Momentum Growing For Massive Redevelopment Of Federal Buildings Near National Mall

On some of the most prime real estate in D.C., in between the National Mall and the $3.6B waterfront megaproject The Wharf, sits a swath of aging, underutilized federal office buildings. 

The government is looking to offload one of those buildings — an 845K SF structure built in the 1930s — but that announcement earlier this month may be just the first domino to fall in a strategy that could reshape this prominent part of the nation's capital. 

Momentum has been building in recent months within the government real estate space on efforts to advance a full-scale redevelopment of the federal office cluster in Southwest D.C.

Former government real estate officials, neighborhood leaders and brokers are calling for the feds to offload a series of large buildings just south of the National Mall, relocate employees to other facilities and allow the District and private developers to create a mixed-use district where today the streets sit mostly lifeless.

The Public Buildings Reform Board — an independent, nonpartisan agency created by a 2016 act of Congress to identify ways to reduce the government's real estate costs — has been taking "a really strong look at that area" in Southwest D.C., said Dan Mathews, a PBRB member.

He said he has talked to "a lot of" development companies and the city in recent months and sees excitement about the potential to redevelop the submarket. He compared it to The Yards, a long-term, 48-acre redevelopment of the Southeast Federal Center that now anchors one of D.C.'s hottest neighborhoods. 

"The Yards is a good example of what is possible when a critical mass of federal property goes onto the market in such a way that an entire submarket can be remade," Mathews said last week at Bisnow's DMV 2025 Economic and Political Forecast event. "We have an opportunity like that right now south of Independence Avenue."

From 2017 to 2020, Mathews served as the General Services Administration's public buildings commissioner, the person responsible for executing the federal government's real estate strategy. He shared the stage at The Westin Georgetown with three other former PBS commissioners, as well as the official currently in that role, Elliot Doomes.

Each of them agreed that the federal government should dispose of more underutilized office buildings, especially those in prime locations like the Southwest D.C. cluster. 

A report in March from the PBRB found that agencies are using just 12% of the space in their headquarters buildings on average. The report has helped accelerate the conversations around disposing of underutilized office buildings this year. 

Tranwestern released a report in September that identified a series of buildings near the National Mall that are ripe for disposal. Lucy Kitchin, who leads Tranwestern's government services advisory group and authored the report, told Bisnow she identified these buildings after speaking with government officials about how many people are coming into these buildings regularly. 

"They're some of the most underutilized buildings, and they encumber some of the most valuable land," she said.

Kitchin said she has seen momentum picking up around the idea of offloading these properties for redevelopment in recent months. 

"A lot of people who think about these types of things have started coming to the same conclusion," she said. "Some of their ideas are coalescing, and it seems to be happening more right now."

Southwest Business Improvement District Executive Director Steve Moore said he has also seen this momentum. He attended one of the recent PBRB meetings in which they discussed the idea, and he had Mathews speak to the BID's board about it.

"This has been on everybody's desk," he said.

"The more traction that happens around this, I find more people are saying 'We’ve got to look at this long and hard. Maybe we’ve got to think about this quadrant of the city differently than we had been,'" Moore added. 

Given the prime location of these federal buildings, just south of the mall and north of a residential neighborhood with amenities, he said a large-scale redevelopment effort that added housing and other uses would be "transformative."

"It's across the street from some of the most visited museums in the world," he said. "There's a critical mass of cultural attractions like no place else, and it's in this neighborhood that already has schools and churches and playgrounds. It suggests a whole new renaissance for this area of the city."

The building the GSA identified for disposal this month, 300 Seventh St. SW, had previously been under consideration for the Federal Emergency Management Agency's headquarters, but that would have required a costly renovation, Doomes said. 

"We crunched the numbers, we took a look at it, and we decided that was not the best value to taxpayers, so we pivoted," he said. "We said 'This is a piece of the property in the middle of the city, so let's dispose of it.'"

Moore said a redevelopment of that property would help improve the Seventh Street corridor that goes from Chinatown, through the mall and L'Enfant Plaza, down to The Wharf — a 3.5M SF mixed-use development on the Washington Channel that was completed in 2022. 

"It kind of continues the momentum of development in that way," he said. 

At least two of the buildings within L'Enfant Plaza could be in play for redevelopment, Cushman & Wakefield Executive Vice Chairman Darian LeBlanc said at the Bisnow event. He also pointed to the Forrestal Building, a "massive complex" between Ninth and 12th streets on Independence Avenue that houses the Department of Energy. 

"Basically everything from Independence Avenue to Banneker Circle could be in play," LeBlanc said. "But at the rate the feds move, it'll take 30 years to get that done."

Mathews pushed back on that notion, saying that steps could be taken in the near term that would drive private investment to the area. He pointed to the example of the Southeast Federal Center: Congress passed legislation that set up a framework for development, D.C. helped with zoning and entitlements and it was then led by a master developer, Forest City Realty Trust, which was later acquired by Brookfield. 

"It was an orderly development over 20 years, and because there was confidence set by that plan early on, private capital flowed in," he said. 

Developer Bob Buchanan, the founding principal of Buchanan Partners and founder of the regional organization The 2030 Group, spoke on the panel after the PBS commissioners and said he was impressed by how many of them agreed that the government should get rid of office space. 

"There’s going to be a lot of space made available hopefully for housing with government buildings that are no longer viable," Buchanan said. "So how can we repurpose those buildings to be residential? I think that’s a huge opportunity."

One former vacant government office building in Southwest has already been converted to residential: Carmel Partners began leasing in October for 562 units in the former Cotton Annex building at 300 12th St. SW. Another mostly vacant Southwest building that the GSA previously leased, 1250 Maryland Ave., sold late last year, and buyers Lowe and Henderson Park are planning a residential conversion. 

Most of the other federal buildings in Southwest still have some government employees working there, so in order to accelerate the redevelopment of the cluster, agencies would need to be relocated, and the properties would need to be offloaded. This would require major steps to be taken by the GSA, Office of Management and Budget and others in the administration, up to the president. 

The GSA has already started shifting its strategy. Mathews said he came to a realization while he was serving as PBS commissioner that the government owning its office buildings isn't necessarily the most cost-effective solution, especially given the shifts that have occurred in the office market.

Office workers today are looking for modern, amenity-filled buildings in order to make coming in a pleasant experience, and some of these aging federally owned buildings would cost hundreds of millions to renovate to bring to that level.

Meanwhile, there is record-high vacancy in D.C.'s private sector office market, and when the government looks to lease space it can find tenant-friendly deals with owners willing to kick in money for upgrades. 

"Now it’s time to call into question what are you going to do — you have stock of aging federal buildings that are highly underutilized, and each one is going to cost $300 to $500 million to renovate," said Norman Dong, a partner at FD Stonewater who served as PBS commissioner in the Obama administration. "At the same time, you have this excess of inventory in the market for commercial real estate space that is more suited to meet a modern office requirement."

Bob Peck, a principal at Gensler who served as PBS Commissioner during Barack Obama's first term, said it is clear the government owns more office space than it needs, especially in the Southwest cluster.

But moving agencies can be difficult. The GSA must contend with agency leadership, the OMB and other stakeholders in order to move forward. 

"If somebody can crack some heads, break some eggs, it wouldn’t take that long to do a plan for the city," Peck said. "It wouldn't be that hard to figure out what the GSA portfolio should look like post-Covid, post-return-to-office, figure out which buildings need to go and get moving."

The start of a new administration could bring more momentum to move projects like this forward, especially as Trump has focused on the idea of reducing government waste, tapping business leaders Elon Musk and Vivek Ramaswamy to lead a nongovernmental body dubbed the Department of Government Efficiency. 

Disposing of aging, federal buildings in Washington that can be expensive to maintain and renovate would be a visible way for Trump to show progress on cost savings. 

"Selling a huge building might not be a huge needle mover in the scheme of things, but it looks good — the visual image of that, people can see it — and it could be very symbolic," Kitchin said. "It’s very tangible, and that might be attractive."

While it would take time before companies are selected to start redeveloping these properties, Kitchin said real estate leaders who want to see this move forward can make an impact by lobbying Congress and the administration.

"For people who are involved in real estate community here, the time to act is now," she said. "We’re at an inflection point as it relates to this issue, and that’s why it’s so important."