The national office market is unlikely to feel significant effects from reductions in federal office space despite the Trump administration’s decision to terminate 679 leases totaling 7.8 million square feet. According to CBRE, the General Services Administration, which leases just 1.7% of the U.S. office inventory across 1,800 cities, holds 69 million square feet of space. Even if all publicly listed GSA leases marked as terminated by the end of March are vacated, the overall office vacancy rate will rise by only 10 basis points. CBRE’s analysis further suggests that a 10% reduction in GSA-leased space would increase national office vacancy rates by just 20 basis points, underscoring the limited impact of these federal cutbacks.
While the overall potential impact is numerically small, it could pose moderate headwinds to a recovery in the office sector driven by improved demand and reduced supply. U.S. office vacancy fell for the first time in 18 quarters during the fourth quarter after stabilizing at 18.9% at the end of last year.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
