The federal government is shifting its strategy for disposing of offices by prioritizing buildings across the country that are the most likely to attract buyers.
The General Services Administration, the government’s real estate manager, has posted on its website a list of office properties containing a total of more than 2 million square feet of rentable space it may sell, a spokesperson from the agency told CoStar News via email.
The maneuver is the latest change in strategy for an agency that has been trying to reduce its real estate holdings for years. The newest list includes properties in major cities such as Chicago and Atlanta.
“These aren’t buildings that are in the middle of nowhere in the country, for the most part,” Lucy Kitchin, managing director of Transwestern's government services advisory group, told CoStar News in a phone interview.
It appears the properties on the latest list published by the GSA were not included on an initial list of hundreds of other buildings it identified as “non-core assets” earlier this month. That list was removed from the website within the next 24 hours. CoStar News reported that the disposition of those buildings could potentially save the government more than $430 million in annual operating costs.
“Due to the overwhelming response that we received after publishing the first list, we are refining our process,” the GSA said on its website. “We decided to use a more incremental approach focusing on a shorter list of assets that have already been evaluated, based on several criteria such as deferred maintenance and operating cost, utilization, and the general availability of replacement space in the local market.”
While the GSA had identified each of the buildings on the new list for disposal within the past two years, their inclusion on the “accelerated disposition" signifies the agency’s effort to expedite the process of unloading buildings it considers to have the highest probability of attracting potential new owners. The GSA said the priority disposition list will be updated regularly.
The eight properties identified by GSA for accelerated disposition are:
- The River Road Building at 4700 River Road in Riverdale, Maryland;
- The SSA Trust Fund Building at 149 W Broad St. in Bridgeton, New Jersey;
- The William O. Lipinski Federal Building at 844 N Rush St. in Chicago;
- 8930 Ward Parkway in Kansas City, Missouri;
- The San Antonio Federal Building West at 727 E Cesar E Chavez Blvd. in San Antonio, Texas;
- The La Branch Federal Building at 2320 La Branch St. in Houston, Texas;
- The Peachtree Summit Federal Building at 401 W Peachtree St. in Atlanta; and
- The Joe L. Evins Federal Building at 200 Administration Road in Oak Ridge, Tennessee.
Unloading empty offices
By ridding itself of the buildings, the agency said, it would ensure taxpayers do not pay for empty and underutilized federal office space, or the maintenance costs associated with long-term building ownership.
The agency said timing of offloading buildings is contingent upon several variables.
The GSA said it notified all affected agencies before it published the list and that it could consider selling a building and then leasing it back from the buyer in what's known as a sale-leaseback transaction.
For the River Road facility in Maryland, the GSA said the Department of Agriculture is moving to another facility under its custody and control. As for the Social Security Administration’s New Jersey facility, the GSA said the agency is expected to move into a new facility later this year.
“As the nation’s federal landlord it is our responsibility to regularly evaluate and address the housing needs of our federal agencies in order to meet their space requirements and optimize the federal footprint,” Melanie Gilbert said in a statement in December.
She served as the GSA's acting regional administrator and regional commissioner for the national capital area when the GSA announced it wanted to dispose of the River Road Building.