March 19, 2022

State Governments Shedding Millions Of Square Feet Of Office Space Amid Hybrid Work Revolution

March 16, 2022 | Jarred Schenke and Matthew Rothstein | Bisnow

State and local governments lease tens of millions of square feet of office space across the country, but that number is falling fast as the push for remote and hybrid work has made civil servants rethink their real estate.

From California to Georgia and Maine to Utah, the pandemic thrust government agencies into an entirely new way of working. Two years later, many have found that offering flexible working arrangements can solve two ever-present challenges they face: attracting and retaining their workers and maximizing taxpayer dollars.

“The savings are real,” Nebraska Department of Administrative Services Director Jason Jackson said. “I think future administrations are going to be hard-pressed to say, ‘We should be spending more on office space.’”

At the end of 2019, state and local governments leased 22.6M SF of privately owned, corporate-grade office space across the U.S., comprising 21.6% of all government tenants, according to data compiled by JLL U.S. Office Research.

By the end of last year, that total had dropped by 2M SF.

That nearly 10% reduction may be the tip of the iceberg, said Bob Hunt, the national leader of JLL’s public institution and higher education department. Over time, state and local office footprints could shrink by as much as 25% or 30%, Hunt told Bisnow.

The pandemic and its effects on remote work policies have prompted 87% of state governments to rethink their real estate strategies, according to a JLL survey conducted between February and April 2021. Forty percent of respondents said the rethinking would likely result in a reduction in office space, Hunt said during a November webinar with the National Association of State Facilities Administrators, while the other 60% were unsure what level of impact these considerations would have.

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