The federal government is walking back some of its plans to dramatically cut its real estate footprint across the country with a decision to keep two offices originally slated for the chopping block.
The U.S. Securities and Exchange Commission has renewed leases for hubs in Los Angeles and Philadelphia, reversing plans to ditch the spaces and delivering welcome boosts to two cities still struggling to backfill pandemic-era occupancy losses. SEC employees earlier this week were told of the decision to retain the two offices after reaching a deal with their respective landlords for the two locations.
The General Services Administration, the agency responsible for the leasing and management of government buildings, signed a 10-year renewal for the SEC outpost at One Penn Center in Philadelphia's Center City. The agency occupies about 44,000 square feet in the building at 1617 John F Kennedy Blvd., where it houses about 150 of the commission's employees.
The extended agreement for the Philadelphia regional office, where the SEC has leased space for more than a decade, is now scheduled to expire August 2035, according to an SEC spokesperson.
On the other side of the country, the deal for the SEC's office at 444 S. Flower St. has been extended through September 2029. The regional office in the downtown FourFortyFour South Flower tower spans more than 57,900 square feet, according to CoStar data. The department is also the 48-story high-rise's largest tenant.
"I appreciate GSA's partnership in ensuring the SEC has appropriate, cost-effective space to meet its mission in these locations and around the country," SEC Chairman Paul Atkins said in the memo to employees, earlier reported by Reuters.
It's not yet clear if the GSA will retain other offices once listed as potential terminations.
Saving spaces
The dual renewals land about six months after the Department of Government Efficiency unveiled sweeping plans intended to terminate and restructure large swaths of the federal real estate portfolio across the United States.
The cost-cutting watchdog earlier this year, for example, said it had canceled or restructured nearly 100 federal leases covering more than 2 million square feet of space across the country, a move that was collectively estimated to save taxpayers about $80 million. By late February, DOGE estimates showed about $100 million in lease reductions, a figure expected to climb even further as the government has another $385 million of office leases that are eligible to be cut through the remainder of this year.
The agency then scaled back some of its lease termination decisions a few weeks later, removing about 2.2 million square feet of leases that collectively reduced the amount DOGE had claimed to save by $57.83 million. The true value of DOGE's sweeping cost-cutting efforts has yet to be seen, but the efforts have already shaken the national office market.
The General Services Administration, the agency responsible for the leasing and management of government buildings, pays roughly $5 billion a year to rent 144 million square feet of offices nationwide, according to the agency’s latest data.
The SEC alone paid more than $30 million during its fiscal 2024 year for GSA-owned rental space, according to one of its recent financial reports. The committee has worked closely with the GSA to manage the cost of its facilities by downsizing or altogether terminating deals for office space when leases expire, the agency said in its latest congressional budget request.
That effort has resulted in about $8.5 million in annual rent savings since 2011.