While questions remain about how radically Elon Musk’s Department of Government Efficiency can shrink the real estate footprint of the federal government, the unprecedented nature of the cost-cutting push has left landlords that rely on government rent payments in a precarious position.
In the first month of Donald Trump‘s presidency, executives with office landlords that hold federal leases have downplayed DOGE‘s impact, but analysts are sounding the alarm that those leases — long considered sure bets backed by the credit and good faith of the U.S. government — are now as risky as any other office lease in the private sector.
The shift in perception of leases signed by the General Services Administration, the government’s real estate arm, is “pretty much a 180,” Green Street head of office and life science research Dylan Burzinski said.
The GSA has more than 7,500 leases across the U.S., according to the agency’s data. Of its 149.4M SF leased footprint, 52% of the space is either on a lease expiring by 2028 or can be terminated before then, according to an S&P Global analysis.
The commissioner of the Public Buildings Service within the GSA — essentially the head real estate executive in the federal government — said last month he hopes to cut the government’s footprint by up to 50%.
“I don’t think people understand the extent of the GSA leases that are out there,” said Michael McCarthy, a real estate finance lawyer with Morgan Lewis & Bockius. “A lot of landlords, a lot of lenders believe the GSA leases would go a lot longer than the firm term. You don’t see them as a five-year lease. You don’t see them as a 10-year lease. These are long, long term.”
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