By Norman Dong
Managing Director at FD Stonewater

November 13, 2020

Note: While we understand that the election results are being contested, we wanted to take this opportunity to explore the Federal real estate outlook under a Biden Administration.

As we emerge from one of the most contentious Presidential campaigns ever, we would expect to see a significant shift in Federal policy and direction under the new Biden Administration. But will this also hold true for Federal real estate? Both Democrats and Republicans have been largely united in their call for more effective management of the Federally-owned and leased portfolio. As a likely Biden Administration begins to take hold, we are already seeing signs of what is on the government real estate horizon.

Over the past decade, there has been strong bi-partisan support to reduce spending on Federal real estate by shrinking the Federal footprint and shifting away from leasing into Federally-owned space. The landmark “Freeze the Footprint” directive issued by OMB in 2012 evolved into a more deliberate effort to “Reduce the Footprint” beginning in 2015. By 2018, GSA launched its Lease Cost Avoidance Program, placing greater emphasis on actual savings instead of the size of the footprint. As the Federal approach continues to mature, we can expect the focus on cost savings and a more efficient use of space to continue. However, COVID remains a major wildcard, and the long-term impact of the pandemic on Federal real estate remains unknown.

During the fiscal year that ended on September 30, Federal spending hit $6 trillion for the first time ever as the government mobilized in response to the COVID-19 pandemic. As the crisis persists, Federal spending will continue at record levels as the government seeks to combat the pandemic and jump-start the economy. Hopes remain high for a post-election COVID relief bill. Under the first stimulus, the Centers for Disease Control, the National Institutes of Health, and other agencies received significant funding increases to respond to the public health crisis. With another stimulus package on the horizon, this time GSA may be among the beneficiaries of increased funding. Taking its cue from the Recovery Act of 2009, the House Appropriations Committee included an additional $5.99B in capital funding to support new construction, acquisition, and repair and alterations in its markup of the FY2021 GSA budget. If approved, this funding would support the DHS headquarters consolidation at St. Elizabeth’s along with other projects to consolidate leased tenancies into Federally-owned facilities.

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