Dive Brief:
- Federal government agencies are reassessing their real estate portfolios to improve overall space utilization in response to the growth of hybrid work, according to an Office of Management and Budget report to Congress this month.
- An agency-by-agency assessment of office utilization and office portfolios found a little over 24 million square feet of “underutilized” owned and leased space across the government’s portfolio. The cost of that space is about $81 million, OMB says — less than 1% of the total cost of federal government owned and leased office space.
- OMB Deputy Controller Diedre Harrison issued a memorandum Friday that sets requirements for federal office space design standards and occupancy measurement and reporting. It also sets deadlines for agencies to report how they’re calculating occupancy and to start monitoring and reporting those numbers.
Dive Insight:
OMB asked the 24 largest federal agencies to provide an update on their office utilization rates and efforts to trim office space this spring, as hybrid work has become common in both the private and public sectors. About 46% of federal employees work in roles eligible for telework as of May 2024, the report states, and those workers spent 61.2% of regular working hours on-site at agency-assigned job sites, with significant agency-to-agency variation.
The annual cost of space in the Federal Real Property Profile — a list of government-owned or leased office space, except for facilities exempt from disclosure on national security grounds — is nearly $8.1 billion, according to the report. That includes nearly $2 billion to operate and maintain federally owned buildings, about $1.34 billion to operate and maintain leased buildings and around $4.75 billion in annual office lease costs.
The report details the space reduction efforts of each department or agency. Among the 24 agencies approached by OMB, the biggest planned office cuts come from the departments of Defense, Agriculture, Commerce and Energy. All four agencies are preparing to reduce their office footprints collectively by millions of square feet in the next several years, the report says.
The USDA reported it has cut its footprint by over 500,000 square feet since the beginning of fiscal year 2024 and identified an additional 1 million square feet for reduction over the next several years.
The Commerce Department reported that it has offloaded 1 million square feet of underutilized space in the past decade and is on track to trim its overall owned portfolio by an additional 335,000 square feet. Its space covered by General Services Administration occupancy agreements has shrunk 13.75% overall, the department said, and it is targeting over 1.06 million square feet of additional GSA occupancy agreement space for disposal in the next several years, including a 764,000-square-foot portion of its U.S. Patent and Trademark Office in Alexandria, Virginia.
The Defense Department reported that it has “made significant strides to strategically eliminate excess facilities from its property portfolio." In the last five years, the Washington Headquarters Services, which manages the GSA lease portfolio for the department in the National Capital Region, terminated over half a million square feet of leases and returned 275,000 square feet of space to GSA for use by other federal tenants, it said. Within the next five years, WHS plans to further pare back 512,000 square feet occupied under GSA agreements, it told OMB.
The Energy Department said it plans to dispose of roughly 3 million square feet of buildings through 2027. The agency noted it has already moved out of 193,000 square feet of leased space in spring 2023, which will generate $9 million in annual savings.
Federal facilities are over 50 years old, on average, OMB said, noting that older buildings are neither efficient nor “optimally configured for modern work and often require significant modification.”
