Federal agencies are warning that the impact on certain markets could be “profound” as they are trying to reduce the size of real estate footprints by up to 50% under the Trump administration.
Inman on Tour: Increase the volume of real estate success in Nashville! Connect with industry pioneers and top speakers, gain insights, cutting-edge strategies and valuable connectivity. Increase your business and achieve your most audacious goals – all with Music City Magic. Sign up now.
Cities across the US continue to struggle through a slump in office markets that questioned downtown’s future vitality, but financial analysts now risk some cities disproportionately from government efficiency department-reducing real estate costs It warns that there is.
According to a Barclays PLC analysis, Bloomberg initially reported that real estate loans related to commercial mortgage bonds are $12 billion, the world’s wealthiest person as part of a cost-cutting measure overseen by Elon Musk. Yes, there is a risk to someone who entrusts the person who runs Doge. .
Doge and government officials say they are trying to “right-size” a federal real estate portfolio with more than 7,500 leasings. This puts a small number of major cities at risk.
Bloomberg reported that Washington, DC is the most exposed, with a $600 million government lease being linked to commercial mortgage bonds (CMBs). Chicago will have the next $376 million, followed by $324 million in New York and Los Angeles, with $322 million and Arlington, Virginia, $240 million.
Officials say they are trying to reduce federal real estate footprint by up to 50%.
As cities tackle record-breaking office vacancy rates in the downtown area, the cuts will primarily focus on office space.
Some of that vacancy is caused by buildings leased by the federal government, and Doge says it has already identified and cancelled leases for dozens of unspecified properties last week.
Over the past six days, the number of lease ends for underutilized buildings has increased from 3 to 22, with savings increasing from $1.6 million to $44.6 million. https://t.co/b4ev4nyx96
– Government Efficiency Bureau (@doge) February 3, 2025
However, there is doubt as to whether the government can remove it from its lease.
Lawyers for law firm Arnold & Porter wrote in a white paper Monday that they will determine when and how leases in government-targeted buildings can be vacant.
“Therefore, GSA’s efforts to terminate leases during what is called the “company term” of those leases, simply because the government decided they wanted to reduce the federal government, have been “solid.” It is called the period. The footprint constitutes a breach of the lease and entitles the property owner to damages,” the lawyer wrote.
However, the lawyers pointed out that the government has leases that are likely to allow the government to cancel up to 45% of contracts in markets like Atlanta.
“As a result, the potential effects in some markets can be severe,” the lawyer wrote.
Email Taylor Anderson
