John Fish, CEO of Suffolk Construction, and Joe Biden (Suffolk Construction, Getty)
A major real estate industry group says the federal government is setting a bad example and hurting the entire office market by allowing remote work and shrinking its office footprint.
The real estate roundtable — which is made up of property, development, lending and management companies as well as trade associations — said in a letter that the Biden administration should do more to attract federal employees to their officesreports CoStar.
“We are concerned that certain administration policy directions will encourage federal agencies to adopt permanent work-from-home policies for federal employees and thereby magnify the negative economic and social consequences for cities,” the letter signed by the president of the Real Estate Roundtable and Suffolk Construction CEO John Fish and Real Estate Roundtable President and CEO Jeffrey DeBoer, according to the outlet.
Citing data from Kastle Systems, CoStar said office occupancy in 10 major US cities is less than 50% of what it was before the pandemic hit in March 2020.
In addition, the group has called for legislation to facilitate the conversion of offices and other commercial properties into residential units.
Nationally, the federal government owns 81 million square feet of office space and leases an additional 171.5 million square feet, the outlet said.
In a survey of 24 federal agencies, 16 planned over the next three years to reduce the number of leases and 19 said they would reduce square footage.
The group said government cuts will cause building values to depreciate significantly.
Many private companies, adopting remote work policies or seeking to cut costs, have reduced their office footprints nationwide. Meta, for example, said in October that it was spending $3 billion to consolidate office space.
At New York, JP Morgan has reduced its office footprint of 700,000 square feet since the start of the pandemic.
Over the summer, NFL Network, Yahoo and 20th Century Studios put about 120,000 square feet of office space back in the Silicon Beach market.
—Ted Glanzer