Washington: Federal agencies will begin to vacate hundreds of offices across the country this summer under a frenetic and error-riddled push by Elon Musk’s budget-cutting advisers to terminate leases that they say waste money.
Musk’s Department of Government Efficiency maintains a list of canceled real estate leases on its website, but internal documents obtained by The Associated Press contain a crucial detail when those cancellations are expected to take effect. The documents from inside the General Services Administration, the US government’s real estate manager, list dozens of federal office and building leases expected to end by June 30, with hundreds more slated over the coming months.
The rapid pace of cancellations has raised alarms, with some agencies and lawmakers appealing to DOGE to exempt specific buildings. Several agencies are facing 20 or more lease cancellations in all, including the IRS, the Social Security Administration, the US Department of Agriculture and the US Geological Survey.
Many of the terminations would affect agencies that aren’t as well-known but oversee services critical to many Americans.
They span from a Boise, Idaho, office of the Bureau of Reclamation — which oversees water supply and deals with disputes across the often-parched American West — to a Joliet, Illinois, outpost of the Railroad Retirement Board, which provides benefits for railroad workers and their survivors.
The lease terminations do not mean all the locations will close. In some cases, agencies may negotiate new leases to stay in place, downsize their existing space or relocate elsewhere.
“Some agencies are saying I’m not leaving. We can’t leave,’ said Chad Becker, a former GSA real estate official who now represents building owners with government leases at Arco Real Estate Solutions. “I think there’s going to be a period of pushback, a period of disbelief. And then, if necessary, they may start working on the actual execution of a move.
Errors add to confusion
DOGE says GSA has notified landlords in recent weeks that it plans to terminate 793 leases, focusing mostly on those that can be ended within months without penalty. The group estimates those moves will save roughly $500 million over the terms of the leases, which in some cases were slated to continue into the 2030s. The Bureau of Reclamation cancellation in Boise, for instance, would take effect Aug. 31 and is expected to save a total of $18.7 million through 2035.
But DOGE’s savings estimates — a fraction of Musk’s $1 trillion cost-cutting goal — have not been verified and do not take into account the costs of moves and closures. The group has released no information about what they will mean for agencies.
“My initial reaction is this is just going to cause more chaos,” said Jim Simpson, an accountant in Arizona who helps low-income people file taxes and serves on an IRS panel that advocates for taxpayers. “There’s a lot of room to help with government efficiency, but it should be done surgically and not with a chainsaw.”
Simpson said he was surprised to learn that dozens of IRS offices, including local taxpayer assistance centres, were facing upcoming lease cancellations. He refers clients there to get paperwork to file returns and answer IRS inquiries, and he said losing services would “cause a lot of anxiety” and delay refunds.
Plans to cancel the leases at several of the IRS centres and other sites were in error and have been rescinded, according to a person with direct knowledge of the changes who spoke to the AP on the condition of anonymity in order to avoid retaliation. Those changes are not yet reflected on DOGE’s list, which only removed one and added dozens more in its latest update published Thursday.
The GSA walked back the cancellation of a Geological Survey office in Anchorage, Alaska, for instance, after learning it did not have termination rights, according to the person familiar with the matter.
Rep. Tom Cole, R-Okla., said Monday that he’d convinced DOGE to back off lease terminations planned for the National Weather Centre in Norman, a Social Security office in Lawton and the Indian Health Services office in Oklahoma City. But all three leases remained on DOGE’s list of cancellations as of Thursday.
GSA’s press office didn’t respond to inquiries.
The real estate market is blindsided
While there was already a bipartisan push to reduce the government’s real estate footprint, the mass cancellations blindsided an industry known for its stability.
Landlords who had been expecting government agencies to remain tenants, for several more years in some cases under their existing leases, were stunned. Some agencies learned from building managers, not their federal partners, that their leases were being canceled, according to real estate managers.
Becker, whose firm is tracking the DOGE lease cancellations, and other observers said they expect some agencies will be unable to move their personnel and property out of their spaces within such tight timelines. That may force some agencies to pay additional rent during what’s known as a holdover period, undermining DOGE’s stated goal of saving taxpayer money.
The Building Owners and Managers Association, which represents the commercial real estate industry, told landlords in a recent advocacy alert to be prepared to seek payment from any federal government tenants who stay beyond their leases.
Many affected agencies aren’t speaking up
Asked about plans for buildings with leases that will soon expire, the IRS did not respond. A Social Security Administration spokesperson downplayed the impact of its offices losing leases, saying many were “small remote hearing sites,” did not serve the public, were already being consolidated elsewhere or planned for closure.
Several other agencies provided little clarity — saying they were working with GSA to consider their options, in statements that were nearly identical in some cases.
But a spokesperson for the Railroad Retirement Board expressed concern over the upcoming lease cancellations of its offices in Joliet, Illinois, and eight other states, saying it was working to maintain a public-facing office presence for the local railroad community.”
Government Accountability Office official David Marroni told a congressional hearing last week that the push to unload unnecessary federal real estate was “long overdue,” saying agencies have for too long held on to unnecessary space. But he warned the downsizing must be deliberate and carefully planned to “generate substantial savings and mitigate the risk of mistakes and unexpected mission impacts.”
That process had already started before Musk’s team arrived, with the federal government’s real estate portfolio steadily declining over the last decade. Indeed, critics of DOGE say if it were truly interested in cost-cutting, it could learn from GSA, whose mission even before Trump took office was to deliver “effective and efficient” services to the American public.
A law signed by former President Joe Biden before he left office in January directed agencies to measure the true occupancy rates of leased spaces by this summer. Those that did not meet a target of 60% use rate over time would be directed to dispose of their excess space.
”There is a logical and orderly way to do this,” Rep. Greg Stanton, an Arizona Democrat, said at last week’s hearing. Instead, he said, DOGE is pursuing a reckless approach that threatens to harm the delivery of public services.
Industry observers cautioned that each situation is different, and it will take months or years to understand the full impact of the lease cancellations.
“It really depends on the terms. But it is a shock, there is no question, that all of a sudden, boom, in six weeks, all these things have happened,” said J. Reid Cummings, a professor of finance and real estate at the University of South Alabama.
AP
