- The federal government cut just 503,161 SF of leased office space in March, down sharply from February’s 8.5M SF.
- March’s lease reductions saved $11.5M in annual rent, bringing total rent obligations down to $5.23B.
- Some MSAs like New York, San Diego, and D.C. saw selective lease expansions, even as terminations increased elsewhere.
- Uncertainty remains over the true scope of savings, with inconsistent reporting from government sources.
Slower Cuts in March
As reported by GlobeSt, the federal government’s push to lease reductions took a significant step back in March. According to Trepp, the General Services Administration (GSA) terminated just over 500,000 SF of space, a sharp drop compared to the 8.5M SF cut in February. That translated to just $11.5M in rent savings—only 3.6% of the savings achieved the previous month.
Tracking the Numbers
Trepp’s February report had shown major momentum in the cost-cutting effort: 109 property reductions and $318.5M in savings. But that pace appears to have cooled considerably. March’s cuts amounted to less than 6% of February’s square footage reduction.
Still, the federal government’s total office rent expenditure now stands at $5.23B annually, suggesting meaningful progress—albeit at a slower clip.
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
Where Cuts—and Expansions—Are Happening
Despite the slowdown, there was “selective expansion” reported in key markets like New York, San Diego, and Washington, D.C., even as consolidation efforts continued in Philadelphia and D.C. Trepp also noted growing lease termination risks for 2025.
According to internal documents, more lease closures are expected by June 30. However, not all terminations will result in office closures—some agencies may renegotiate leases, relocate, or downsize within the same property.
Conflicting Data Clouds the Picture
March’s data has been difficult to pin down. While the Denver Gazette cited nearly 750 terminated leases as of March 26, the Department of Government Efficiency (DOGE) later listed only 643 terminations with $311M in savings. Newsweek pegged the savings at over $400M, while Fierce Biotech noted that DOGE had cut its initial forecast nearly in half.
As of April 21, DOGE data shows only a dozen more reductions this month, with around $4.8M in additional savings.
What’s Next
The rapid pace of federal office space consolidation in early 2025 appears to have been a temporary surge, with momentum tapering off in March. However, with more lease expirations expected mid-year, further reductions could still be on the horizon.
Developers, investors, and property managers should watch for updated figures and policy shifts as the new administration’s cost-cutting agenda takes shape.
