Leasing/Property Management

What exactly did the GAO say in that report on empty federal offices?

The most talked about Government Accountability Office report in months confirmed what a lot of people suspected. Federal offices are largely unoccupied.

Tom Temin@tteminWFED

July 19, 2023 12:20 pm

11 min read

The most talked about Government Accountability Office report in months confirmed what a lot of people suspected. Federal offices are largely unoccupied. A continuation of the situation during the pandemic. Federal Drive Host Tom Temin next guest is the man behind that report. He’s the GAO is acting director of Physical infrastructure, David Marroni.

Interview Transcript

Tom Temin And let’s start with the numbers. I think people were surprised at how unoccupied offices really were. Thinking maybe, well, they’re half full, three quarters full. But that’s not what you found.

David Marroni That’s right. So we looked at 24 headquarters buildings in the D.C. area. And what we found is all 24 had extra space. Most were using 25% or less of their capacity. So that’s a pretty low utilization. But even on the range, if you’re looking at all 24, it went from about 10% utilization to about 50%. So it’s really a government wide issue here.

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Tom Temin And did you look at government owned buildings only or were these some of these large leased spaces also?

David Marroni So most of them were owned headquarters buildings, but there are some that are leased. But regardless, across the board, you’re seeing the same utilization pattern.

Tom Temin Right? You could probably project what’s going on in headquarters to leased space that might be allied to an agency across town. In other words.

David Marroni Well, you could as long as it was office space of the similar type and again, headquarters function. So administrative professional policy kind of.

Tom Temin And to what extent do you understand or feel that this occupancy rate, 10 to 15%, you know, is across the nation, say, in other cities that have large federal presences?

David Marroni So it’s hard to say once you get outside of D.C., the use of federal space varies. They can be labs, secure facilities. What I would say is if their office spaces and performing similar functions, policy, administrative, it would likely be they have similar utilization rates.

Tom Temin Wow. Were you a little bit surprised that it was that low?

David Marroni The numbers jump out of the page. GAO has pointed out for years, 20 years at this point about a new space in federal office buildings. So the fact that there was underused space was not surprising. But I agree the number is kind of jumps off the page.

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Tom Temin Fair to say it wasn’t 100% before the pandemic.

David Marroni Correct. It was not 100% before the pandemic. This has been a longstanding challenge. Agencies have dealt with that we have highlighted. But since the pandemic, with the embrace of telework, it seems to have gone to a higher level.

Tom Temin And what was your methodology? Did you simply poll the agencies or did you send some people to walk around and count cubicles or what?

David Marroni So we had a at a high level, a two step process. First, we gathered data on each of the headquarters buildings, their usable square footage. So that’s places you can put people in desks, offices, team rooms, conference rooms, and then divided that by a GSA benchmark for how much space each person should have. And that gave us the capacity of the building. How many theoretically could be in that building on a given day? Step two was we collected in office attendance data for a couple of weeks that January, February and March. And compared to the capacity to say, okay, how many people were actually using that space in this period of time?

Tom Temin Got it. So just to validate the methodology, if a building could have X number of people, but that agency decided, well, we want to give our people 20% more than that because they want to, you know, be able to eat their sardines and stretch their shoulders and stretch their arms out or whatever the case might be, then that would begin with a baseline of 80% in that building.

David Marroni Correct? That’s a great way to look at it. So utilization is not the same as attendance. You could have a building that in theory could hold a thousand people and only have 500 people assigned to it. So right off the bat it’s at 50% utilization.

Tom Temin But this study was done. I mean, what was the impetus here? Because you wanted to find out what’s really going on in this post-pandemic era when there’s this tug of war between agency management, the White House gently pulling on one end and the employees and employee union groups and so forth, pulling on the other end of the rope.

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David Marroni Right. Well, it was a twofold reason for looking at this first. As I mentioned, we’ve been looking at this for 20 years now as a problem. So we wanted to continue to highlight this challenge of unneeded space held on to by federal agencies. But secondly, post-pandemic. There’s obviously been an embrace of hybrid work of telework. And so we wanted to get a sense of what is changed. What does the picture look like now?

Tom Temin Yes. And I wanted to ask you to whether there’s any sense from this that if a given occupancy is 15%, does that mean that the same 15% are coming in every day and 85% of the employees don’t, or that 15% of the population happens to be in that building on a given day? Probably not within the scope, but do you have a sense of that?

David Marroni So that would vary by agency on how they collected their data. Some might have that ability because they’re badging and badging out. It identifies the person could be a variety of things. For our purposes. We were looking at how is the space being used? Not attendance per se.

Tom Temin Right, but at least the agencies know that much. So that’s kind of good news.

David Marroni Some likely do, some may not. It depends. The quality of the data varies.

Tom Temin Right, so some might be making nicely educated guesses and some might be counting the key pass tally.

David Marroni That is a fair statement.

Tom Temin We’re speaking with David Marroni. He’s acting director of physical infrastructure at the Government Accountability Office. And so did you have any recommendations here? And now we know what the pig weighs, question is how to fatten it, thin it, slaughter it or what?

David Marroni So the key is for agencies to decide now, take a hard look at their space needs and their plans going forward for in office, attendance and other factors and decide how much space do we really need and move in that direction. It’s not going to be cost free. It costs money to do any sort of consolidations, any disposals of properties, but it’s important to move forward now.

Tom Temin Yeah, consolidation has been a bugaboo for a long time, I think across the government and I guess our agencies may be reluctant to move into another building because it doesn’t have their name across the skyline like the Federal Trade Commission building. Well, the GAO’s own building on the congressional side. You’ve got several tenants in there besides GAO.

David Marroni We do.   And that is one of the challenges that officials identified is a sense of cultural reticence to giving up your own headquarters space or even within departments, bureaus, giving up their own controlled space. But it’s something that agencies should consider if it’s going to make it more efficient. And as you noted at GAO headquarters, we already do that. We have a couple of agencies in our building too. It can be done.

Tom Temin Because if you look at like one of the pictures in the report was the Frances Perkins Labor Building, kind of a big nondescript block. It looks like a Dilbert building or something. And I don’t know what the occupancy there was, but that looks like it could fit three other agencies. If you’ve got agencies with 15% occupancy in a building like the Perkins Building, then you can get six agencies in there.

David Marroni Well, potentially it’s something the agency should look at. I mean, part of it, too, is deciding what is their in-office attendance policy going to be going forward that’s going to help determine how much space they actually need. And then once they have that information. Yeah, looking at options of consolidation, sharing space makes sense.

Tom Temin Because in a building with low percentage of occupancy, that doesn’t mean that the cost of the building is related to the occupancy. There’s a certain base level to keep the thing in the pipes from freezing, the roof from caving in. I mean, they need maintenance, whether there’s anybody in there or not.

David Marroni Completely true costs money either to own buildings or to lease it. You have your lease cost and that’s going to take place whether or not people are at their desks. Environmental cause, too, takes a lot of energy to heat cool and light these buildings and those operations are going to continue again, whether someone’s at their desk or not.

Tom Temin And what’s the reaction been so far? This report’s only been out a couple of weeks, I think, now. And I know it’s gotten some attention on Capitol Hill. That’s your client ultimately, but also in a lot of other quarters. What about contractors that might be having to go in side by side with the different color badges in federal buildings?

David Marroni So in terms of contractors, they’re actually in our numbers. We included mission based contractors in our numbers. So that too, plays into it. The agencies need to look at the overall picture, how many people are working in their building not necessarily just federal staff, but working out of that space and how much is really needed, whether contractors or agency officials.

Tom Temin Right. So there’s a lot agencies can do without congressional action. If they wanted to consolidate, say, if a big unit of Health and Human Services said, we kind of like it being near the ramp to 395, we’re going to move over to the Perkins building. They can just do that, right?

David Marroni Well, they can take steps in that direction. They can certainly identify the property. It takes money. So it’s not as simple as, you know, today we make a decision. Tomorrow we have to do it. There’s a long time to get it through the process. And there steps if you decide, for instance, to get rid of a property, that’s a complicated process, too, which is all the more reason to take that hard look now and start making decisions because it does take time and money to get to that end state.

Tom Temin Is there any possibility legally I, I guess I would ask, of federal space being leased out to commercial tenants. I keep using that poor old Frances Perkins building, but suppose a law firm wanted to move in there. Would that be possible legally?

David Marroni So it depends on the situation. There have been examples where the federal government has leased out federal properties that have been vacated. So there are a couple of hotels in D.C. where that has been the case. So there is some possibilities. I wouldn’t be able to speak to every legal situation, but there have been some examples where that’s been used.

Tom Temin Yeah. So where do we go from here with this report? I mean, it’s out there and it is what it is to use the common vernacular, but nobody seems to be acting.

David Marroni So we’ll be keeping an eye on this, and I know Congress will as well. We just had a hearing last week at the House Transportation and Infrastructure Committee to take a look at this. And we have ongoing work. We’ll keep on the focus on what are agencies now doing to make these decisions about their space needs and keep it on the front burner.

Tom Temin And would you be able to answer the main cosmic question, which everybody has, And there seems to be some universal resonance going on here, and that is that the traffic in and out of DC it rush hours, which is most of the day, is absolutely. Terrible. And yet nobody’s going to work. Can you explain that one?

David Marroni I wish I could, Tom, but same here in Atlanta where I’m based, so I cannot say.

Tom Temin All right. Well, I’m going to keep asking everyone that might know.