White House has plan to increase sales of vacant, underused federal buildings

By Ed O'Keefe and Jonathan O'Connell
Washington Post Staff Writers
Thursday, March 3, 2011; B04

The Obama administration plans to shed thousands of vacant or underused federal buildings in coming years and hopes to recruit outside help to determine which office towers, courthouses and warehouses the government no longer needs.

Once established, an independent commission of public- and private-sector real estate experts would review 1.2 million federally owned properties and determine which ones should be sold, White House officials said.

"The government doesn't need all of these properties," Jeffrey Zients, deputy director of the Office of Management and Budget, said Wednesday. He leads the administration's efforts to cut $3 billion in real estate costs by the end of fiscal 2012.

The panel, modeled on the military's Base Realignment and Closure Commission, received a brief mention in President Obama's fiscal 2012 budget request, but the administration didn't discuss the idea publicly until Wednesday. Congress would have to pass legislation to establish it.

Sen. Thomas R. Carper (D-Del.) said he might include language authorizing the panel in a bill he is writing to trim the federal real estate portfolio. "Clearly this is an area where the federal government gets better results for less money by reducing the amount of property we own and by better managing the property we keep," Carper said.

The federal government's annual building operation and maintenance budget runs to more than $20 billion, Zients said. About 14,000 properties in the federal portfolio are vacant and an additional 55,000 are underused, according to a 2009 government audit.

But a cumbersome real estate review process and a lack of public information on which properties might be offered for sale has drawn criticism from government auditors and private developers.

A recent Government Accountability Office report cited federal properties in California and Missouri that were declared surplus in 2002 but had not been sold by 2009. In the D.C. area, lawmakers are eager for the government to decide whether to sell the Old Post Office Pavilion, a mostly vacant historic property that occupies a choice location on Pennsylvania Avenue NW.

Commercial real estate experts do not expect the government to meet the goal of saving $3 billion by 2012 because many excess properties are likely poorly located World War II-era sites.

Even well-located sites can fail to fetch top dollar: A federal building in downtown Bethesda sold last summer in an online auction for $12.5 million. The asking price was $14 million, and the opening bid was just $100.

Joseph Consoli, a 30-year commercial real estate veteran, said the government needs to think beyond disposing of vacant buildings to achieve significant savings or efficiencies.

Part of the problem is the varied real estate needs of the many federal agencies, said Consoli, who has worked on property management issues for the General Services Administration, the Army and the Air Force.

Some important federal buildings, such as the Supreme Court, will never be sold and simply must be maintained, he said. Military branches, however, may require access to buildings for only months at a time.

Federal officials are "not thinking long term about how to maintain the value of the assets within the mission of what each public agency or department is accomplishing," Consoli said.

O'Connell is a staff writer for Capital Business, The Washington Post's weekly business publication.

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