Aaron Jodka
Colliers Capital Markets recently sat down with Charles Dilks, Vice Chair, and Victoria Abbasi, Vice President, from Colliers’ Government Solutions team to discuss the rapidly changing policies in government leasing and the opportunities and challenges they present.
Colliers Capital Markets (CCM): How big is the General Services Administration’s (GSA) footprint across the U.S.? How much is leased versus owned?
Government Solutions (GS): The GSA is the nation’s largest tenant, with a portfolio consisting of 173 million SF of leased and 184 million SF of owned space. For context, its leased space is similar in size to the entire Phoenix or Denver market, while its owned space is comparable to Boston.
CCM: How are GSA leases structured differently than a typical office deal?
GS: The GSA currently has 41 million SF of leases in “soft term,” a period in which the government can terminate leases at any time – typically with 30-120 days’ notice – without incurring a penalty. Unlike private sector terminations, which occur on a set date, government terminations are rolling, offering flexibility after the firm term ends. This structure is common in GSA leases and has long been a tool for managing evolving space needs driven by factors including workforce changes, budget constraints, policy changes, and technology advancements. Soft term leases allow the GSA to adjust its real estate portfolio efficiently as government needs change.
CCM: What actions is the government taking today to evaluate its real estate footprint? Are some markets more impacted than others?
GS: Since 2012, the GSA has been actively downsizing its leased footprint through right-sizing and consolidations, a trend that accelerated with the rise of remote work during the pandemic. The current Public Buildings Service commissioner is continuing that push, aiming to reduce both GSA’s leased and owned inventories. An Executive Order issued on February 26, 2025, will further this effort. Agencies will update the Federal Real Property Profile Management System to reflect their current holdings, identify all termination rights and determine whether to exercise them, and submit plans to the Director of the Office of Management and Budget for the disposition of unnecessary property.
Some regions of the country have a large number of soft term leases and pending expirations, while others may have underutilized federal buildings. For its owned inventory, the GSA, along with the Public Buildings Reform Board, is prioritizing the disposition of underutilized federal buildings. In the District of Columbia, for example, downsizing is more likely to occur through the sale of federally owned properties rather than lease consolidation, creating opportunities for redevelopment and conversion of highly desirable sites.
Sandy McDonald
Ronna Larsen