How the federal government can help downtown Washington ‘return to work’

Hybrid work has dramatically reduced the number of people working in downtown Washington, D.C., to the detriment of the Metro public transit system, small businesses, and the District’s vitality as a whole. Equally clear is the federal government’s outsized impact on the downtown’s vibrancy: as the District’s single largest employer and tenant, federal agencies are both a chief cause of the city’s current malaise and may hold the key to its rejuvenation. 

There are three separate but interrelated challenges that must be recognized for the federal government to help downtown Washington. First, accept that federal employees are never going to fully “return to office.” Consequently, federal agencies need to give up office space; commercially leased space but especially older and now vastly underutilized federal buildings. Finally, for this needed realignment of the federal portfolio to be useful to city leaders and residents, the disposition and redevelopment of those unneeded assets must be accomplished in a much more proactive and creative manner than is now typical.   

First, consider the “return to office.” The federal government’s white-collar workforce, largely concentrated in D.C., will not physically return in any meaningful way. Blame it on the never-ending war for talent: Feds in a range of job series (think contracting officers, human resources professionals and anyone with IT skills) always have job-hopped among agencies for higher pay grades, alternate work schedules and better work environments. Remote work capabilities exacerbate this long-standing dynamic, and with over a quarter of the federal workforce at least eligible if not fully planning to retire by 2027 (according to the Office of Personnel Management’s 2022 Federal Employee Viewpoint Survey), agencies must offer maximum flexibility to attract and retain talent. Couple that with cumbersome hiring processes and private sector salary competition—it is hard to see this changing.

So federal agencies now have far more space than their recruitment and retention policies suggest they need, but they remain reluctant to part with any of it. This requires a much more aggressive and top-down approach by the administration, aimed at reducing the real estate footprint rather than returning to office. For senior career officials as well as employee unions, a little common sense would be helpful too: how reasonable is it to work from home three or four days a week and still expect to keep one’s own private office or workstation?

Bureaus and offices within agencies must start sharing space—offices, conference rooms, even secure spaces. Agencies even could share headquarters buildings. The Government Accountability Office’s forthcoming study on federal office building utilization is expected to highlight the substantial “shadow vacancy” that exists in federal buildings and further support the idea that agencies must begin to share space. 

Unfortunately, however, as hard as sharing space seems to be, the third challenge might prove the most difficult: quickly and effectively transitioning all that unneeded federal real estate to future uses. Especially for older federal buildings, the current regulatory and statutory processes that govern disposition are woefully inadequate to address what should become a tidal wave of surplus federal property. The typical disposal approach is an “as is-where is” sale, and what you do with it after that is up to you (after you also agree to a host of costly preservation measures). But with the health of downtown D.C. at stake, this expected glut of surplus federal buildings (how many of the approximately 130 federal buildings in Washington objectively could be released?), provides the perfect opportunity to rebalance the federal real estate portfolio and facilitate the resurgence of downtown at the same time.

One solution would be for the federal government, and primarily the General Services Administration, to dust off many of the real property authorities it has but rarely uses: authorities to affect exchanges of real property and to enter into public-private partnerships for redevelopment. Past examples locally include the Hotel Monaco (the old Tariff Building) and the now-Waldorf Astoria on Pennsylvania Avenue. The Volpe Center in Cambridge, Mass. is also a prime example of leveraging unneeded government real estate to facilitate redevelopment, and the 2016 Federal Assets Sale and Transfer Act provides further justification for more creative disposal methods. 

Particularly in today’s (and tomorrow’s) constrained financial environment, and with office space underutilized and overvalued, most federal building conversion projects simply won’t “pencil.” And especially given the size and capital requirements of these old buildings, assuming that developers will simply buy them outright is wishful thinking. But a more creative partnering approach may provide developers with the resources and deal structures necessary to advance projects which otherwise would prove infeasible. Are deals like these complicated and risky? Yes, but not nearly as risky as letting downtown D.C. stagnate.

Ultimately, the federal government’s leased and owned real property portfolios should be sized so that buildings are fully utilized every day, with employees and contractors using widely available technology to match and schedule employee usage with available office resources. Then, with a new, more private sector-like mindset, these unneeded federal buildings can become the hotels, housing, museums and other infrastructure of the live-work-play environments so critical to the future of Washington.   

Adam Bodner is a principal at ABodner Consulting and a board member of the Federal Real Property Association. He was a longtime federal real estate official and most recently was executive director of the Public Buildings Reform Board. The views expressed are his own.