Federal Offices to Start Vacating Due to DOGE Cuts

In a significant move, federal agencies across the United States will begin vacating hundreds of office spaces this summer as part of a swift and often disorganized effort led by Elon Musk's Department of Government Efficiency (DOGE). The department is focusing on terminating leases it considers wasteful.

The White House's Department of Government Efficiency has published a list of canceled real estate leases on its website. However, internal documents obtained by the Associated Press reveal crucial details about the timing of these cancellations. According to files from the General Services Administration (GSA), which manages U.S. real estate, many leases are set to expire by June 30, with more cancellations expected in the coming months.

This rapid lease termination initiative has raised concerns among various agencies and lawmakers, some of whom are asking DOGE to reconsider or exempt specific vital buildings. Agencies like the IRS, Social Security Administration, U.S. Department of Agriculture, and U.S. Geological Survey are among those facing numerous lease cancellations.

Interestingly, many cancellations target lesser-known agencies that provide essential services. For instance, an office in Boise, Idaho, responsible for managing water supply and disputes in the western states, and another in Joliet, Illinois, which aids railroad workers, are among the affected sites.

It's important to note that not all affected locations will close their doors. In some cases, agencies might negotiate new leases, reduce their space, or move elsewhere.

Chad Becker, a former GSA official, pointed out that some agencies are adamant about not vacating their offices, stating, "I'm not leaving. We can't leave." He added that an initial response may involve disbelief and pushback, leading to extended planning for the move.

DOGE announced that the GSA has notified landlords about the termination of 793 leases, primarily focusing on those that can end without penalty in a short timeframe. According to estimates, these cancellations could save the government around $500 million over the duration of the leases, some of which had terms extending into the 2030s. For example, the lease cancellation for the Boise office could save approximately $18.7 million by 2035.

However, the claimed savings from DOGE have not been independently verified and do not factor in the costs associated with moving and closures. Furthermore, there has been little communication regarding the potential impact on agencies.

Some observers, like Jim Simpson, an Arizona accountant, expressed concerns about the chaos these cuts could cause. He emphasized that while government efficiency efforts are essential, they should be executed thoughtfully rather than aggressively, noting that unexpected delays and changes could lead to significant anxiety for citizens awaiting services.

Error in Lease Cancellations

There have been reports that some lease cancellations for IRS centers and other locations were mistakenly included in the initial lists and have since been rescinded. A source familiar with the situation, speaking anonymously to avoid backlash, confirmed that some leases were incorrectly flagged for cancellation.

For instance, the cancellation of a Geological Survey office in Anchorage, Alaska, was reversed because the agency discovered it lacked the rights to terminate the lease. Congressional Representative Tom Cole also confirmed he had successfully argued against lease terminations planned for several critical offices in Oklahoma.

Unexpected Industry Shock

The extent of these lease cancellations has taken many by surprise, particularly in an industry often characterized by stability. Landlords who anticipated continued occupancy by federal agencies were caught off guard, and some agencies found out about cancellations from property managers rather than their own departments.

Financial Consequences of Cancellations

Industry analysts warn that the tight timelines for these cancellations could lead some agencies to incur additional costs by having to pay extra rent during a transition period—potentially undermining DOGE's goal of saving taxpayers money. The Building Owners and Managers Association has advised landlords to prepare for potential rent claims from federal tenants who may remain in buildings beyond their lease terms.

Representatives from various agencies have provided little clarity on their plans moving forward. For instance, the Social Security Administration noted that many of the leases it is losing pertain to small sites that do not serve the public, while a spokesperson for the Railroad Retirement Board emphasized their commitment to maintaining an office presence for local railroad workers.

Modernizing Federal Real Estate

Efforts to reduce redundant federal real estate have been ongoing, and some officials suggest that this recent push may be overdue. However, experts caution that any downsizing must be approached methodically to avoid problems that could arise from rapid changes.

Although the government has already been decreasing its real estate footprint over the past decade, critics of DOGE suggest that instead of a snapshot approach, the agency could benefit from studying established GSA practices, which have focused on effective service delivery.

A recent law mandated agencies to assess the occupancy rates of their leased spaces, with those underutilized ordered to consider space disposal. Representative Greg Stanton remarked on the hasty nature of the current cancellations, calling for a more logical and careful approach.

Ultimately, the real impacts of these lease cancellations will take time to fully understand, and the situation remains fluid. As one finance professor noted, the rapid changes felt sudden and overwhelming, likening it to a blitzkrieg.

federal, offices, leases