Federal Gov’t Real Estate Chief: Coronavirus Will Likely Lead To New Space Requirements

The federal government has already spent trillions of dollars responding to the coronavirus pandemic, and the official in charge of its real estate portfolio said this will likely lead to new real estate projects in the D.C. area. 

General Services Administration Public Buildings Service Commissioner Dan Mathews said he expects the crisis will lead to new requirements directly related to the coronavirus, with public health agencies expanding, plus additional projects aimed at stimulating the economy. 

"I would expect, given the amount of money appropriated to a variety of agencies working on long-term solutions to the virus, that will translate into a real estate requirement," Mathews said Thursday on a Bisnow webinar. "I do think there will be additional requirements for us to secure in the future."

"On behalf of the entire real estate market, we look forward to seeing all of those requirements," said Cushman & Wakefield Executive Vice Chairman Darian LeBlanc, a top GSA broker who moderated Thursday's webinar. 

In addition to the expansion of agencies working on the public health crisis, a large number of planned federal projects could be accelerated if Congress passes an infrastructure bill as it looks to stimulate the economy, Mathews said. Senators returned to Washington this week, and Real Estate Roundtable CEO Jeff DeBoer said on a Bisnow webinar last week the industry hopes to see an infrastructure bill passed this year. 

"We are moving forward with projects, and we have a large list of projects that we could do if Congress chose to go forward with an infrastructure-based stimulus program," Mathews said.

A former staffer on the House committee that oversees the GSA, Mathews was appointed to lead the Public Buildings Service in August 2017. He said he remembers working on the 2009 stimulus bill that appropriated an additional $5.5B to the GSA and led to new projects as the economy recovered from the Great Recession.

"If Congress chose to do something like that again, we certainly have a large number of projects that are fully scoped, we've made requests to Congress in recent years for those projects, they're basically ready to go," Mathews said. "We're in the market, we're moving forward with our current funding, and if Congress chose to put additional funding on GSA, we would be prepared to execute that."

The pandemic has caused delays in some of the GSA's ongoing construction projects, Mathews said. The agency typically has about $6B to $7B of projects underway at any given time, he said. Some local stop-work orders did not exempt federal projects at first, but he said most of them were later amended to allow the GSA to resume construction. 

"On the construction side, there are delays and some work stoppages, and that's to be expected given the conditions," Mathews said. "Contractors needs to keep employees safe, so we have to mitigate where possible, and that does cause delays."

The GSA is still moving forward with new lease deals, he said, and they are not experiencing a significant slowdown in activity, but there have been some roadblocks in moving federal agencies into new spaces.  

"Where we've had delays is right at the very end before we take occupancy," Mathews said. "There have been some supply chain issues with furniture production ... sometimes we've had challenges where we're literally ready to move a tenant from one space into a new space, but they're on mandatory telework so they're not comfortable bringing people in to pack up their personal belongings, so the move is actually delayed."

Some of the federal government agencies the GSA manages have moved to remote working, while others deemed essential have continued to come into the office. The GSA manages about 370M SF of owned and leased office space for the federal government.

Mathews said the GSA has been following guidance from the Centers for Disease Control and Prevention on maintaining a safe work environment with social distancing, personal protective equipment and extra cleaning measures. Agencies also have the option to add measures such as temperature screening or testing employees for COVID-19, he said. 

As the GSA looks to bring remote workers back to the office, he said it is considering staggering shifts to keep spaces less than fully occupied to maintain distance between employees. Some agencies have open floor plans with unassigned seats, and in those cases it would ensure that people aren't working at a desk where another employee has sat within the last week.  

"There's flexibility built into our space and our management and utilization of that space, and frankly that creates real advantages for what I would call the short- to mid-term period where we're phasing back into the workplace," Mathews said. "The conditions in the community are such that there is still transmission going on, so we don't want to put everybody in there at the same time."