Feds’ Fast-Track DC Selloff Sparks Concerns Over Road Ahead

Washington’s Southwest corridor is shaping up as one of the country’s largest redevelopment opportunities. But some of D.C.’s biggest real estate players worry it’s barreling ahead without a roadmap.

The General Services Administration is unloading a wave of aging federal office buildings between the National Mall and the Wharf, according to Bisnow, setting the stage for a generational remake of the district.

But architects, brokers and city stakeholders say the federal government’s rush to offload the properties risks creating a piecemeal redevelopment effort driven more by expediency than long-term planning.

In March, the agency sold the nearly 1 million-square-foot Regional Office Building near L’Enfant Plaza to Dalian Development for $24.3 million, or less than $26 per square foot. Another major property, the Liberty Loan building overlooking the Tidal Basin, is under contract.

Several more hulking federal assets are expected to hit the market next, including the Department of Housing and Urban Development headquarters, the Forrestal Building and the Department of Agriculture’s South Building.

The GSA is framing the offerings as part of a broader effort to “modernize and rightsize” the federal portfolio as maintenance costs balloon. The Public Buildings Reform Board recently estimated that the federal government is carrying roughly $50 billion in deferred maintenance liabilities.

But critics say the government’s speed-first approach could saddle the district with disconnected projects and undercapitalized buyers. Southwest BID executive director Steve Moore told the outlet he was concerned “anybody with a Gmail address and $25 million” could end up controlling key pieces of the corridor.

Developers and planners are floating several ideas to impose order on the process.

One proposal under discussion on Capitol Hill would create a redevelopment authority modeled after the Pennsylvania Avenue Development Corp., the entity established in the 1970s to oversee the transformation of Pennsylvania Avenue. PRP Real Assets president Paul Dougherty said at a recent event that Sen. Bill Hagerty of Tennessee has been working on draft legislation to create such a body, though no bill has been introduced.

Others argue the federal government should retain ownership through ground leases or allow the District to acquire and master-plan the sites itself. Mayor Muriel Bowser’s proposed 2027 budget includes a new fund that could finance infrastructure improvements, developer incentives and even direct acquisitions of federal properties.

What emerges from the concrete-heavy corridor could reshape the Washington neighborhood for decades.

— Holden Walter-Warner