Trump Administration Weighs Massive Federal Office Sell-Off, Threatening D.C. Real Estate Market

By LPshares.com · January 23, 2025

The Trump administration is considering selling a significant portion—about two-thirds—of the federal government’s office space to private buyers, according to sources familiar with the proposal, The Washington Post reported on Tuesday.

The General Services Administration (GSA), responsible for overseeing federal real estate, manages a vast portfolio totaling 370 million square feet nationwide. However, due to insufficient funding, many of these properties have fallen into disrepair, remaining vacant or underutilized, as the GSA testified before Congress in 2023.

The Trump administration is also considering terminating nearly 75% of the 70 million square feet of office space leased by the GSA from private landlords in Washington, D.C., according to developer Don Peebles, who spoke with The Washington Post. A substantial reduction in GSA leases could create financial strain for D.C. landlords, many of whom rely on the agency as a key tenant.

The GSA has already been working to reduce its property holdings as maintenance issues worsen, but offloading federal buildings is a complex process. Before selling properties, the agency must typically offer them first to other government entities at little or no cost. Peebles warned that many of these buildings would likely be sold at steep discounts, potentially driving down the overall value of D.C.’s office market, which has already seen significant declines in recent years. “Buildings will sell for 30 cents on the dollar,” Peebles said. “It’s a paradigm shift. There will be a dramatic reset on property values.”

A GSA spokesperson stated that the agency is continuing efforts to downsize the federal real estate portfolio and maximize the use of existing government-owned buildings. They also noted that additional funding from Congress could help speed up this process.