Downtown D.C. federal office buildings are underutilized, report finds
As the local D.C. government advances multiple efforts to revitalize downtown and mitigate financial pressures caused by a surge in pandemic-era remote work, a new federal report shows that many of the District’s large office buildings occupied by federal agencies are being significantly underused.
The report, released Thursday by the U.S. Government Accountability Office, examined how 24 agencies that occupy most of the federal government’s buildings are using the 21.5 million square feet of office space that belongs to them. Measuring employee attendance, the GAO found that 17 of those agencies’ headquarters were filled at just 25 percent capacity or less during three separate weeks between January and March.
On average, the two-dozen agencies — which include the Environmental Protection Agency and Departments of Justice, Labor and State — used about 39 to 49 percent of their headquarters’ capacity during the span, sparking discussions in Congress on Thursday about how the federal government can move more quickly to get rid of expensive assets it no longer needs.
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Federal efforts to dispose of unneeded properties in D.C. would be welcome news for Mayor Muriel E. Bowser (D) and city leaders who are trying desperately to attract more workers and residents downtown, which became unrecognizable during the pandemic as businesses struggled to recover from a sharp decline in foot traffic. The mayor has publicly called on the Biden administration to either return federal workers to their downtown offices or transfer the properties to the District.
But the GAO’s findings bring renewed attention to what members of Congress described as long-standing challenges with the federal government’s own real estate portfolio and whether agencies are making the most use of their Washington headquarters. During a House Transportation and Infrastructure Committee hearing to discuss the report, officials noted that federal agencies spend about $2 billion annually to maintain office buildings they own and about $5 billion annually to lease office space — regardless of occupancy level.
“We had far too much empty space in our portfolio. Unfortunately, the ongoing telework policies have only exacerbated that problem,” said Rep. Scott Perry (R-Pa.), who chairs the House subcommittee focused on economic development and public buildings. Discussing the new report, he added: “The taxpayer is paying for the remaining 75 percent of these agencies’ unused space. … The taxpayer is quite literally paying to keep the lights on when no one is home.”
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The GAO found that the Small Business Administration, for example, would use only 67 percent of the total capacity at its building at 409 Third St. SW, even if 100 percent of its employees showed up on the same day. The report’s authors, who described their findings as “conservative estimates,” said data collection was challenging at times because agencies lack uniform standards for measuring building utilization as well as consensus on how such data should factor into real estate decisions.
Most of the 24 agency headquarters selected for the study are located near the National Mall and White House, though four have headquarters in Maryland and Virginia. Perry said his hope was that the GAO’s report could serve as a baseline to pass legislation that would help the federal government “rightsize” its portfolio, potentially offloading underutilized property to the private sector or local municipalities.
Bowser announced a third-term goal in January to draw 15,000 residents downtown over the next five years while also adding millions of square feet of residential space to the area. But the local government has no control over federal workers, who make up a quarter of the city’s workforce — nor over the buildings they occupy.
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In May, as she unveiled her administration’s effort to create a “Downtown Action Plan” to revitalize D.C.’s core, Bowser said that while she wants to work with the federal government on its return-to-office plans, she is not banking on their return. “Of course, we want our federal workers back,” Bowser said at the time. “Sometimes I take the view that we’re going to do it with or without you — rather do it with you, but I’ve got to do it regardless.”
As part of the action plan, city and business leaders on Thursday participated in a “futuring workshop” designed to spark creative ideas to reimagine downtown.
At Thursday’s hearing, David Marroni, an acting director in the GAO’s physical infrastructure team, highlighted the pressing need for federal agencies to determine how much space they’ll actually require moving forward — a step that he said presents its own set of challenges with lingering uncertainty around in-office policies.
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Many federal agency headquarters, he said, have excess storage and administrative spaces that became defunct over time as technology improved and as more agencies embraced hybrid work.
“The status quo can’t hold. Agencies have been in a wait-and-see mode for more than three years. They need to decide how much office space they really need and start moving in that direction,” Marroni said. “Low building utilization has significant costs, both to the government and the American taxpayer.”
The Biden administration in April instructed federal agencies to examine their remote-work policies while encouraging them to “substantially increase meaningful in-person work.” Marroni said agencies have gradually started to announce their attendance policies and put out information about their real estate plans, “but we have a particular need now to refocus and potentially make some hard decisions about what space we need.”
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But even when the Office of Management and Budget establishes agency standards around office utilization, consolidating space and moving on from the buildings will likely be a lengthy process, Marroni said. Half of the government’s leases are set to expire within the next five years, he said, adding further incentive for them to come up with a plan.
At the end of the hearing, D.C. Del. Eleanor Holmes Norton (D) recalled that in March, Nina Albert, commissioner of the Public Buildings Services at the General Services Administration who manages the federal government’s real estate portfolio, said the GSA would be “delighted” to work with local D.C. leaders on “repositioning assets that have historic utilization, rising costs and are not a long-term strategic goal for private use.”
Pressed by Norton on whether any of those conversations had taken place yet, Albert said the GSA was “in contact” with D.C. — but said discussions about specific properties likely won’t take place until the federal government has a clearer sense of how various agencies will move forward.
“Having said that, we understand what the District is trying to do with its downtown, and we’re trying to make sure that strategically, our assets can contribute to the vitality of downtown,” Albert said.
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