Image Source: Pexels
The General Services Administration (GSA) is making waves in the commercial real estate (CRE) sector, aiming to dispose of two-thirds of its owned office space and terminate three-quarters of its leased space nationwide.
This is a seismic shift in an office market already in turmoil, with default rates surpassing those of the Financial Crisis.
Here’s what you need to know:
By the Numbers:
• 149 million square feet leased by the GSA nationwide
• $5.2 billion in annual rent paid to private landlords
• 35.5% of leases (53.1 msf) could be terminated by 2028
• 21.2 msf in termination rights hit as soon as 2025, impacting 1,000+ properties
Metro Impact Highlights:
• Washington D.C.: GSA leases nearly 10% of the market (35.8 msf) and could cut 9.6 msf in 2025.
• Kansas City: GSA holds 6% of the market (4.3 msf) and may terminate 1.0 msf in 2025.
The Takeaway:
This move could save the government $1.87 billion annually after 2028, but it will also put the already struggling office sector at risk of a wave of vacancies, distressed assets, and downward pressure on valuations.
More By This Author:Global Home Prices Surge In 2024: U.S. Market Sees 4.0% Growth
Yield Curve Inversion Is Not A Perfect Recession Predictor
July Pending Home Sales At A Record Low…
