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Government lease terminations could put hundreds of buildings at risk of distress

While federal move-outs are likely to be scattered, many landlords stand to suffer
Buildings such as 40Forty-One in Midtown Phoenix, which houses a large Internal Revenue Service office, could see distress-level vacancy if announced Federal government lease terminations occur. (CoStar)
Buildings such as 40Forty-One in Midtown Phoenix, which houses a large Internal Revenue Service office, could see distress-level vacancy if announced Federal government lease terminations occur. (CoStar)
CoStar Analytics
March 14, 2025 | 4:46 P.M.

Right-sizing the federal government’s real estate footprint has long been proposed as a means of saving taxpayer money. A CoStar analysis suggests the new administration's possible targets for lease terminations could put more than 200 buildings at risk of financial distress, even if the cuts would be too geographically broad to produce a meaningful change in vacancy in most of the markets where the affected buildings are located.

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