Federal officials are scrutinizing underused government real estate in the Southeast, with nine properties now under review for possible consolidation or disposal. The effort was outlined at a January 29 public meeting of the Public Buildings Reform Board (PBRB) in Charleston, South Carolina. The board’s executive director, Paul Walden, led the meeting on weighing strategies to reposition federal properties that are costly to operate and largely underused.
That discussion built on growing real estate industry interest in how federal buildings can be positioned for new uses—an issue previously explored in Urban Land’s “Underutilized Federal Real Estate: A Road Map,” which outlines best practices for acquisition and adaptive reuse nationwide.
Momentum on this issue has origins in a long-standing challenge. Decades of limited investment left much of the federal portfolio in bad condition, with an estimated $72 billion or more in deferred maintenance liabilities for buildings owned and managed by the General Services Administration (GSA), according to PBRB. Beyond their physical deterioration, many of those properties are also significantly underused.
What the Public Buildings Reform Board does—and why it matters
The PBRB, a nonpartisan temporary board established by the Federal Assets Sale and Transfer Act of 2016, focuses on approximately 1,500 buildings identified as neglected and underused throughout the United States. The board makes recommendations to Congress and the federal government for the consolidation and potential disposal of those structures.
Those recommendations provide opportunities to realize three bottom-line benefits, such as:
- Saving U.S. taxpayers billions of dollars in operations and maintenance costs
- Allowing federal employees to work in safer, modernized workspaces
- Returning underused properties to the local tax base to be repurposed and to meet each community’s most pressing needs
L. Mendell Rivers Federal Building in Charleston, S.C. was occupied until 1999 and then sold and converted.
(PBRB)
The Dewberry Hotel in Charleston, a once vacant federal building that developer John Dewberry acquired from the GSA at auction for $15 million in 2008. After a $77 million renovation and redevelopment, the hotel now provides more than $680,000 in annual property tax revenue to Charleston, alongside sales taxes on food and beverages, as well as a 2 percent accommodations tax based on the hotel’s average daily rate of $400.
(PBRB)
Low occupancy, high costs: The case for consolidation
“The main issue with these federal buildings is that the lights are on, but nobody’s home,” said Nick Rahall, a former member of the U.S. House of Representatives and a PBRB board member. “ Taxpayers are paying premium market rates for buildings that are not premium and are largely empty. We found a 70 percent decrease in occupancy rates when we reviewed a select group of federal buildings in the Washington, D.C. area in 2023, compared to 2019.”
Deferred maintenance has left these buildings unhealthy and even unsafe in some cases, according to Rahall. “Congress cannot appropriate its way out of this, which points to the need to shrink the federal government’s property portfolio,” he said.
PBRB board member Dan Mathews—former commissioner of General Services Administration’s Public Buildings Service and president of Mathews Associates, a real estate consulting firm—explained that PBRB is not part of the Department of Government Efficiency, the agency responsible for shrinking the pool of government employees, nor is it part of the GSA.
“Our role is to recommend properties for disposal that are underutilized or neglected,” Mathews said. “Congress created us because they wanted an outside, independent, private sector group with real estate expertise to look at properties without all the pressures that work within the government.”
The PBRB’s recommendations are forwarded to the federal Office of Management and Budget for approval or disapproval. Thereafter, the GSA moves tenants and sells buildings as directed. The main criteria for recommendations include occupancy rates and capital liabilities for deferred maintenance and modernization needs.
“Occupancy rates are way below 50 percent, and often below 25 percent,” Mathews said. “In Washington, D.C., many large agency headquarters have occupancy rates of 5 to 8 percent, so when you do the math on operating costs per employee, it can go up to $150,000 to $180,000 per person, compared to $35,000 to $40,000 per employee for the best trophy office spaces in the city.”
How adaptive reuse of federal buildings benefits cities
Adaptive reuse of federal buildings provides opportunity for local jurisdictions, and engaging the real estate community and the public in that discussion is essential, said David Winstead, former Public Building Commissioner and a ULI Trustee.
Winstead provided several examples of the successful disposition of former federal buildings, including The Dewberry Hotel in Charleston, a once vacant federal building that developer John Dewberry acquired from the GSA at auction for $15 million in 2008. After a $77 million renovation and redevelopment, the hotel now provides more than $680,000 in annual property tax revenue to Charleston, alongside sales taxes on food and beverages, as well as a 2 percent accommodations tax based on the hotel’s average daily rate of $400.
Balancing historic preservation and redevelopment
“We have a long history of protecting and preserving our architecture in Charleston, but progress and preservation are not mutually exclusive,” said Charleston’s mayor, William Cosgswell. “Local, regional, state, and federal governments can work together as we focus on the future of the Custom House in Charleston, which has historic significance and [presents] an opportunity to benefit residents and constituents.”
Other stakeholders at the meeting who spoke about the benefit of transparency on the part of the PBRB and about potential opportunities for adaptive reuse while honoring historic buildings included Brian Turner, president and CEO of the Preservation Society of Charleston, and Saesha Carlile, chief operating officer of Savannah, Georgia. Carlile talked about the importance of Savannah’s historic landmark district and architectural preservation as an economic driver for the city.
“We want these buildings fully occupied and look forward to working with local partners and residents, and [committing] to stewardship of these important buildings,” she said. Theresa Wilson, city manager of Columbia, South Carolina, spoke about the opportunities presented by adaptive reuse of federal buildings as a catalyst for reinvestment in local communities.
“All taxpayers will benefit from sales proceeds from these buildings, as well as the elimination of capital liabilities for deferred maintenance,” said Jeffrey Gural, a PBRB board member and chairman of GFP Real Estate LLC (formerly Newmark Holdings). “Local governments will also benefit from the transfer of these properties to local tax rolls.”
New federal policy and market conditions accelerate disposition
In January 2025, Congress passed the “Use-It” Act to require federal buildings with less than 60 percent utilization to be reviewed for disposal, Winstead said. That change, he said, provides new authority for the PBRB’s mandate.
“Right now, commercial markets in most urban areas are in distress, so it’s the best possible time to look for a more cost-effective opportunity to move government employees into leased private space,” Winstead said. “Our consultant partners at JLL estimate that private office space in D.C. costs about $10,000 per employee, which is far below the government buildings we’ve reviewed.”
The PBRB recommended that the GSA use local brokers during the disposal process, particularly because many of these older federal buildings generate complicated sales. Winstead said that this step has sped up the disposal process.
The federal properties discussed at the Charleston meeting include:
- U.S. Custom House, Charleston, South Carolina. This historic building, which is closed to the public, has empty common spaces and costs at least $65,000 per employee to operate and maintain.
- Strom Thurmond Federal Building, Strom Thurmond Courthouse, and Matthew J. Perry Jr. Parking Deck, Columbia, South Carolina. The federal building has a 38 percent vacancy rate, and the courthouse is completely vacant. Together, these three properties encompass more than $78 million in deferred maintenance.
- Charles E. Bennett Federal Building, Jacksonville, Florida. With a 20 percent vacancy rate and more than $20 million in deferred maintenance liabilities, this building could generate taxpayer benefits from a sale and reduction in operating costs and liabilities.
- U.S. Custom House and Juliette Gordon Low Federal Building, Savannah, Georgia. With only about 20 federal employees working at the Custom House, the cost to house these workers is approximately $158,000 per employee. The Low federal building had an average occupancy rate of nine percent in 2024, and it had significant deferred maintenance liabilities. Options for this building include historic preservation, expansion of local government office space, and new development from sales proceeds.
- Paul G. Rogers Federal Building and U.S. Courthouse, and AUTEC Federal Building, West Palm Beach, Florida. The estimated cost to modernize these combined properties is more than $75 million. Repairing the courthouse would cost nearly the same as constructing a new building and require a costly environmental abatement.
Since 2020, the PBRB has generated three previous rounds of recommendations for the consolidation and disposal of 38 federal buildings, 10 of which have been sold for a total of $193 million. The next PBRB report will be issued in the fourth quarter of 2026. For more information, visit the PBRB website.
Related Reading:
ULI, the Public Buildings Reform Board, and the National Capital Planning Commission convened a two-day Technical Assistance Panel in February 2025 to examine strategies for repositioning underused federal properties. (Full report)
