Dive Brief:
- In its proposed fiscal year 2025 budget, the Biden administration wants to help the U.S. General Services Administration right-size the massive federal government real estate footprint and improve federal buildings in Washington, D.C., and Maryland.
- The proposed budget allocates $425 million for the GSA to shrink its federal portfolio and trim long-term costs through a new real estate optimization program that will facilitate renovations of federal buildings to utilize space more effectively and help offload unneeded federal facilities, the agency said.
- The plan also aims to strengthen and improve digital services across the government, including the responsible use of artificial intelligence, while encouraging electric vehicle adoption to meet sustainability goals, the GSA said. GSA Administrator Robin Carnahan said the budget will accelerate the GSA’s efforts to right-size the real estate portfolio and “ensure the secure and effective use of technology across the government,” which could lead to a reduction in leasing costs.
Dive Insight:
The budget builds on the GSA’s plan to shed 23 properties that represent a reduction of 3.5 million square feet and more than $1 billion in cost savings over a decade, according to the news release.
On behalf of federal tenants, including U.S. Postal Service facilities, the GSA leased 173 million square feet across the U.S. last year. The agency said it aims to reduce that rental space to 170 million square feet this year and to 168 million square feet in 2025.
The federal government has been grappling with long-standing pressures to address the impact of vacant buildings and underutilized space at its facilities. The proposed budget’s funding emerges against the backdrop of a bill passed by the U.S. House of Representatives to standardize the federal government’s calculation of occupancy and utilization rates, requiring agencies to trim or consolidate federal office space where utilization drops below 60%.
The GSA said the $425 million provided in the Biden administration’s proposed FY 2025 budget would ensure it has full access to the annual revenue and collections in the federal buildings fund, which maintains and manages federal buildings. The funding, it said, would also raise the prospectus threshold — or the dollar amount above which federal agencies must seek congressional approval for more flexibility to manage its real estate portfolio — from $3.9 million to $10 million, according to a March 12 news release.
The budget proposal also seeks funding for restoration and revamping seven federal facilities in Washington, D.C., along with the Washington National Records Center in Maryland, per the release.
The GSA noted that in recent years, federal buildings fund appropriations fell significantly below the rents expected from agencies. This shortfall has hindered the pursuit of an appropriately-sized capital program relative to the size of its portfolio, the agency noted.
To address this shortfall, the GSA’s Public Buildings Service arm is requesting $10.7 billion in new obligational authority, including $233 million in net positive budget authority. In a document laying out the budget request’s justification, the GSA said the funds would help it reduce its “significant deferred maintenance liabilities,” release over 100,000 rentable square feet of leased space and avoid millions in annual future lease payments. The money, PBS said, would also support the Biden administration’s goal of transitioning to 100% carbon pollution-free electricity governmentwide.
