An impressive array of real estate minds is reviewing the portfolio of underutilized federal office buildings in Washington, D.C., to save taxpayer money and reposition assets for redevelopment opportunities. “The federal government is notorious for holding onto these buildings forever,” says Norman Dong, a partner at FD Stonewater and former commissioner of the Public Buildings Service of the General Services Administration (GSA). “Historically, the federal government waited for the stars to align perfectly before it would release an asset, so the properties and neighborhoods in which they’re located have not been realizing their full potential.”
In addition to government actions to streamline the redevelopment process of underutilized buildings, ULI, the Public Buildings Reform Board (PBRB), and the National Capital Planning Commission (NCPC) convened a two-day Technical Assistance Panel (TAP) during February 2025. (Full report) It included public sector, economic development, engineering, capital markets, and public realm planning experts to make and discuss recommendations for the future of the James V. Forrestal Building, currently the Department of Energy’s headquarters and located in Southwest Washington, D.C. Recommendations for the process and redevelopment of that federal building by the TAP can serve as a guideline for similar projects.
The mission of the PBRB, established by the Federal Assets Sale and Transfer Act of 2016 (FASTA), is to address a portfolio of underutilized and aging federal buildings.
“The PBRB is a congressionally created entity,” says Michael Capuano, a former Congressman, former mayor of Somerville, Massachusetts, and a PBRB member. “They did it because Congress—pretty much uniformly across the board, on a bipartisan, bicameral basis—saw that there were problems in the GSA disposal system and wanted to bring some outside influence to it.”
The PBRB is a temporary board meant to identify problems with the existing system to handle underutilized buildings, Capuano says. The board specifically focuses on approximately 1,500 buildings identified as neglected and underutilized in Washington, D.C., and other locations around the United States.
“Congress made the philosophical decision that underutilized buildings should be disposed, so we’re not looking at it as all buildings should be sold,” Capuano says. “The idea is, how are the buildings currently being used? And what’s their condition? Is it worth renovating them? That’s detailed work, so that what we’re doing is based on what the facts are, as opposed to some philosophical belief.”
A 2023 General Accountability Office report found that many government agencies use 25 percent or less of their buildings, and many use as little as nine percent of their space. Even with return-to-office mandates, one agency said 33 percent of its headquarters’ space would remain empty, even when 100 percent of its staff was in the office.
Furthermore, many federal buildings are obsolete and suffer from deferred maintenance.
“The average age of the buildings in the federal government’s portfolio is over 50 years old,” says David Winstead, former U.S. Public Building Commissioner, a member of the Public Buildings Reform Board, and a ULI Trustee. “Most would cost $700 to $1,000 per square foot to renovate.”
The PBRB recommends to the Office of Management and Budget assets that are no longer needed to house federal agencies and that have value as potential redevelopment sites for their local communities. In its first two reports, the PBRB identified and recommended the disposal of properties valued at more than $450 million. In its May 2025 report, the PBRB identified 11 federal properties with nearly 7.1 million gross square feet (660,000 sq m) for consolidation and divestment. The PBRB estimates that exiting all 11 of those sites would result in more than $300 million in sales proceeds, savings of more than $52 million in the first year, and of more than $5.4 billion over 30 years.
“The PBRB has bipartisan appointments that include two former congressmen, two former GSA Public Buildings Service Commissioners, and two well-known real estate leaders, so it has a diverse background,” says Paul Walden, executive director of the PBRB. “The board was established to identify higher-value buildings that could be sold with proceeds going back to the asset proceeds fund.” Those funds can then be used to move agencies, pay for improvements, do environmental remediation, or address historic preservation concerns, Walden says.
In addition to Capuano and Winstead, the PBRB consists of Dan Mathews, former commissioner of GSA’s Public Buildings Service and president of Mathews Associates, a real estate consulting firm; Jeffrey Gural, chairman of GFP Real Estate LLC (formerly Newmark Holdings), and president and CEO of Tioga Downs and Vernon Downs in New York; Nick Rahall, a former Congressman; and D. Talmage Hocker, the founder and CEO of The Hocker Group LLC, an integrated real estate platform.
Rendering showcasing the potential extension of the Virginia Avenue right-of-way from the U.S. Department of Energy East Building’s current location. The panel recommended that Virginia Avenue, because of its impact on development potential, not be restored, but several previous studies called for this gateway. This planning issue should be resolved with further discussion.
(NCPC IMAGE PREPARED BY PERKINS&WILL)
Real estate leader insights
Approximately 40 percent of federal office real estate is in the District metro area, Winstead says.
In Washington, D.C., ULI brings together private sector expertise and capital market knowledge to set a path forward for stimulating economic development in the National Capital region, says Marc Gazda of ULI Washington’s Technical Assistance Panel program.
“We have such a huge concentration of federal buildings in [the District] that it becomes necessary to think about how to reposition an entire neighborhood rather than a single building,” says Marcel Acosta, executive director of the National Capital Planning Commission.
In other cities, the PBRB relies on its consulting relationship with Jones Lang LaSalle (JLL) to connect with the local real estate community, Walden says.
“In the cities we’ve talked to about underutilized federal property, it’s all been positive, as long as they feel like they’re listened to and respected, and not just hearing something coming from on high,” Capuano says. “I think most of them understand that empty or decrepit buildings don’t help. They hurt everybody.”
Based on several factors, the PBRB engaged JLL’s expertise in evaluating federal properties, Winstead says, such as reinvestment needs required to improve the buildings for continued use by the federal government, occupancy levels, building significance, and the mission of the agency.
JLL has served as a consultant to the GSA and other agencies, and it has experience with military housing and asset management, as well as the structuring of other public/private partnerships, according to Martine Combal, senior vice president with the government, education, and nonprofit advisory practice at JLL.
During the second round of underutilized building evaluations by JLL and the PBRB, the group took a portfolio approach, according to Combal. “We looked at major markets with a strong federal presence, such as Atlanta; Boston; Washington, D.C.; and southern California to understand where the opportunities are,” she says.
In May 2025, the Office of Management and Budget approved a list of 11 structures recommended by the PBRB to be sold by the GSA: the Forrestal Building and three others in the National Capital area, as well as buildings in Houston, Atlanta, Boston, Chicago, Nashville, Miami, and Albuquerque.
The redevelopment process
The redevelopment potential of the Forrestal Building has been discussed for more than a decade, Dong says. “Everybody recognized that, until you solve the problem of where to put the Department of Energy, you’re never going to be able to see any forward momentum on this issue,” he says. “You need to have a practical solution that is not contingent upon all the stars aligning. It would be easy if we asked Congress for a billion dollars for a new building and they gave it to us, but that’s not practical.”
The Technical Assistance Panel worked under the assumption that there would be no additional funding for redeveloping the Forrestal Building, Dong says. “What you often heard in the past was ‘it’s going to cost me $100 million to move that tenant,’ so that became the ‘Get Out of Jail Free’ card for the government to play to not move,” he says. “Now we have a new recognition that you live with the budget you have and get something done, rather than say, ‘I need more money in order to get something done.’”
To Dong, this episode represents a teachable moment that can be applied broadly to many underutilized federal buildings. Agencies can consider moving into a leased building.
“There’s no magic that says all of these people have to be located in a single building,” Dong says. “You can split the requirement, particularly under this administration, where there’s a lot more willingness to be flexible.”
Forrestal is a three-building structure erected in 1969 with 1.8 million rentable square feet (167,000 sq m). Relocating the Department of Energy could save $41 million annually in operating costs and eliminate the need to spend an estimated $2 billion in deferred maintenance costs, according to a JLL study referenced in the TAP report.
“The complex is across from the Smithsonian Castle, and the building extends over the street, blocking views between the castle and the Southwest Waterfront,” Acosta says. “This 12-acre [5 ha] site directly adjacent to the National Mall offers a huge opportunity to yield larger returns and catalyze redevelopment throughout the area in one of the most important locations in our capital.”
The GSA must engage local government as it goes through this process of disposing of federal properties, according to Dong. Best practices are to have a shared vision of the redevelopment between the government entities, he says.
“In Southwest D.C., we’re focusing on the entire neighborhood, so we’re not just doing this with our federal partners, we’re working with local government, including the D.C. Office of Planning and the deputy mayor of economic development to rethink these areas,” Acosta says. “If these federal sites go private over time, we will need to address zoning, infrastructure, and everything else. If you don’t think this through carefully, if you don’t bring everybody from the local government to the private real estate community, people may not recognize that this isn’t just about building another 10-story apartment building.”
Recognizing that demolition of all infrastructure on site at the Forrestal Complex would cost $50 million to $60 million, and that large-scale infrastructure improvements, including the redevelopment of streets, would be required, the TAP proposed a public/private partnership with the District government to offset some upfront costs, Gazda says.
“Some of the tools the TAP identified to potentially implement this redevelopment include a payment-in-lieu-of-taxes agreement and tax increment financing, both of which have great precedent in D.C.,” Gazda says. “The panel estimated that the bond capacity of this site is between $150 million and $200 million. There are other incentives for development from the D.C. government, including the 20-year real property tax abatement for office conversions offered through the city’s Housing in Downtown program.”
The TAP recommended:
- Razing the 11-acre (4.4 ha) buildings that make up the complex for redevelopment, because adaptive reuse would not be financially viable
- Leasing space elsewhere for DOE headquarters or relocating the department to another building in the federal portfolio
- Identifying transaction structures that offer the greatest potential through redevelopment and capital sources, including market and public/private partnership tools
- Redeveloping the parcels, with uses likely to succeed based on current market factors, to include 2.4 million square feet (223,000 sq m) of residential space, 800,000 square feet (74,300 sq m) of museum/cultural space, 200,000 square feet (18,600 sq m) of hotel space, 200,000 square feet (18,600 sq m) of office space, and 74,000 square feet (6,855 sq m) of retail space
THE JAMES V. FORRESTAL BUILDING: A ULI Washington Technical Assistance Panel Report
“There’s not a one-size-fits-all approach to dealing with underutilized federal buildings,” Acosta says. “Is it feasible to convert and reuse the existing building? Are there any historic preservation issues? Is a teardown the only viable path to the reuse of the site?”
Evolving demand
Multiple factors contribute to the underutilization of federal office space, including the move to telecommuting that began before the pandemic, the mandatory and then optional remote work that followed, and the Department of Government Efficiency federal layoffs. The Trump administration’s mandate that federal employees return to their offices increased some office use, but the PBRB’s analysis addresses longstanding issues of vacant offices, not just recent examples.
“For example, the Forrestal buildings’ daily use in March 2024 averaged 7 percent to 20 percent,” Winstead says. “If you look at the employees in almost 2 million square feet [186,000 sq m] of space, it’s costing the federal taxpayer $150,000 per head per year to house those federal employees. Lawyers who sit across the street cost $10,000 each for their occupancy.”
In addition to FASTA’s provisions, the Utilizing Space Efficiently and Improving Technologies Act, signed into law in January 2025, requires agencies to measure building utilization based on a 150 square foot [14 sq m] per person metric, and a plan to dispose of underutilized space.
“A lot of employees are occupying as much as 300 square feet [28 sq m] per FTE, which is well above the mandated 150 usable square feet [14 sq m],” Combal says. “Some of that comes from the fact that these buildings are 80 to 100 years old, and they’re not set up for a modern work environment. They may have large auditoriums that sit unused.”
Deferred maintenance is another critical concern, as agencies often encounter difficulty with access to funds for moving or upgrading their buildings.
“We’ve got the executive branch and the legislative government with different viewpoints on how to manage funds, and unfortunately the buildings sometimes are caught in the middle,” Combal says. “You have to spend money to save money.”
The PBRB recommends consolidating some federal agencies to high-quality buildings that were renovated or built more recently. Moving an agency out of an obsolete building isn’t as immediately appealing as some people might think, though. “In D.C., we have a lot headquarter agencies, and we’ve found that a lot of the headquarter agencies are reluctant to share,” Combal says.
The TAP examined the catalytic potential of redeveloping the Forrestal Complex in the context of the leasable square footage of the Southwest Federal Center and the Capitol Riverfront. In green, the area of the Forrestal Complex: 48,000 square feet. In yellow, the area of the Southwest Federal Center: 9.8 million square feet. In blue, the area of the Capitol Riverfront: 14.6 million square feet.
(GOOGLE EARTH)
Streamlining the disposal process
The Federal Property and Administrative Services Act of 1949 established the GSA and the process by which it disposes of civilian federal real estate. The GSA maintains the Federal Real Property Profile Management System, a publicly accessible database, and has an established protocol for the disposal of properties.
The process requires a federal agency to report its property as “excess,” at which point that property is offered to other federal offices as a transfer. If no other agencies need it, the property becomes “surplus,” and the GSA may make it available through a public benefit conveyance, including homeless use, negotiated sale, or public sale, based on the agency’s determination of the property’s highest and best use.
“Under Title V, which is run by GSA and HUD, a property must be advertised for homeless services or homeless housing,” Combal says. “Under FASTA, if there’s no eligible nonprofit or entity that elects to acquire the process for homeless services, you can skip the rest of the public conveyance process and, from there, the GSA can run a negotiated sale, which is where the public can access these locations.”
The typical GSA system is to post a property on the agency’s website and put the property up for bid, Capuano says. Unfortunately, he says, not every potential bidder knows about the website or when something’s been posted, and there’s little outreach to potential buyers.
“The GSA’s process is causing some loss of revenue, from our perspective,” Winstead says. For example, he noted a property in Laguna Niguel, California, that was for sale through GSA for $177 million in late 2024, in a process that started a few years ago. “The property back then was worth a lot more and should have come to market a lot earlier.”
The GSA recently announced a request for information about disposal and brokerage services, Combal says, which could facilitate sale of these properties. Developers looking for property can search the GSA’s real estate sales site.
“Just putting a property on the GSA website doesn’t always connect with the right parties, who would normally be an investor in some of these multimillion-dollar properties,” Walden says.
On the first day of the TAP, the panelists visit the Forrestal Building. Pictured: Ellen McCarthy, who serves on the faculty of the Urban & Regional Planning program at Georgetown University and is principal at the Urban Partnership; Kirk Mettam, senior vice president of TYLin; Gerry Widdicombe, chief financial officer of DowntownDC BID; Vicki Davis, managing partner and co-founder of Urban Atlantic; Katie Cristol, chief executive officer of Tysons Community Alliance; Josh Olsen, senior vice president of Monument Realty; Yolanda Cole, senior principal and owner of Hickok Cole; Norman Dong, a partner at FD Stonewater and former commissioner of the GSA Public Buildings Service.
(ULI WASHINGTON)
Opportunities for asset repositioning
In some locations, a public/private partnership to redevelop federal property may be optimal, whereas in others, particularly for single buildings, a simple acquisition and redevelopment may work. Municipalities may be amenable to private ownership, as these buildings are to be going from federal ownership and not subject to property taxes to local ownership generating property tax revenue, Winstead says.
Options for the former federal buildings depend on location. “For example, a federal building we’ve looked at in Miami is in a very strong market, but it’s what you would call an under-improvement for the site,” Walden says. “It’s sort of a nondescript eight-story 1960s federal building, surrounded by these 40- and 50-story condo towers, in this really vibrant part of town. There’s an opportunity to build something else that would add to the economic growth of that area.”
Walden says even the GSA’s own building in Washington, D.C., has been reviewed.
“The GSA building is over a century old,” Walden says. “There are some remodeled spaces, but other parts still have the window air conditioner units that haven’t been touched since the 1960s. You have a lot of these prewar buildings that have such a backlog of deferred maintenance, and the GSA will never get the appropriations to address that.”
Developers interested in adaptive reuse or acquiring a site need to be aware of their risks, as with any other investment, Combal says. “There’s perceived or real risk associated with these properties because, historically, federal agencies have transferred properties as is,” she says. “Some of these buildings have historic covenants, and there may be additional entitlements. It will take due diligence to appropriately underwrite the reuse and repurposing of some of these locations.”
The GSA can play a role in mitigating uncertainty, Dong suggests, by providing information about potential environmental remediation. “It helps redevelopment to know how a building will be zoned and whether it has historic preservation requirements, too,” Dong says. “When the GSA is being more thoughtful, with an eye towards understanding the proposed reuse that aligns with what the local government wants, then the process goes much more quickly.”
A street-level view, along 10th Street SW, of the Forrestal Building from the Smithsonian Castle in Southwest Washington, D.C.
(NCPC)
On the first day of the TAP, the panelists visit the Forrestal Building. Pictured: Ellen McCarthy, who serves on the faculty of the Urban & Regional Planning program at Georgetown University and is principal at the Urban Partnership; Kirk Mettam, senior vice president of TYLin; Gerry Widdicombe, chief financial officer of DowntownDC BID; Vicki Davis, managing partner and co-founder of Urban Atlantic; Katie Cristol, chief executive officer of Tysons Community Alliance; Josh Olsen, senior vice president of Monument Realty; Yolanda Cole, senior principal and owner of Hickok Cole; Norman Dong, a partner at FD Stonewater and former commissioner of the GSA Public Buildings Service.
(ULI WASHINGTON)
Rendering of a westward view from 10th Street SW of Independence Avenue SW, showcasing Independence Avenue’s potential transformation into a grand boulevard.
(NCPC IMAGE PREPARED BY PERKINS&WILL)
Rendering showcasing the potential extension of the Virginia Avenue right-of-way from the U.S. Department of Energy East Building’s current location. The panel recommended that Virginia Avenue, because of its impact on development potential, not be restored, but several previous studies called for this gateway. This planning issue should be resolved with further discussion.
(NCPC IMAGE PREPARED BY PERKINS&WILL)
Rendering showcasing the potential transformation of 10th Street, SW from above, looking north toward the National Mall.
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Rendering of the potential transformation of 10th Street SW at street-level, through a northward view that shows the Smithsonian Castle.
(NCPC IMAGE PREPARED BY PERKINS&WILL)
Rendering showing the potential transformation of 10th Street SW from the Haupt Garden, southward, toward the Southwest Waterfront.
(NCPC IMAGE PREPARED BY PERKINS&WILL)
Rendering that showcases public space along the potential extension of the C Street SW right-of-way from 10th Street SW in a westward view from the U.S. Department of Energy West Building’s current location.
(NCPC IMAGE PREPARED BY PERKINS&WILL)
The TAP examined the catalytic potential of redeveloping the Forrestal Complex in the context of the leasable square footage of the Southwest Federal Center and the Capitol Riverfront. In green, the area of the Forrestal Complex: 48,000 square feet. In yellow, the area of the Southwest Federal Center: 9.8 million square feet. In blue, the area of the Capitol Riverfront: 14.6 million square feet.
(GOOGLE EARTH)
