The Department of Government Efficiency led by billionaire Elon Musk says nearly two dozen office leases have been terminated and that it's looking for others to scrap as part of its stated mission to save taxpayer money.
DOGE said the General Services Administration ended 22 leases in moves that will result in a total of $44.6 million in cost savings for the federal government, without providing further details. DOGE announced the decisions on Musk's social media channel X, formerly Twitter.
In its post, DOGE did not say which buildings would be affected. The White House didn't return an email request seeking a comment about the lease terminations or overall plan.
As DOGE works to identify what it considers excess office space, President Donald Trump has ordered workers to return to their workspaces full time. Office owners should expect more cancelations, said the GSA, the organization that provides workspace and real estate services federal agencies. The GSA owns or leases more than 363 million square feet of space in 8,397 buildings in over 2,200 cities and markets across the country.
“These lease terminations are part of GSA’s ongoing effort to consolidate and right size its portfolio to save taxpayers dollars,” a GSA spokesperson said in an email to CoStar News. “GSA anticipates that this effort of terminating vacant, or underutilized lease space, will continue."
The moves by the federal government to reduce the office space it leases comes as the market for that property type struggles from the remote-work policies corporations adopted to slow the spread of COVID-19 and cutbacks in the wake of higher interest rates.
The overall office vacancy rate in the United States has increased to 14%, and during the past 12 months, move-outs exceeded move-ins in that property type across the country by 24.4 million square feet, according to a CoStar Market Analytics report.
While about half of the nation's top 50 office markets, led by New York, have seen positive demand since the second quarter and some smaller markets have registered "resurgent demand," CoStar analytics said "the other gateway cities and many secondary markets are still losing occupancy as slow job growth and the rightsizing of footprints to post-pandemic needs enters its final phase."
The GSA spokesperson said the first three lease termination notices were sent to properties in Kansas City, Missouri; O’Fallon, Illinois and Fairborn, Ohio. The addresses of the properties were not provided.
DOGE said that the GSA ended three leases of “mostly empty office space” and that tenants relocated to other nearby buildings in the government’s portfolio.
But DOGE did not say how much leased office space it planned to abandon in its U.S. real estate portfolio. As Musk leads sweeping changes at the United States Agency for International Development and Trump calls for significant reductions in the federal workforce, GSA is expected to require less office space.
In the last week, Musk himself reportedly visited the GSA headquarters in Washington, D.C., Nextgov/FCW reported. He did not immediately return an email request for comment routed through his companies Tesla and SpaceX.