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Massive Federal Office Space Cuts Jeopardize $15.6B in CRE Loans

The GSA must cut leases, which will likely negatively impact CMBS and CRE CLO loans.

By Erik Sherman | February 26, 2025 at 05:22 AM

The Trump administration’s recent directive to the General Services Administration (GSA) to significantly reduce federal office leases has sent ripples through the commercial real estate market. This cost-cutting measure, aimed at trimming as many as 300 leases per day, represents a potential shift in billions of dollars of office market value.

According to a new report by KBRA, the current conditions are fluid, and outlooks remain uncertain. The GSA leases account for approximately $28.7 billion of the $350.6 billion principal balance of CMBS and CRE CLO loans as of February 18, 2025. These leases encompass 173.6 million square feet of space across 6,483 buildings and 7,535 leases, predominantly office space.

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