The General Services Administration terminated nearly 1,000 federal office leases last week — the first of several waves of downsizing its leaders expect complete between now and the end of the fiscal year.
But GSA’s real estate shop is already trying to walk back hundreds of those lease terminations, after officials discovered that closing down these offices would impact public-facing benefits and services.
Despite these complications, GSA is planning on five more rounds of mass lease terminations between now and Sept. 30. By the end of the fiscal year, GSA leaders expect to terminate another 660 leases. Federal News Network spoke with four current or former GSA officials, who all requested anonymity to avoid retaliation.
One official with GSA’s Public Buildings Service said the agency is currently in the process of rescinding about 300 recently terminated leases.
“A lot of what they terminated were actually public-facing buildings, which were not supposed to be part of this,” the employee said. “We are reaching out to lessors, and for the most part, in better terms saying, ‘Just kidding. We would like to cancel that [termination].’”
Agencies will begin moving employees out of their current office space starting in June. Once GSA terminates a lease, agencies typically have about 120 days to relocate employees.
A second PBS employee said GSA did not consult with its regional offices about the lease terminations, and that some tenant agencies were not notified before their leases were terminated.
“Regions were told not to engage with the customers around this. The lease termination letters were being sent out to building owners PBS leased from in batches,” the employee said.
The employee added that many tenant agencies are “very upset” about losing office space, while trying to comply with the Trump administration’s mandate to bring nearly all federal employees back to the office.
“They are trying to figure out how to fit staff into space with return to office, and PBS is trying to close a lot of leases,” the employee said.
The first PBS official said that in some cases, GSA may not have time to get contracts in place to move or dispose of furniture in leased office space.
“In some cases, we’re being told, ‘Well, they’ll just abandon in place.’ Those lessors are going to be left with that price tag, and they’re going to have to just sue the federal government for that money back.”
For smaller companies leasing to the federal government, the GSA official said they might not even be able to afford the legal battle.
“It’ll cost them more to sue than it will to collect the money. Most cases, they’re just going to have to cut their losses.”
A GSA spokesperson told Federal News Network that GSA “is reviewing all options to optimize our footprint and building utilization.”
“A component of our space consolidation plan will be the termination of many soft term leases. To the extent these terminations affect public facing facilities and/or existing tenants, we are working with our agency partners to secure suitable alternative space. In many cases this will allow us to increase space utilization and obtain improved terms,” the spokesperson said.
‘We are trying to clean up the mess’
The official said GSA’s central office in D.C. terminated the leases without input from regional offices.
“We are trying to clean up the mess, and we’ve just been told, if a lessor is not willing to rescind the termination, then to just reach out back to the national office.”
According to the employee, agencies with environmental missions —including the Environmental Protection Agency, U.S. Geological Survey, and Forest Service, saw some of the biggest reductions in leased space.
The Washington Post reported that GSA also terminated leases for more than 110 IRS offices that have taxpayer assistance centers.
In addition to slashing current leases, GSA is putting a hold on signing new ones.
“We are in a pause. There are very, very few exceptions,” the official said.
A third PBS employee confirmed the freeze on new leases, citing a memo Acting GSA Administrator Stephen Ehikian signed in January.
“Effective immediately, and until further notice, all contracting officers and lease contracting officers (1102s and 1170s) are instructed to suspend the execution of any new GSA-funded obligations, including new awards, task and delivery orders, modifications, and options,” Ehikian wrote in a Jan. 24 memo obtained by Federal News Network.
The memo lists an email address where employees can request an exemption and proceed with signing a new lease.
The first PBS employee said that in some cases, GSA has signed new leases, but lessors are losing construction workers to other projects, because the agency isn’t able to proceed on next steps— leading to delays and recalculation of project costs. The official said the agency said the federal leasing process takes anywhere between three to four years. In cases where contractors need to build new space for a tenant agency, the process can take up to five years.
“They don’t really know what the repercussions of certain actions are. And while we bring them up, it’s, ‘Noted, and we’ll get back to you,’ the official said. “Government efficiency isn’t being so efficient with our funds.”
A former GSA official told Federal News Network that the agency’s mass termination of leases will have a disproportionate impact on the Washington, D.C. metro area. About 30% of GSA’s owned and leased portfolio is in the region.
“It’s inevitably going to hit hit harder here, but there’s significant concentrations of federal inventory all over the country, including even in those areas where there aren’t huge federal buildings, there’s usually a lot of federal leases, and people in the real state industry will start to feel that,” the former GSA official said.
Federal News Network previously reported that GSA is targeting leases in their “soft term.” GSA often signs five-year leases, with the option of renewing for another five years. The agency is looking to terminate leases that have reached the initial five-year threshold.
The former official said many federal office buildings have been underutilized for decades, and never came close to full occupancy even before the COVID-19 pandemic. However, the former official said the Trump administration’s ongoing cuts to the federal workforce and federal office space are out of sync.
“Usually, you would figure out what functions you’re going to keep first … then you have the whole game of dominoes in which you shrink the inventory. Where does it make sense to keep space and where not? And so far, we’re just not seeing that.”
Current GSA leaders say its current portfolio of owned federal buildings is outdated, and faces a multi-billion-dollar maintenance backlog to improve those buildings.
The former GSA official, however, said the agency may also incur significant expenses by terminating leases and moving agencies to new spaces.
“They may find themselves canceling these soft terms only to go out in the market, and the market is tightening up in a lot of cities. They’re going to go out and find, ‘Oh my gosh, I signed this lease at $25 a foot 10 years ago, 15 years ago, and the rate now is $32 a foot. You’re gonna lose money anyway,” the official said.
‘They don’t know where to go’
Agencies are rescinding telework and remote work agreements, and directing employees to come back to the office full time.
The IRS, in a recent memo to employees conceded that some of its facilities “do not have enough space” to accommodate returning employees.
According to the first PBS official, agencies have been asked to justify their need for office space, but officials from the Department of Government Efficiency have said the return-to-office push is “not alone an acceptable reason” for asking for more office space.
Instead, DOGE officials at GSA have asked agencies what other office space they already have, and how many employees are currently working there.
“We have all of these employees that we don’t know what to do with them. We’re telling them that they need to go back to their national office. We have employees who are breaking down in tears when they hear from us, or the lessor that the space is being terminated, and they don’t know where to go,” the PBS employee said.
GSA is looking to move out of its own office space. Public Buildings Service Commissioner Michael Peters has called for cutting the total federal real estate portfolio by 50%, and is planning to sell GSA’s own 1800 F St. headquarters.
Federal News Network previously reported that GSA leaders are considering relocating GSA employees to the Interior Department’s headquarters. But a GSA spokesperson said that no decision has been made yet.
“When we do ask the question, ‘Where are the employees going to relocate?’ We get, ‘Not my problem,’ as the answer. That came from a DOGE employee directly — ‘Not my problem.’”
The GSA official said the pace of these changes is being set by DOGE officials.
“We at GSA have asked for a lot of their direction to be written down and documented so that we can execute their plan according to the policy. A lot of that has been we’ve been told no. Basically, we’ve given you verbal direction. You do need to take it. We’ll work to get something later. As of now, we want to see these results by the end of the week, and there’s very little ability for our leaders to push back. And the timelines are so short that we do need to begin acting now, so it’s not as if we’re going against that direct order.”
Meanwhile, GSA is also looking at major cuts to its portfolio of owned buildings.
The agency Tuesday listed more than 440 “non-core” assets it will consider offloading from its portfolio of federally owned buildings. However, on Wednesday withdrew the entire list of properties, but stated a new list is “coming soon.”
The first PBS official said the agency will keep some critical assets — including courthouses, land ports of entry and specialized enforcement spaces.
“Everything else that’s your typical office space, our flagship buildings across the nation, they are all set for disposal, and we’re getting rid of them… Anything that is just your typical office space is set is no longer identified as a core building. So those are looking to be disposed of,” the official said.
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