Future of Work
The Great Federal Office Downsizing
Dan Bladen
CEO & Co-Founder
Top view scene of Washington DC down town which can see United states Capitol, washington
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In his first days back in office, President Trump has sparked fresh debate about the federal government’s real estate strategy. Biden’s Office of Management and Budget (OMB) previously announced plans for agencies to shed significant amounts of office space, citing inefficiencies in usage. Building on this momentum, Trump’s executive order has mandated the end of remote work arrangements for federal employees and proposed selling off large portions of the government’s office portfolio. 

With federal offices averaging just 12% occupancy, he’s signaled plans to sell off significant portions of the federal government’s office portfolio. Trump’s real estate strategy isn’t just about cutting costs; it represents a potential game-changer in how the U.S. government interacts with office real estate—and its implications could ripple far beyond Washington, D.C.

The State of Federal Real Estate

The General Services Administration (GSA), often referred to as the federal government’s landlord, manages a massive 370 million square feet of office space. Much of this portfolio, however, has become an albatross: poorly maintained, underused, and saddled with bureaucracy. Some 7,500 government buildings sit entirely vacant, while another 2,200 are partially empty.

Take the former GSA regional headquarters in D.C.’s L’Enfant Plaza. Despite its prime location, the nearly 1-million-square-foot building has been empty since 2018, requiring an estimated $184.8 million in renovations. It’s a good example of why Trump’s push to right-size the federal real estate portfolio could make economic sense—but it’s also a warning of the potential pitfalls.

The former GSA regional headquarters in D.C.’s L’Enfant Plaza. Image: JOANNE S. LAWTON
A Double-Edged Sword for D.C.

If Trump’s administration moves forward with selling two-thirds of the government’s office portfolio, the impact on the D.C. real estate market could be huge. Government leases are a cornerstone for many private landlords in the city. A significant pullback from the GSA could destabilize the market, leading to a sharp decline in property values.

“Buildings will sell for 30 cents on the dollar,” warns Don Peebles, a prominent D.C. developer. “It’s a paradigm shift. There will be a dramatic reset on property values.”

At the same time, selling off these assets could inject new life into neglected spaces. Private-sector developers, unencumbered by the GSA’s red tape, could reimagine these buildings for modern uses—if they’re willing to shoulder the costs of renovations and upgrades.

The Return-to-Office Mandate

Alongside plans to reduce the government’s real estate footprint, Trump’s RTO mandate aims to bring federal workers back to their duty stations full-time. While proponents argue this will improve collaboration and productivity, critics point to the human and logistical costs. Many federal employees have built routines around remote work, benefiting from reduced commutes and increased flexibility.

As Nick Bloom’s research highlights, “Workers’ productivity doesn’t seem to increase if they go to the office more than three days a week.” Forcing a full-time return may risk alienating employees who have thrived in hybrid setups.

Lessons from the Past

This isn’t the first time Trump has taken a keen interest in federal real estate. His redevelopment of the Old Post Office in D.C. into the Trump International Hotel demonstrated his ability to transform underperforming assets into profitable ventures.

Mar-a-Lago, another government property turned private, tells a similar story. These successes underscore Trump’s belief in the private sector’s ability to do what the government often cannot: efficiently manage real estate.

Mar-a-Lago. Image: Jud McCranie
A New Era for Federal Real Estate?

Trump’s federal real estate strategy—a mix of downsizing and privatization—poses significant risks and opportunities. On one hand, selling off underutilized buildings could relieve taxpayers of costly maintenance bills and revitalize urban spaces. On the other, fire sales might devalue surrounding properties and leave the government scrambling for space if future needs grow.

What’s clear is that the federal government’s relationship with real estate is changing. For D.C. landlords, developers, and employees, the coming years will demand adaptability, innovation, and a willingness to rethink old paradigms. The question isn’t just how much space the government needs—it’s how to create a real estate strategy that aligns with a rapidly evolving world of work.

How Kadence Helps You Make Smarter Space Decisions

As organizations face growing challenges in managing their real estate, we at Kadence offer a way forward. With the analytics gathered through Kadence, businesses can adapt to changes like those impacting the federal landscape and make smarter decisions about their spaces.

Kadence simplifies how businesses manage their real estate. With real-time insights into office usage and employee needs, Kadence helps organizations:

  • Cut Wasted Space: See exactly how much room you actually need.
  • Support Hybrid Teams: Use data to create flexible spaces that work for everyone.
  • Boost Efficiency: Give teams the tools to book the right spaces for their tasks, making collaboration and focus time seamless.

By turning data into smarter decisions, Kadence helps businesses save money and build workplaces that thrive in today’s changing world. If you would like find out more, chat to one of our hybrid work experts today.


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