States Hungry To Lure Federal HQs From D.C., But Rushed Site Selection Process Has Some Concerned

Federal agencies face an April 14 deadline to submit proposals for moving their office spaces out of Washington, D.C., as part of the broader push billed as a move to cut costs and decentralize the federal government.

While D.C.-area landlords and brokers lament the potential loss of major tenants, economic development and CRE professionals elsewhere in the U.S. are energized by the possibilities. But the realities and logistics of moving massive agencies and their employees are complex, and such an operation is unprecedented. 

“This is a new arena in economic development,” said John Boyd, principal at The Boyd Co., a site selection consultancy. “So much of the focus on relocating agencies has to do with creating efficiencies and saving the taxpayer money. It also represents an economic development opportunity for markets throughout the U.S.” 

Agencies from NASA to Customs and Border Patrol are among those being courted by politicians and others from states across the country. Federal agencies lease roughly 35M SF of office space in D.C.

Ohio Gov. Mike DeWine has made a public push to bring the space agency’s headquarters to Cleveland, Ohio, assembling a bipartisan coalition of state lawmakers to support an effort to locate near the NASA Glenn Research Center. The Cleveland City Council sent a letter directly to Vice President JD Vance and NASA’s temporary administrator making its own appeal.

Aggressive pushes are also being made by Texas, Alabama and Florida, with the Sunshine State’s two senators introducing legislation to move NASA's headquarters to Cape Canaveral, and local university leaders pushing the Space Coast, the site of the most rocket launches in the country.

But the process seems rushed relative to the realities of the leases in place, according to Diana Parks, executive chair of the National Federal Development Association, an industry group that leases space to government tenants.

“Have you ever packed two hours before you go into the airport?” Parks said. “You inevitably forget something. I think this is going to be one of these things that's got a lot of issues and problems.” 

NASA itself isn’t in any rush.

“The NASA Headquarters building lease is up in 2028, and the agency is looking at options to lease a new facility in the Washington area,” NASA Press Secretary Bethany Stevens said in a statement to Bisnow. “In compliance with the Executive Order signed Jan. 20, NASA employees returned to full-time on-site work by no later than Friday, Feb. 28.”  

Parks said she believes any moves will take much longer than is currently recognized because the agencies lack the internal expertise to evaluate relocation options. This should be done through the General Services Administration, but the GSA has “already been decimated,” she said. 

GSA is figuring out how to cut half its staff, an aggressive culling that has led to the loss of key personnel.

“To me, it seems a little performative,” Parks said. “It's not going to result in immediate savings or receipts that can go up on the [Department of Government Efficiency] board. And I don't think you can honestly say how much this is going to cost, because moving federal folks with the IT and the security is not inexpensive.”

Still, excitement over the possibility of relocating agencies and creating new economic development and real estate leasing opportunities has percolated. 

Boyd talked about the potential of, say, moving the National Institutes of Health to the Research Triangle in North Carolina, moving the Department of Transportation to Austin — a center of autonomous driving — or moving the Securities and Exchange Commission to one of the “new Wall Streets” like Dallas or Charlotte.

These are all hypotheticals, but he suggested that this is how local economic development officials are thinking about this opportunity and how congressional representatives, senators and governors are lobbying the federal government. 

➡ @LtGovJimTressel and I sent a letter to President Trump this week to show our support for relocating @NASA's headquarters to @NASAglenn in Cleveland. Ohio is the birthplace of aviation, the heart of America's aerospace industry, and a critical hub for advanced technology,… pic.twitter.com/LhQ8nBQ5FG

— Governor Mike DeWine (@GovMikeDeWine) March 15, 2025

In addition to efforts by DOGE and the Trump administration to move agencies out of D.C., a bipartisan group of lawmakers introduced the Strategic Withdrawal of Agencies for Meaningful Placement Act, or SWAMP Act, in February to decentralize the federal bureaucracy and move agencies out of the D.C. region.

Moving an HQ could create new leasing activity in a new market, including the additional organizations that interact with the agency such as startups and lobbyists. Boyd argues a relocated agency makes that market a center of that sector’s ecosystem and adds a flood of 9-to-5 office workers to a downtown area. Those workers could also be paid at lower rates that reflect cost of living in smaller cities.

“This was a model that [Elon] Musk has successfully utilized at Tesla,” he said. “A lot of workers will simply quit or resign. They're not going to want to make the move. They'll be replaced by workers at the lower end of the federal pay scale.”

But the speed at which DOGE and others are moving may not be factoring in the challenges of relocating large government agencies and swapping out real estate. There is a process the GSA has to go through to buy, sell or lease property to increase competition and make sure the government gets a fair price.

Parks said she has a number of government agency clients that are residing in leased space, and when they were told that the lease was canceled, they didn’t have any place to go or money for moving equipment and signing a new lease. 

In these scenarios, called a holdover, property owners can’t evict federal agencies because there’s a clause in the lease that means the agency simply needs to pay more rent. So if an attempt is made to move an agency before they’re ready, and without the proper planning and funding, holdover situations could mean more costs to taxpayers. 

There have been other efforts to relocate federal agencies from D.C. that highlight the challenges and opportunities of such a shift. The Bureau of Land Management was ordered to move to Grand Junction, Colorado, in 2019 during Trump’s first term, only to be relocated back to D.C. after former President Joe Biden took office. The agency ultimately lost 300 workers due to the initial move. A bill in Congress seeks to make the Grand Junction move permanent. 

The Federal Bureau of Investigation has been planning to move its headquarters to Greenbelt, Maryland, since 2023, only to have President Donald Trump vow to cancel the move. 

Parks points to the National Oceanic and Atmospheric Administration HQ's move to College Park, Maryland, as an example of the kind of synergies and benefits such a relocation can bring. 

The agency has a spacious new headquarters due to cheaper real estate costs outside of the capital, and it can work with surrounding universities to collaborate on research and develop future talent. But that move took years to plan and act on. 

Parks said companies that move their headquarters spend years trying to maximize their savings. Expecting a government agency to do the same on a significantly abbreviated timeline may be wishful thinking, she said.

“It just absolutely underscores how misaligned the appropriateness of making this decision before you even know how many personnel are going to be employed,” she said. “You could say I have concerns.”