HUD HQ Move Faces Lawsuit as DC Businesses Fight Relocation

A battle is emerging over the Department of Housing and Urban Development’s planned exit from Washington, D.C., as a handful of L’Enfant Plaza businesses argue the agency’s relocation to Virginia could devastate an already struggling retail district.

Two restaurants and a party supply store sued HUD and Secretary Scott Turner over the agency’s plan to move its headquarters from the Robert C. Weaver Federal Building in Southwest D.C. to Alexandria, Bloomberg reported. The plaintiffs argue HUD lacks the legal authority to relocate outside the nation’s capital and warn the agency’s departure has already cut into sales, threatening their long-term survival.

The lawsuit adds another layer of uncertainty to a relocation that has drawn scrutiny from Democratic lawmakers, HUD’s employee union and the Government Accountability Office. Congress has not approved the move and critics point to HUD’s authorizing statute, which requires the agency to be located “at the seat of government.”

For neighborhood businesses, the consequences are already tangible. Fast-casual chain Brown Bag said revenue at its L’Enfant Plaza location fell roughly 20 percent in April and May from a year earlier. Indian restaurant SpiceX and party retailer Total Party also claim declining foot traffic tied to HUD’s phased departure has forced cutbacks and raised fears they may eventually close.

Turner has defended the relocation as both a workplace upgrade and a cost-saving measure. HUD has cited mold, asbestos and aging infrastructure at the Brutalist headquarters, while the General Services Administration has estimated abandoning the building could eliminate roughly $500 million in deferred maintenance and reduce annual operating costs by $56 million.

Critics, however, say neither agency has fully explained how those savings were calculated or disclosed the full cost of relocating roughly 3,000 employees.

The case underscores the outsized role federal office tenants continue to play in Washington’s commercial real estate ecosystem. L’Enfant Plaza has struggled to regain momentum since the pandemic, as remote work hollowed out federal office occupancy and drained customers from ground-floor retailers.

A 2023 GAO study found occupancy at the Weaver building occasionally dipped as low as 9 percent, while many businesses that arrived after a multimillion-dollar redevelopment of the plaza ultimately shuttered.

— Holden Walter-Warner