Fed Real Estate Portfolio Needs Nearly $26B in Maintenance

As the federal government tries to downsize its real estate portfolio, it’s running into an 11-figure deferred maintenance problem.

The General Services Administration, which operates the government’s real estate holdings, determined the portfolio requires $25.8 billion in repairs, Bloomberg reported. That includes 62 buildings that need at least $100 million in repairs and two — the Agriculture Building and Herbert Hoover Building in Washington, D.C. — that have more than $1 billion in deferred maintenance.

That total is actually roughly half of a $50 billion estimate of deferred maintenance put out by the Public Buildings Reform Board in March.

The derelict state of many of the properties are inhibiting the government’s ability to sell them. Making the repairs isn’t easy either, according to GSA head Ed Forst, because of legislative rules.

The prospectus threshold, for instance, requires congressional approval for any repair project costing at least $4 million. Delays and diversions often put those maintenance needs on the backburner, according to Forst, resulting in more costs later.

In fiscal year 2025, more than $1 billion in proposed repairs weren’t done because approval wasn’t received on time, causing the prospectuses to expire. Forst said it takes an average of 435 days to get approval, which is needed before the projects can even be bid on. There is reportedly bipartisan support to raise the prospectus limit in Congress.

Meanwhile, Congress diverted more than $15 billion from the Federal Buildings Fund to other places, taking away the pot of maintenance money for the portfolio.

The GSA has been rapidly selling aging federal office buildings in Southwest D.C., including the million-square-foot Regional Office Building, to reduce maintenance liabilities. That’s led to concern that a “speed-first” approach lacks a master plan, potentially leading to disjointed redevelopment in a critical corridor.

A first-of-its-kind report mandated by Congress revealed this spring that the federal government utilizes less than a third of its office space; none of the 22 surveyed agencies reached 50 percent occupancy last year.

The estimated annual cost for the unused space across these agencies is a combined $2 billion.

— Holden Walter-Warner