Biden: ‘Vast Majority Of Federal Workers’ Soon Returning To Offices

The slow return of federal agency employees to offices has hampered the efforts of D.C. and other cities to reinvigorate their downtown business districts, but that return is now set to accelerate.  

President Joe Biden during his State of the Union Address Tuesday announced that the "vast majority of federal workers" would soon return to the office, citing rising vaccinations and falling hospitalizations.

"It’s time for Americans to get back to work and fill our great downtowns again," Biden said. "People working from home can feel safe to begin to return to the office."

Biden's pronouncement comes as welcome news to landlords and local officials, who have called for the return of the federal workforce to help revitalize D.C. and other cities.

Currently, half of the 700,000 members of the American Federation of Government Employees, which includes D.C. and federal workers, work from home, Axios reported Monday.

If every federal office worker came back permanently tomorrow, the economic impact from their spending on transportation, food and other needs could reach $150M per day, said D.C. Deputy Mayor for Planning and Economic Development John Falcicchio. 

Falcicchio said that around 197,000 federal government employees worked in D.C. offices prior to the pandemic, though he expects they won't all be back five days a week.

"For us, that's like a quarter of our workers, so it's really important that they come back for the economic vitality that it provides," Falcicchio told Bisnow.

The deputy mayor praised Biden's announcement, which he said was a "big mile marker" in the government response to the pandemic.

The Biden administration has left the details of return-to-work plans up to federal agencies, which have brought back varying levels of employees depending on what they view as mission-critical workers. Falcicchio said the announcement is confirmation that most of the workforce will be back by the end of spring.

"We think it's a prudent plan," Falcicchio said. "All of this will help us get back and get to normal."

In addition to its owned buildings, the federal government leases more than 181M SF from private office landlords around the country. It has leases for space larger than 400K SF in D.C., Atlanta, Kansas City, Philadelphia, Chicago and San Antonio, according to a Bisnow analysis in August. 

Several office brokers and former federal real estate officials who spoke to Bisnow in August were pessimistic about the federal government's need for office space in the long term, and they anticipated reduced footprints and consolidation of certain offices.

But Nina Albert, commissioner of the General Services Administration's Public Buildings Service, said there will still be a need for office space in the future.

"There is a whole variety of government functions that continue to require office space," Albert told Bisnow in September. "So I think what we’re talking about as opportunities to reposition are within agencies where there was no telework policy previously and now they might want to work toward more of a hybridized approach or different solutions by position category or position type."

The return occurs despite a lack of enforcement of Biden's vaccine mandate for federal workers, which is currently being contested in court.

Vaccine mandate or not, the news is welcome for downtown D.C., where tenants are reckoning with their post-pandemic future.

Besides boosting retail, the announcement could also trigger additional return-to-work plans from private employers, said Leona Agouridis, executive director of the Golden Triangle Business Improvement District, an area in D.C.'s Central Business District that includes federal office buildings.

"Businesses in the Golden Triangle and throughout the District of Columbia have long relied on the daily office worker—their absence has been a huge blow to our retail and restaurants," Agouridis said in a statement. "Along with the BID’s ongoing recovery efforts, the return of the Federal workforce would continue to move the central business district in the right direction."

The private sector's return to office efforts have begun to gain momentum in recent weeks. Kastle Systems' building occupancy report increased last week to 36.8%, up from 31.6% two weeks earlier. And several large companies including Meta, American Express and Wells Fargo are planning office reopenings this month, The Wall Street Journal reported. 

Also during his State of the Union address, Biden announced several other actions that could affect commercial real estate. The Department of Justice is assembling a task force to prosecute Russian oligarchs who have parked money on the United States' shores.

"We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets," Biden said. "We are coming for your ill-begotten gains."

Elsewhere, Biden also decried the influx of major investment firms into nursing homes and announced he would create a chief prosecutor for pandemic fraud, responding to complaints about Paycheck Protection Program loans.