The Trump administration on Wednesday rescinded a list of federal properties that it had targeted for sale, but still plans to move forward with the disposition of potentially hundreds of properties in a move that could roil commercial markets across the country.
“We anticipate the list will be republished in the near future,” Stephanie Joseph, a spokesperson for the General Services Administration, said in a statement emailed to Facilities Dive.
A report Wednesday in the Washington Post, citing an unnamed GSA official, said the disposition plan is on hold indefinitely.
GSA’s Public Buildings Service is the federal government’s real estate arm. It created a firestorm earlier this week when it published a list of more than 440 properties — including some of the federal government’s most high-profile buildings — that it said were obsolete or no longer being used to capacity and could be sold off.
Among the buildings targeted in the earliest version of the list are the J. Edgar Hoover Building that serves as the FBI headquarters and the Robert F. Kennedy Building, home of the Department of Justice, both in Washington, D.C. GSA’s own headquarters was on the list as well.
The lion’s share of the buildings are in the greater Washington area, but many of the buildings are spread throughout the country, including 26 in Michigan, 24 in Texas and 17 in Georgia.
Putting such a large number of buildings up for sale at a time when commercial real estate markets are still recovering from the COVID-19 pandemic’s impact on office vacancies could force property prices and leasing rates down in markets with many of these federal properties, market specialists say.
“This could lengthen the recovery timeline, cause a stall out in the rental rate recovery and cause vacancy rates to stay elevated longer than what we had hoped,” Stephen Buschbom, research director at property data firm Trepp, told The Wall Street Journal.
The move would also add to the confusion stemming from mass firings of government workers with probationary status and requests by the Office of Management and Budget to have all eligible employees return to full-time in-person work.
"GSA must explain what will happen to the agencies and employees housed in these buildings,” Johnny Olszewski and Kweisi Mfume, two members of Congress who represent hard-hit districts in Maryland, said in a joint statement. “No federal government building should be sold without a utilization assessment that is made public and a clear plan to house federal workers."
GSA said earlier this week the buildings were selected because they weren’t core to the federal government’s mission and were either underused or had such a big backlog of maintenance and repair work they were “functionally obsolete” The agency estimated the properties have a recapitalization cost of more than $8 billion, and disposing of them could save some $430 million annually in operations and maintenance costs
“Selling ensures that taxpayer dollars are no longer spent on vacant or underutilized federal spaces,” the agency said on its website. “Disposing of these assets helps eliminate costly maintenance and allows us to reinvest in high-quality work environments that support agency missions.” The statement is posted online on the page where the list had previously been hosted.
The agency said it pulled the list not because it’s rethinking its plans but to present the information later, in a way that differentiates properties based on how their disposition would work.
"Since publishing the initial list … we have received an overwhelming amount of interest," Joseph said in the emailed statement. "We [will] evaluate this initial input and determine how we can make it easier for stakeholders to understand the nuances of the assets listed.”
The disposition plan, when it’s released, will be sensitive to market impact, the agency said on its website.
“[We] will be engaging in market research and customer agency feedback regarding the potential disposition strategies for non-core assets, and will consider current use, occupancy, cost of agency relocation, and local market conditions when assessing disposition,” the agency says. “[The Public Buildings Service] welcomes creative solutions, including sale-lease backs, ground leases and other forms of public/private partnerships to drive the full optimization of our space while delivering our federal employees the high quality work environments they need to fulfill their missions.”
GSA is always looking at what to do with its properties and evaluating which ones should be disposed of and how, and bringing the list back online is part of that effort, the agency says
“To be clear, just because an asset is on the list doesn’t mean it’s immediately for sale,” Joseph told Bloomberg. “However, we will consider compelling offers and do what’s best for the needs of the federal government and taxpayer.”
