The federal agencies will start to vacate offices in the summer, under a frenetic effort by Elon Musk’s advisers who are trying to cut costs. They want to end leases they claim waste money.
The Department of Government Efficiency at the White House, under Musk’s leadership, has a list of canceled leases posted on its website. However, internal documents obtained by The Associated Press reveal a vital detail: When these cancellations will take place. The documents, which come from the General Services Administration (the U.S. Government’s real-estate manager), list hundreds of leases for federal offices and buildings that are expected to expire by June 30.
Some agencies and legislators have expressed alarm at the rapid pace of cancellations. They have asked DOGE to exempt certain buildings. The IRS, Social Security Administration and U.S. Department of Agriculture are among the agencies that have had 20 or more of their leases cancelled.
The terminations will affect many agencies that are not as well known but provide services vital to Americans.
The offices range from the Boise, Idaho office of the Bureau of Reclamation, which deals with water disputes and oversees the supply of water in the parched American West to the Joliet (Illinois) outpost of Railroad Retirement Board which offers benefits to railroad workers and survivors.
Lease termination does not mean that all locations will be closed. Some agencies may choose to negotiate new leases in order to remain in their current space, reduce the size of it or move elsewhere.
Some agencies say: “I’m leaving. “We can’t go,” said Chad Becker. He is a former GSA official in real estate who represents building owners that have government leases with Arco Real Estate Solutions. “I believe there will be a period where people are going to push back, and a period when they won’t believe it. Then, if needed, they could start working on the execution of an action.
DOGE reports that GSA notified landlords that they plan to terminate 793 leases. They are focusing on those that could be terminated within a few months, without any penalty. The group estimates that these moves will save approximately $500 million over lease terms, some of which were scheduled to continue well into the 2030s. Bureau of Reclamation’s cancellation of the lease in Boise would go into effect on August 31. It is estimated to save $18,7 million by 2035.
DOGE’s estimates of savings – which are a fraction Musk’s $1 trillion goal for cost-cutting – have not been verified, and do not include the costs associated with moves and closings. The group has not released any information on what the changes would mean for agencies.
Jim Simpson, a tax preparer in Arizona and member of an IRS panel advocating for taxpayers, said: “My first reaction was that this would just cause more chaos.” “There is a lot that can be done to improve government efficiency. But it shouldn’t be done with a chainsaw. It should only be done with precision.”
Simpson was surprised to hear that the IRS, as well as local taxpayer assistance centres, would be losing their leases in the near future. He sends clients to the local taxpayer assistance centers to obtain paperwork for filing returns and answering IRS inquiries.
DOGE cancels some leases due to errors
According to a source with knowledge of the changes, who spoke anonymously to the AP to avoid retaliation and was in direct contact with the IRS, the plans to cancel leases for several IRS centers and sites were erroneous and have now been rescinded. These changes have not yet been reflected on DOGE’s list. The latest update, published Thursday, only removed one location and added dozens of others.
According to a person familiar with this matter, the GSA reversed its decision to close a Geological Survey Office in Anchorage, Alaska after realizing that it did not have termination rights.
Rep. Tom Cole (R-Okla.) said Monday that he had convinced DOGE not to terminate leases for the National Weather Center, the Social Security office, and the Indian Health Services office, all in Oklahoma City. All three leases were still on DOGE’s list of cancellations by Thursday.
The GSA press office did not respond to any inquiries.
DOGE push caught many by surprise
The cancellation of large amounts of government real estate was a surprise to an industry that is known for its stability.
Landlords, who had expected government agencies to stay tenants – for several years in some cases – under their current leases were shocked. Real estate managers say that some agencies were informed by building managers and not federal partners about the cancellation of their leases.
Cancellations may incur additional costs
Becker, who’s firm tracks the DOGE lease cancelations, and other observers expect that some agencies won’t be able to move out their personnel and their property within such tight deadlines. This could force some agencies into paying additional rent for a period known as the holdover, which would undermine DOGE’s stated aim of saving taxpayers money.
In a recent alert, the Building Owners and Managers Association (BOMA), which represents commercial real estate, warned landlords to be ready to demand payment from federal government tenants who extend their leases.
The IRS did not respond when asked about the plans for buildings whose leases are soon to expire. The Social Security Administration’s spokesperson minimized the impact on its offices of losing their leases. She said that many of them were “small remote sites” which didn’t serve public or were being consolidated in other places.
Other agencies also provided little clarification, saying that they were working with GSA on their options and making statements that were almost identical in some cases.
A spokesperson for the Railroad Retirement Board expressed concerns over the upcoming cancellation of leases for its offices in Joliet and Illinois, as well as eight other states. The spokesperson said that the Railroad Retirement Board was working “to maintain a public office presence for local railroad communities.”
Trimming federal property is already underway
David Marroni, a GAO official, told a Congress hearing last week the effort to get rid of unnecessary federal real estate is “long overdue”, saying that agencies have held on to unnecessary space for far too long. He warned that downsizing was to be planned and deliberate in order to make substantial savings, and reduce the risk of errors and unanticipated mission impacts.
The federal government’s portfolio of real estate had been steadily decreasing over the past decade, even before Musk’s arrival. In fact, critics say that if DOGE was truly interested in cutting costs, it could take a lesson from GSA. The GSA’s mission, even before Donald Trump became president, was to provide “effective and efficient services” to the American people.
In a law signed by the former president Joe Biden in January, before he left his office, agencies were directed to measure true occupancy rates for leased space by this summer. The agencies that did not meet the 60% target over time were directed to dispose their excess space.
At last week’s meeting, Arizona Democrat Rep. Greg Stanton said, “There is a logical, orderly way of doing this.” He said that DOGE was pursuing an approach recklessly, which could harm public service delivery.
The industry observers warned that every situation is unique and it may take several months or even years to fully understand the impact of lease cancellations.
It really depends on the conditions. It is a surprise, no doubt, that in just six weeks, all of these things happened, said J. Reid Cummings a professor of real estate and finance at the University of South Alabama. It’s like a blitzkrieg.
