Despite a push to cut costs related to the federal government's vast real estate portfolio, at least one agency is standing apart from the shake-up with plans to expand and upgrade its offices across the country.
The Federal Deposit Insurance Corp., responsible for overseeing the national banking system, is expecting to funnel more money toward "major capital improvements and repairs" throughout its portfolio of offices across the United States, according to details outlined in the agency's operating budget. The budget allocates roughly $76.5 million to upgrade its leased and owned spaces.
The investment, named the Facilities Modernization Initiative, is set to be anchored by the move to relocate and expand its regional office in New York once its lease expires in the city later this year. The agency will be moving to the tower at 1166 Avenue of the Americas in midtown Manhattan after signing a deal earlier this month for 147,543 square feet, significantly larger than the roughly 119,225 square feet it has been occupying at the Empire State Building.
The new Manhattan hub alone is estimated to cost $32.7 million, according to the budget, and will coincide with a number of other efforts underway aimed at upgrading the agency's physical outposts.
Along with New York, the FDIC is on track to complete renovation work already underway at its offices in Atlanta, Dallas and Chicago.
The FDIC recently renewed and expanded its lease at 10 10th St. in Atlanta, where it is now the building's second-largest tenant. In Dallas, the agency late last year agreed to take over two additional floors at Plaza of the Americas at 600 N. Pearl St., an expansion that will boost its footprint in the building to about 186,100 square feet once finish-out work is completed.
The FDIC is also planning some "minor leasehold improvements" for its regional office at Chicago's 300 S. Riverside Plaza office, a roughly 45,500-square-foot hub for which the agency recently renewed its lease.
Just shy of $20 million has been allocated toward improvements and repairs for buildings the FDIC owns in San Francisco and the greater Washington, D.C. area. Another $8.5 million will be invested in finishing or beginning renovation work for 16 other field offices across the U.S., according to the budget, with any remaining offices slated for upgrades either once leases expire in 2026 or sometime over the next few years.
All told, the FDIC is estimating it will spend about $150.8 million this year to operate its national office portfolio, a more than 6.5% increase compared to 2024.
The FDIC didn’t respond to CoStar News' requests for comment.
Ready to commit
The increased investment is an anomaly against a backdrop of downsizing, lapsed lease agreements and high-profile move-outs rippling across both the national office market as well as throughout the federal government.
While plenty remains to be seen, President Donald Trump has made competing promises to both cut the size of the government workforce and call federal employees back to the office full time. He is also said to be considering a plan to sell a large majority of the federal government’s office stock to the private sector.
The impact of any of those initiatives would probably result in widespread upheaval in terms of how the government — specifically the General Services Administration, which owns, manages and leases space on behalf of most federal agencies — operates and uses its office space.
The GSA manages a portfolio of federal buildings across the country that spans upward of 370 million square feet. Within that portfolio, a number of the buildings have fallen into disrepair and require significant capital improvements to make them suitable for daily occupancy and use. Even so, with federal employees continuing to work remotely or on an abbreviated in-person schedule, many of those buildings haven't been fully used in years.
GSA-owned buildings in the D.C. area average about 12% occupancy, according to a recent agency-issued report. The government owns more than 7,500 vacant buildings across the country and another 2,200 or so buildings that are partially empty.
At the beginning of 2024, 16 federal agencies had announced return-to-office mandates, but their precise attendance policies varied, according to a report from brokerage JLL. Within hours of being sworn in, Trump issued an executive order intended to "terminate remote work arrangements and require employees to return to work in-person at their respective duty stations on a full-time basis."
With about a quarter of the federal workforce represented by unions — a majority of which have fought to retain hybrid work policies — it isn't yet clear how the order will affect federal employees' work arrangements or the offices in which they're required to report.
For the FDIC, at least, the agency has been operating under a requirement issued last year that calls for its employees to report to a physical office at least two days per week. Its office modernization plan coincides with efforts to improve its workplace environment, which have come under scrutiny after reports of stalking, harassment, homophobia and other violations agency officials have since vowed to remedy.
The overhaul plans are "part of a continuing, multi-year effort to redesign the workspace in FDIC field offices to support collaboration and hybrid work," FDIC Chairman Martin Gruenberg said in the budget report. "The budget also provides the resources to implement our action plan for transforming our workplace culture to ensure that all employees feel safe, valued and respected, and that complaints about employee misconduct are addressed quickly and effectively."