The Reagan administration's program to cut back on the amount of leased space used by government employes will show the first major signs of success in fiscal 1986, according to the General Services Administration -- its primary leasing agent.
That fact could bode ill for the real estate community in major federal hubs, including Washington, Dallas-Fort Worth, Chicago and Denver, where the federal presence helps -- at least in a small way -- to bolster the local economy.
"We're certainly not going to sit here and say that we want to help the real estate community make money," said Ira Jekowsky, GSA's assistant commissioner of public buildings for policy and program support.
"Finally," he said, "we're beginning to show the savings."
Over the past four years, the administration had made a determined effort -- through GSA and the Office of Management and Budget -- to cut back on the growth of the federal government, including the expansion of buildings and personnel.
Fewer workers, shoehorned into smaller offices, which are increasingly shifted from leased to government-owned buildings, will result in a savings of $41 million in fiscal 1986, according to GSA comptroller Raymond A. Fontaine.
The fiscal 1986 budget, which went to Capitol Hill earlier this week, explains: GSA projects that it will give up about 3.8 million square feet of office space nationwide by the end of fiscal 1986, leaving 62.1 million square feet.
That cut will allow the fiscal 1986 budget for rent to stabilize for the first time at $839 million -- exactly the same as is projected for fiscal 1985.
In fiscal 1985, GSA will reach 65.9 million square feet of leased space, up 100,000 square feet from fiscal 1984.
Budget officials said the tiny increase is deceptive, at least for the Washington area, because about 1 million square feet of new leasing is expected to be done this year -- offset by a 900,000 square foot net decline elsewhere in the country.
GSA projects that it will need nearly $51 million to pay for rent increases nationwide in its leased space in fiscal 1986.
James G. Whitlock, GSA's Washington regional public buildings commissioner, said that the biggest expansions this year are occurring with the Navy, the Environmental Protection Agency and the Departments of State, Justice and Treasury.
"We are on the market, or we will be going on the market, for major blocks of space for these agencies this year," Whitlock said.
"But in fiscal 1986," he said, "we're expecting nothing. No expansion. No growth."
Whitlock said that about 20 percent of GSA's current 298 leases will be expiring in fiscal 1986, however, meaning that the agency will be in the market for up to 5 million square feet of replacement space if it cannot extend its current leases at reasonable rates.
On average, Whitlock said, GSA's rents in these buildings aveage $10 to $12 and will shoot up to $15 to $18. "Any more, and we may have to move to cheaper space," he said.
GSA has decided on some of the new locations for this year's expansion already: EPA is simply going to expand its headquarters in the Waterside Mall office complex and the Agriculture Department's Economic Research Service is going into 1301 New York Ave. NW, a building that was recently leased from Washington developer Dominic Antonelli. Other sites remain up in the air, he said, and GSA will be looking for the best deals.
"One of the biggest expansions will be the State Department looking to set up a warehouse to gather materials that will be used in building anti-terrorist facilities around the world," Whitlock said, explaining he'll soon look for a 70,000-square-foot warehouse in Fairfax County and 25,000 square feet of office space in Rosslyn for the new State Department employes.
The FBI, Drug Enforcment Administration and the Secret Service are all looking for an additional 25,000 to 40,000 square feet of space and the Food and Drug Administration wants a new 40,000-square-foot office building in Rockville that it can use to run a new program designed to streamline the licensing of drugs.
The military has a request in for about 175,000 square feet of expansion space, most of it for the Navy in the Crystal City area.
"Right now, the Navy is putting on people like crazy," Whitlock said. "They've crammed themselves so heavily into buildings in Crystal City that it's unworkable."
Tightening budgets, in the face of the rising deficit, have forced some agencies to scale back their requests.
Justice officials, for example, recently canceled a 60,000-square-foot expansion, Whitlock said, adding that because OMB has so carefully scrutinized expansion space sought by federal agencies, more space requests may "fall out, with time, as the agencies determine they just won't have the money to pay for the space."
Under a decade-old system, all agencies pay a "standard-level-users-charge" for office space, regardless of whether it is owned or leased.
GSA, in turn, sets the rent to pay for the cost of leasing space, building new federal facilities and maintaining, cleaning and repairing all types of space.
Despite the attempts to earn economies, statistics obtained through a Freedom of Information Act request show that the 13 Cabinet departments are now paying nearly 39 percent more for their office space than they were paying in 1981.
During that period the tab shot up from $1.2 billion to $1.65 billion.
GSA's tight fiscal 1986 budget includes $16.7 million to help renovate the ancient Pension Building at 440 G St. NW and turn it into a National Building Museum.
After the superficial renovation was completed for one of the President Reagan's inaugural balls, the administration wanted to pull the plug on the multiyear project, claiming that no long-term benefit would accrue to the federal government.
But former public buildings commissioner Richard O. Haase accepted the chairmanship of the building museum and did some lobbying with OMB Budget Examiner Mary Anne Chafee -- the primary roadblock.
"Dick never surprises me in the way he works," said GSA's comptroller Fontaine. "I would have never gotten that in there if he hadn't worked with her."
Said Haase: "I hope I reached her on a professional, as well as a personal, level with the merits of the matter."
Footnote: Chafee was no pushover. She demanded, and got, 100,000 square feet of space in the building for use by federal agencies when the renovation is completed. The remaining 50,000 square feet will be used as part of the museum and conference center.
There are no new construction projects in the Washington area in the fiscal 1986 GSA budget, but the agency has asked for the authority to spend another $16.2 million on a renovation of the General Accounting Office building at 441 G St. NW, including the "removal of asbestos-contaminated building components."
An underground steam distribution system, also run by GSA, will continue its multiyear overhaul with a request for $13.8 million and the Interstate Commerce Commission/Customs Service headquarters is going to have $2.26 million worth of work done to its heating and air conditioning system.
All of the requests, of course, must be approved by Capitol Hill.
Design work is scheduled to begin in fiscal 1986 on four major local projects.
In the District, GSA plans to rehang the elevators in the New Post Office building at 12th and Pennsylvania and replace of the electrical systems at the State Department.
In Arlington, GSA plans a fire-safety upgrading at the Navy's Federal Office Building No. 2 on Columbia Pike, and at the Pentagon, a major upgrading of the sprinkler protection system and other fire-safety features.