures are disputed and do not encompass the costs related to moving or closing down facilities. Noteworthy savings mentioned include an $18.7 million reduction through 2035 from terminating the Bureau of Reclamation’s lease in Boise.
Critics argue that this widespread effort is leading to confusion and disorder. Jim Simpson, a taxpayer advocate in Arizona, described the method as using a “chainsaw” when more precision is necessary. His surprise was based on learning that many IRS offices, providing essential community services, faced lease cancellations.
Errors have added complexity, with some listed lease terminations revised or rescinded after inaccurate information was initially reported. Some IRS centers were mistakenly earmarked for closure and later removed from the list.
The wave of lease cancellations has caught the commercial real estate sector off guard, disrupting an industry known for its stability. Landlords, some of whom had expected long-term government tenants, were startled by the unforeseen terminations. Agencies finding themselves in tight timelines for vacating could incur extra costs during the transition period.
The real estate market is now grappling with these changes, and GSA’s non-response to inquiries has complicated matters further. GOP Representative Tom Cole managed to avert some planned terminations in Oklahoma, yet the pending leases remained unchanged in recent updates.
Despite potential disruptions, creditors of unnecessary federal estate reductions warn that these actions should be strategic rather than hasty. David Marroni from the Government Accountability Office highlighted the need for a methodical approach to avoid costly mistakes and preserve essential public service functions.
Efforts to part with redundant real estate began before Musk’s influence, under a steady decline in the government’s property portfolio over the last decade. Critics argue remained spaces were already being shed, questioning DOGE’s aggressive motivations.
A law passed under President Biden’s administration demands agencies assess their space usage, directing reductions for those failing a 60% occupancy. Representative Greg Stanton condemned DOGE’s hurried strategy as reckless and a risk to public service delivery.
Industry experts caution that understanding the full impact of these actions will take time, as each situation is unique. The suddenness of these changes has been likened to a “blitzkrieg,” illustrating the turmoil in real estate circles.
