The US government is set to vacate nearly 800 federal office spaces across the country in a drastic cost-cutting effort led by Elon Musk’s Department of Government Efficiency (DOGE).
Internal documents from the General Services Administration (GSA) reveal that hundreds of lease cancellations will take effect by mid-year, forcing agencies to either relocate, downsize, or negotiate new terms.
The move, aimed at reducing government spending, is projected to save approximately $500 million but has raised concerns over the disruption to essential public services.
The agencies affected range from the Internal Revenue Service (IRS) and the Social Security Administration (SSA) to lesser-known but crucial offices such as the Bureau of Reclamation and the Railroad Retirement Board.
The scale of the lease terminations has triggered concerns among lawmakers, landlords, and agency officials, who fear the rushed process may cause logistical challenges and impact critical services.
Some agencies are already pushing back against the decision, arguing that their operations cannot be easily relocated or downsized.
Massive lease terminations target IRS, SSA, and key federal agencies
The GSA has officially notified landlords of 793 lease terminations, prioritising offices where cancellations can be enforced within months without penalties.
This marks one of the most aggressive real estate reductions in US government history, affecting a wide array of agencies.
The IRS alone is set to lose dozens of taxpayer assistance centres, potentially impacting services for individuals needing help with tax filings and refunds.
The SSA, responsible for handling millions of disability and retirement claims, also faces significant office closures.
Other affected agencies include the Bureau of Reclamation, which manages water supplies across the drought-prone Western US, and the Railroad Retirement Board, which provides financial benefits to railroad workers and their families.
Some agencies will be forced to consolidate offices, while others may attempt to extend their leases or shift to remote operations.
Despite the potential savings, the rapid pace of cancellations has drawn criticism.
Internal government sources suggest that some lease terminations were announced in error and have been quietly rescinded.
However, the updated DOGE list still includes newly added lease cancellations, indicating the full extent of the office downsizing is still evolving.
Federal agencies scramble to mitigate disruptions as landlords push back
The sweeping cuts have blindsided many landlords who had counted on long-term government leases, a typically stable investment.
Some agency officials were unaware of the cancellations until notified by building managers, highlighting the disorganized nature of the process.
Industry experts predict that many agencies will struggle to vacate their premises on time, potentially leading to holdover rent payments that could undermine DOGE’s cost-saving goals.
Concerns have also been raised about how agencies will manage the transition. While some offices may relocate, others will be left with no alternative but to shut down.
For instance, an IRS taxpayer assistance centre in Arizona, which helps low-income individuals file taxes, is among the locations at risk of losing its lease.
The prospect of office closures without clear relocation plans has left some employees and the public uncertain about future access to government services.
The Building Owners and Managers Association, representing commercial landlords, has advised property owners to prepare legal action to recover losses if government agencies fail to vacate on time.
Several lawmakers have also urged DOGE to reconsider or delay certain closures, particularly those affecting rural areas with limited alternative service options.
Government cost-cutting plan raises questions over long-term savings
While the lease terminations are estimated to save $500 million over the next decade, critics argue that the broader economic impact remains uncertain.
Costs associated with relocating agencies, renegotiating leases, and potentially paying for holdover rent could offset the anticipated savings.
The move is part of a broader effort to reduce the federal government’s real estate footprint, an initiative that began before Musk’s involvement but has now been drastically accelerated.
Congress had already passed a law requiring federal agencies to assess office occupancy rates, with guidelines suggesting leases should be terminated if usage falls below 60%.
However, many of the offices facing closure provide in-person services that cannot be easily transferred online or consolidated.
At a recent congressional hearing, Government Accountability Office official David Marroni supported the idea of reducing excess government office space but warned that such efforts must be carefully planned.
While some agencies are exploring ways to minimise disruption, others remain in limbo as the lease termination process unfolds.
The true impact of these cuts will become clearer in the coming months as affected offices prepare to close, relocate, or push back against the decision.
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