GlobeSt: Brookfield Properties, Blackstone, Empire State Realty Trust, and Starwood Capital, among others, send letter to Biden administration asking them to scale back WFH-driven office space reductions
Pretty self-serving, IMO, but phrased as "please won't you think about the cities and small business owners."  Text of [the article](https://www.globest.com/2022/12/15/association-sends-biden-a-letter-to-increase-pressure-on-federal-office-leasing) below: 

 

It used to be that letters from the federal government would cause concern over a potential draft notice or tax audit. Add in a new one for commercial real estate: worry that they won’t need that office building any more.

A letter this week to President Biden from The Real Estate Roundtable — backing firms including Brookfield Properties, Blackstone, Empire State Realty Trust, Starwood Capital, as well as multiple major banks and CRE professional organizations — emphasized just how concerned many in the industry have become.

“We therefore respectfully urge you to direct federal agencies to enhance their consideration of the impact of agency employee remote working on communities, surrounding small employers, transit systems, local tax bases and other important considerations, along with the direct effect on governmental service delivery and labor productivity. In addition, we ask for your support of legislation to facilitate the increased conversion of underutilized office and other commercial real estate to much-needed housing,” the letter read.

Otherwise known as “keep leasing the office spaces or let us do something with it to avoid big metro economic collapses.”

The worry is palpable and understandable. A General Accounting Office report from September said that, in a survey, [**most agencies were planning significant cutbacks in the amount of space**](https://www.globest.com/2022/09/15/even-the-government-is-paring-back-on-leased-office-space/) they use.

“GSA leases space for agencies from other federal agencies, public entities, and private-sector lessors in commercially owned buildings,” the report stated. “As of March 2022, GSA managed 7,760 leases, totaling nearly 180 million square feet. Rent costs for these leases are about $5.7 billion annually.” It also added, “There are more than 19,500 federally owned buildings, including approximately 511 million square feet that are considered office space.”

Another industry letter at the end of November echoed [**similar concerns, although specifically for the Washington, D.C. area**](https://www.globest.com/2022/12/01/cre-firms-collapsing-office-values-threat-to-dcs-fiscal-health/)**.**

“Our interest in this matter is not about being overtaxed,” said that letter, which went to D.C.’s CFO and was cc’d to the city’s mayor and city council. “We are primarily concerned about the future fiscal health of the city. For every decline of $100 million in commercial property tax assessments, annual property tax revenue falls by $2 million.”

These are all are big ad threatening numbers, offering a reminder of the impact office decline can mean.

“As of March 2022, more than half of GSA’s leases (4,325 out of 7,754), which account for more than 88-million square feet of space, have expiration dates scheduled for calendar years 2022 to 2026,” as the GAO report had noted. “While agencies will extend some of these leases or move to other spaces, according to GSA officials, in a post-COVID-19 environment agencies are likely to significantly reduce their demand for federal real estate due to changes to telework and remote policies.”

Such concerns show how a collapse of office markets can light a fuse to general urban economic disaster. Less and less money for taxes that pay for the expensive services and infrastructure cities have and need. Less foot traffic to restaurants, stores, and entertainment. And, of course, falling property valuations, because the CRE and finance industries aren’t worried enough as it is.
[{"id": "j0dnqjo", "text": "Seems like a bunch of gsa properties are going to be for sale in the next 5 years. They are rolling out for auction a bunch of buildings that were authorized in 2019. \n\nA lot of these are historic buildings that have not been properly maintained for decades, ie a money pit.", "replies": [{"id": "j0f1394", "text": "You're confusing GSA owned buildings and GSA leased buildings. GSA leases a massive amount of space on behalf of federal agencies, and they were under tremendous pressure before Covid to shrink that space. With the impacts of the pandemic and remote work, a lot of those leases may not get renewed.", "replies": [{"id": "j0f59iz", "text": "They also own a ton of space and it is for sale. \n\nhttps://www.gsa.gov/about-us/regions/welcome-to-the-pacific-rim-region-9/region-9-newsroom/pacific-rim-press-releases/gsa-announces-auction-details-for-sale-of-laguna-ridge-property-in-orange-county-12052022", "replies": [], "depth": 3}], "depth": 2}, {"id": "j0i0n83", "text": "As long as you do not have to rebuild then they may have a lot of potential in reclaiming the old woodwork, fixtures, etc.", "replies": [], "depth": 2}], "depth": 1}, {"id": "j0dpssn", "text": "Office space property owners have been putting off lowering their values through creative accounting practices throughout the pandemic. It seems the lenders are starting to call out the bullshit.", "replies": [{"id": "j0euifk", "text": "I\u2019m betting an epic train wreck is coming.", "replies": [], "depth": 2}], "depth": 1}, {"id": "j0ejp4h", "text": "Won\u2019t someone think of the investment funds. Nothing like a few doomsday predictions to try and protect their bottom line.", "replies": [], "depth": 1}, {"id": "j0f2nio", "text": "This is a DC-specific issue. Federal agencies are slowly getting used to the idea of remote work. It's been challenging to get good people to move to DC for federal salaries for a while, and now there is the opportunity to offer up those jobs to areas of the country where the salaries will go a lot farther and there are a lot more people interested in the work. And there is a real push to get the federal government to be more representative of the nation, and to cut costs by not being so DC-centric.\n\nBut the agency heads (not the rotating door of political appointees, the career SES and GS15s) tend to be boomers who believe in \"management by walking around\" and other such BS. They by and large hate remote work and want to go back to the good old days of busy(work) offices and sexually harassing secretaries and having meetings with lots of people to make themselves feel important. So they are privately fighting remote work tooth and nail, even though they are publicly required to give lip service to how great it is. \n\nHanging in the balance are a lot of decent-sized institutional investors who had a good thing going with leasing to GSA in the DC metro area. If all of a sudden agencies actually start shrinking their footprint (as GSA itself has been pushing the agencies to do for a good while now), there's going to be a lot of unused B-class office space and not enough NGOs and lobbyists who want it.", "replies": [], "depth": 1}, {"id": "j0hp89f", "text": "The office building across the street from me was built to suit for Social Security. 21,000 square feet, leased for over $38 psf next to a building that has been vacant for a year and asking $15 psf. There hasn't been a car there since Covid.", "replies": [], "depth": 1}]