Analyzing the Future of Federal Real Estate
The federal government is one of the largest users of commercial real estate in the United States, with a vast portfolio managed largely by the General Services Administration (GSA). On a recent episode of America’s Commercial Real Estate Show, the show’s host sat down with Andrew Farah, co-founder and CEO of Density, to discuss the current state of federal real estate, utilization trends, and what changes could be on the horizon.
This discussion was national in scope, in other words not specific to Miami area commercial properties. Regardless, there are federal buildings throughout South Florida. This also has some interesting discussion about calculation of utilization rates.
Understanding Federal Real Estate Utilization
Density specializes in tracking building utilization using advanced sensor technology. As Farah explained, his company’s work has shed light on the massive scale of the federal government’s real estate footprint—an astounding 1.1 billion square feet of space. Of this, approximately 78% is government-owned, while the remaining portion is leased.
A key issue that Density has uncovered is the inefficiency of space utilization. Prior to COVID-19, some government office spaces were operating with an average of 1,900 square feet per employee, far above the standard range for private-sector office space. Post-pandemic, the situation has become even more concerning, with agencies reluctant to report actual usage due to the fear of losing underutilized buildings.
Farah also emphasized the importance of properly calculating office utilization rates. He explained that many agencies use outdated methods, such as counting the number of assigned employees rather than measuring real-time occupancy. A more accurate approach involves tracking how many people are physically present in a space over time, relative to the total available square footage. By using technology to measure real-world occupancy trends, organizations can make more informed decisions about downsizing, consolidating, or repurposing office space.
The DOGE Density Map
Farah highlighted the significance of the DOGE Density Map, a tool used to visualize government office space usage across the country. This map compiles data from over 111,000 federal real estate locations, classifying them as utilized, unutilized, or unspecified. One striking revelation from the map is that only about 44% of the federal properties are officially designated as utilized, while a mere 2.5% are labeled as unutilized. The remaining buildings fall into the unspecified category—an ambiguity that suggests agencies may be reluctant to report underutilization for fear of losing their real estate holdings.
The DOGE Density Map underscores the inefficiencies in the federal real estate portfolio, offering a critical tool for decision-makers aiming to optimize space usage. By leveraging this data, the government can identify opportunities to consolidate offices, reduce unnecessary spending, and strategically manage its vast real estate holdings.
Legislation and Policy Changes
Recent legislation now requires federal agencies to report building utilization. If an agency’s space usage falls below 60%, the government will decommission and repurpose those properties. This shift marks a major change in how the federal government manages real estate, forcing agencies to optimize their footprint.
Farah noted that a major challenge in consolidating federal real estate is the condition of government-owned buildings. Many of these properties are outdated, poorly maintained, and sometimes unsafe. Unlike leased properties—which are typically maintained by private landlords—government-owned buildings require significant capital investment for repairs and modernization.
The Future of Government Office Space
With significant shifts in office utilization, the conversation around government real estate is evolving. Farah predicted several key outcomes:
- Increased Return-to-Office Requirements – Federal employees will likely see a reduction in remote work as agencies strive to meet the new 60% utilization requirement.
- Consolidation of Headquarters and Leased Space – There may be a push to relocate core agency operations to more efficient buildings, especially in downtown areas like Washington, D.C.
- Decommissioning and Selling Off Federal Properties – As the government reduces its real estate footprint, there will likely be an increase in surplus properties available for sale, creating opportunities for investors and developers.
Challenges in Execution
While these changes could lead to improved efficiency and cost savings, challenges remain. Government agencies have long struggled with bureaucracy and funding constraints when it comes to real estate decisions. Additionally, the expiration of 100 million square feet of leased space in the next four years presents another complex issue. Many of these leases do not simply expire but instead enter indefinite holdover periods, creating further complications for building owners and tenants alike.
Farah’s Perspective: Humans Are Weird
During the conversation, Farah made an interesting observation: “Humans are weird.” He was referring to the way people interact with office space. He noted that individuals tend to spread out when given the opportunity, creating inefficiencies in office layouts. Much like in an empty movie theater, where people instinctively avoid sitting next to strangers, office workers will distribute themselves across available space rather than clustering together. This natural tendency exacerbates the problem of underutilized real estate, making it even more important to measure actual occupancy and adjust space allocation accordingly.
Final Thoughts
Farah emphasized that one of the biggest gaps in federal real estate management is the lack of accurate utilization data. Without proper measurement and transparency, it’s difficult to make informed decisions on how to optimize office space.
As federal policies shift toward improved space efficiency, real estate professionals, investors, and government agencies alike will need to navigate these evolving dynamics. Whether through technology-driven insights, legislative action, or market-driven consolidation, the future of federal real estate is poised for transformation.