CompStat: DOGE Fallout in DC, Dollar Stores under Pressure, and Aging Warehouses

SKIP AHEAD TO

• Economic News
• Office: The Shifting Scope of DOGE Lease Terminations: An Update on What is Still at Risk
• Retail: Portfolio Risk Assessment: Nearly 1 in 5 Dollar Stores Currently at Risk Based on Rent-to-Revenue Ratios
• Industrial: Aging Warehouses Face Upgrade Pressure As Owners Confront Renovate-or-Discount Dilemma

Economic News

CompStak is tracking several key economic sets to understand:

The Impact of tariffs

• Retailers maintained steady inventory levels in April, holding 1.29 months worth of merchandise on hand, per the Retail Inventories to Sales Ratio;
• The Producer Price Index (PPI) for automobile manufacturing was flat in May, remaining at a reading of 112.1, down slightly from its most recent high in February;
• Imports from China to the U.S. have declined for four consecutive months, and as of May, were just 4.4% above the March 2020 low;
• In terms of total TEUs, the Port of Los Angeles fell to its lowest monthly cargo volume in two years in May, decreasing 5% compared to a year ago. The Port of New York and New Jersey also surpassed TEU volume at both the ports of Los Angeles and Long Beach for the first time since May 2024;
• Warehouse Capacity moved into contraction in June for the first time since March 2024 and the second time since January 2023 with a reading of 47.8. Warehouse Utilization registered slightly lower at 62.2 in June, down 30 basis points from May;
• Inflation-adjusted advanced estimates of U.S. Retail and Food Services Sales rose slightly in June, defying expectations for a third consecutive monthly decline;

State of the Economy and Recession Risk

• The Smoothed U.S. Recession Probabilities Index rose to 0.38 in February from 0.26 in January, but remains well below the 80% threshold historically associated with recession onset. The index has stayed under 80% since May 2020, suggesting continued economic expansion.
• The number of office-using job openings in May were 6.1% higher than a year prior while other private sector job openings were 0.6% lower compared to a year ago. Government job openings, meanwhile, were 20.5% lower than the same time last year in May with the number of unemployed rising an annual 2.4%;

Ongoing concerns about inflation and consumer confidence

• Inflation accelerated in June to its highest annual rate since February with the Consumer Price Index reaching 2.7% in a sign that the effects of tariff duties are starting to be felt. Core Inflation, which excludes food and energy, also rose to an annual 2.9%;
• Consumer sentiment soared 16% in June from May’s reading in the first increase in six months to 60.7. Despite June’s gains, sentiment remains 18% lower compared to December 2024.
• In the 12 months through May, the U.S. Personal Consumption Expenditures Index (PCE) rose to 2.3%, an uptick of 10 basis points in line with expectations. Higher inflation remains a concern for the Federal Reserve and could extend its pause on any future rate cuts.

OFFICE: The Shifting Scope of DOGE Lease Terminations: An Update on What is Still at Risk

The Department of Government Efficiency (DOGE) began announcing lease cancellations in early March 2025, putting hundreds of government leases on the chopping block with other government-owned properties reportedly being prepped for potential sale. In the following analysis, we use CompStak data to compare DOGE-targeted properties and leases to the rest of the market in the two top areas for terminations: Washington, D.C. and Los Angeles. 

Where are the DOGE lease terminations?

According to the Department of Government Efficiency website as of June 2025, the dominant market for lease terminations is Washington, D.C., accounting for 33% of all lease terminations by square footage listed, followed by the state of California (6%), with the majority of terminated leases in that state concentrated in the Los Angeles area.

Identifying leases within CompStak’s data that are marked as terminated on the DOGE website also reveals a concentration in Washington, D.C. (18.6%) and CA (9.1%). Within the state of  California, the Los Angeles market held the highest share in CompStak’s data. 

Comparing Properties with DOGE Lease Terminations vs. the Rest of the Market: Washington D.C. and Los Angeles

In-Place Rents: According to CompStak data, the Washington D.C. portfolio of properties in DOGE’s crosshairs is currently achieving in-place rents — those being paid today by active, unexpired tenants — that are 4% higher than the rest of the Washington, D.C. office market. For the Los Angeles market, the properties with DOGE office terminations have rents in place that are 27% below the rest of the market’s current in-place rents. 

WALT (Weighted Average Remaining Lease Term):  For both Washington, D.C, and the Los Angeles markets, the remaining average lease term for office tenants is higher in the rest of those markets than for the DOGE properties, with the most significant spread in the Washington, D.C. market. 

Transaction Size: In Washington D.C., the average lease transaction size is larger for DOGE properties than the rest of the market, whereas in Los Angeles, the rest of the market has a higher average. 

Building Age: In Washington, D.C., the average built year for DOGE properties vs. the rest of the market is comparable to the average in the mid-1980s. In Los Angeles, the properties with DOGE office lease cancellations were, on average, younger than non-DOGE properties by about nine years. 

Building Class: Notably, the breakdown of Class A space versus B or C space is also comparable across both DOGE and non-DOGE properties in Washington, D.C. However, for the Los Angeles market, DOGE properties have a significantly higher concentration of Class A space compared to the rest of the market. 

Top Industry by Occupancy: Not surprisingly, the properties with DOGE terminations have government as the top industry sector by leased square footage, but government is the dominant leasing sector as well in the non-DOGE properties for Washington, D.C., while TAMI dominates in the rest of the office market in Los Angeles. 

Recent Leasing Trends: In both Washington, D.C., and Los Angeles, leases signed between Q2 2024 and Q1 2025 in buildings with 2025 DOGE cancellations were executed at starting rents below the rest of each market’s average during that same period. In Washington, D.C., the average lease term length in DOGE properties slightly exceeded the rest of the market by 2% for signed leases during that time, while in Los Angeles, the difference was more pronounced at 35%.

Finally, CompStak’s market rent estimate (an evaluation of what the property might lease for today) for properties with DOGE cancellations in Washington, D.C., is 22.7% higher than the rest of the market. In Los Angeles, by contrast, the market rent estimates for DOGE and non-DOGE cancellation buildings are more aligned—$36.25 vs. $38.69, respectively.

Washington D.C. is Key Office Market at Risk

While both Washington, D.C., and Los Angeles have experienced office lease terminations due to DOGE initiatives, the data highlights Washington, D.C. as the most significantly impacted market. DOGE-related terminations are heavily concentrated in the nation’s capital, representing the highest share of total lease cancellations by square footage and properties and reflecting the office market’s heavy reliance on the government sector. 

DOGE-affected properties in Washington, D.C. tend to house larger leases and report in-place rents that are 4% above the market average. However, these properties also have shorter remaining lease terms and older assets on average—factors that may heighten their vacancy risk. Despite a comparable mix of Class A and B/C space, the government remains the dominant tenant across both DOGE and non-DOGE buildings, underscoring the market’s exposure to public sector downsizing.

By contrast, Los Angeles appears less vulnerable. Although it ranks high for total lease cancellations, DOGE-impacted properties in Los Angeles have significantly lower in-place rents—27% below the market average—and smaller lease sizes. However, these assets skew younger by nearly a decade and are more heavily weighted toward Class A buildings, potentially offering more flexibility for repositioning. The broader L.A. office market is also less reliant on government tenancy, with TAMI (technology, advertising, media, and information) firms dominating occupancy in non-DOGE buildings.

Across both markets, recent leases signed in DOGE-impacted buildings between Q2 2024 and Q1 2025 were inked at below-average starting rents, though they featured longer lease terms, especially in Los Angeles, where the average lease term well exceeded the rest of the market by 35%. This suggests  that landlords were already offering more favorable terms to retain tenants ahead of DOGE actions.

Ultimately, while both cities will need to contend with the fallout from DOGE’s efficiency measures, Washington, D.C.’s far greater exposure positions it as the epicenter of the policy’s real estate impact.

The Shifting Scope of DOGE Terminations
Since CompStak began tracking lease terminations listed on DOGE’s website, the total footprint originally marked as terminated has declined significantly, falling to just one-third of its original volume. Many terminations have since been removed from the site, but DOGE has not been transparent about what these removals signify.

For example, the total square footage marked for cancellation in Washington, D.C. would be 45% higher if all leases ever labeled as terminated were still included, according to CompStak data. In Los Angeles, the total would be 146% higher.

These changes suggest that the potential impact on office markets remains substantial. However, if the removed leases are no longer being canceled, whether due to changes in policy or DOGE’s inability to follow through on all initially announced terminations, the disruption may be less severe than originally expected. Without additional clarity from DOGE, the full implications remain uncertain.

RETAIL: Portfolio Risk Assessment: Nearly 1 in 5 Dollar Stores Currently at Risk Based on Rent-to-Revenue Ratios

Recent changes in the dollar store retail sector, combined with new tariff pressures on price-sensitive goods and consumers, could add further strain to an already challenged industry. In March, Dollar Tree announced plans to sell its Family Dollar division to private equity for $1 billion, despite acquiring it in 2014 for over $8 billion. Then, during its Q1 earnings call, Dollar Tree warned analysts that tariffs could reduce its Q2 earnings by as much as 50%, particularly because much of its low-cost inventory is sourced from China, where tariffs have risen significantly.

These developments raise a key question: In an environment where consumer price sensitivity is rising alongside prices, will dollar stores benefit from greater demand for discount goods, or will higher costs and weaker consumer spending place even more downward pressure on revenue?

In the following analysis, CompStak data is used to assess the share of dollar stores currently classified as rent-burdened based on estimated revenues, and how that share could grow under different revenue stress scenarios.

Portfolio Risk Assessment: Nearly 1 in 5 Dollar Stores Currently at Risk Based on Rent-to-Revenue Ratios

According to CompStak’s data, which was used to calculate the annual rent payment for all dollar stores currently leased by Family Dollar, Dollar Tree and Dollar General across the U.S., more than 17% (by number of stores ) and by share of total rent being paid can be potentially considered as paying rent levels that are too high relative to their estimated annual revenue. While the majority are paying a below-average rent relative to their revenue (more than two-thirds), there is still a healthy share that are paying too much, which could mean additional risks if revenue declines due to reduced sales and/or rising costs.

The West North Central Census Division is Home to the Highest Share of Overburdened Dollar Stores by Division (18.5%), but More Than One-Third Are Concentrated in Southern U.S. States

CompStak data shows a clear geographic concentration of rent risk among Dollar Stores with annual rent exceeding 10% of estimated revenue. More than one-third (36.5%) of the rent roll in overburdened and high-risk stores overall is located in Southern U.S. states, spanning the East South Central, South Atlantic, and West South Central Census Divisions.

At the division level, the West North Central region—encompassing Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota—has the highest share of overburdened rent roll for dollar stores, accounting for 18.5% of all overburdened U.S. dollar stores’ total rent roll. 

By state, North Dakota, South Dakota, Nebraska, and Iowa rank highest for the number of stores within their borders that are overburdened by rent.

Overall, these geographies may include more rural markets that may be more vulnerable to further strain as tariffs and supply chain pressures drive up the cost of goods, potentially eroding already thin margins.

Brand Comparison: Dollar General Has the Largest Share of Its Stores’ Total Rent Roll as Rent-Burdened Among the Major Dollar Store Chains Analyzed

According to CompStak data, more than 22% of Dollar General’s active rent roll is rent-burdened (overburdened and high-risk combined), meaning the annual rent exceeds 10% of estimated store revenue. That’s more than double the share of rent-burdened leases at Dollar Tree (8.2%) and Family Dollar (9%).

Among stores that are rent-burdened, Dollar Tree’s average rent-to-revenue ratio (23.1%) slightly exceeds that of Dollar General (22.1%). While Dollar Tree’s rent burdens are higher on average when they occur, Dollar General has a much larger share of stores in this high-risk category. By these metrics, Dollar General may face greater exposure to rising occupancy costs, broader economic pressures, and or climbing costs of goods and supplies.

Location Income Levels vs. Dollar Store Rent Burdens: Higher-Income Areas Account for a Larger Share of Rent-Burdened Locations

When analyzing dollar store locations by the median household income of their ZIP codes, a surprising pattern emerged: higher-income areas show a greater share of rent-burdened stores. In ZIP codes with median household incomes of $80,000 or more, 22.2% of dollar stores by total rent roll are classified as rent overburdened or high-risk. This rate exceeds that of stores in areas with median incomes below $40,000 and $40,000–$59,999 by 920 and 1,170 basis points, respectively. Even ZIP codes in the $60,000–$79,999 bracket showed elevated risk, with over 20% of their stores falling into these high rent-to-revenue categories.

Dollar Stores Could Face Growing Rent Strain: A 15% Revenue Drop Could Push Rent-Burdened Exposure from 17.7% to 21%

Even before potential sales declines or cost inflation tied to new tariffs, a meaningful share of Dollar Store locations are already operating at rent-to-revenue ratios above healthy industry norms. As costs rise and consumer demand softens, more of these stores could tip into overburdened territory, raising the risk of lease renegotiations, defaults, or closures.

In modeled scenarios with revenue declines of 5%, 10%, and 15%, the share of rent-burdened stores increased by 100 to 330 basis points. And these estimates may be conservative: they reflect only the impact of falling revenue due to reduced consumer traffic and spending, not the added effect of rising costs from tariffs and supply chain pressures.

If total sales decline while the cost of goods sold rises, the effective (or net) revenue available to cover rent could fall even further, pushing more locations beyond sustainable thresholds.

Cost Pressures Mount: Tariffs on Core Goods Could Erode Dollar Store Sales and Profits

Some of the most commonly purchased items at dollar stores include cleaning supplies, food and beverages, paper products, health and beauty items, party supplies, and other essentials. Many of these low-cost goods are imported—often from countries facing rising tariffs, with further increases possible depending on U.S. trade policy developments.

While the tariff landscape remains in flux, recent increases have already begun to apply cost pressure to dollar stores, which operate on razor-thin margins. In response, dollar stores may be forced to raise prices on core goods, which could erode profit margins and reduce sales, particularly among price-sensitive consumers in lower-income ZIP codes. The combined impact could ultimately lead to net operating income (NOI) compression for landlords with Dollar Store tenants.

So far, there has been muted evidence of widespread price increases or significant spending declines, likely because:

• Retailers are holding off on passing along cost increases, hoping tariffs will be rolled back.
  
• Companies fear deterring customers with higher prices in an already sensitive market.
  
• Some consumers may have front-loaded spending earlier this year, making larger purchases in anticipation of higher future prices.
  

The Core Personal Consumption Expenditures (PCE) Index, which excludes food and energy, rose 2.7% year-over-year as of May 2025. This marks a slight decline from December 2024’s 2.8% reading but remains above the Federal Reserve’s 2% target. So far, the index has not reflected any sharp tariff-driven inflation.

Breaking down Consumer Price Indexes for specific item categories important for dollar stores shows more mixed signals, but significant increases for some categories. Indexed to December 2024, the CPI for All Items overall is up 1.1% and several key dollar store item categories individually grew faster than that baseline, including:

• Toys, games, hobbies, and playground equipment grew 3.6%.
• Nonalcoholic beverages grew by 2.9%.
• Household paper products grew by 2.0%.
• Pet food and treats grew by 1.2%.
• Food at home grew by 1.1%.

Looking ahead, many economists expect more noticeable shifts in pricing and consumer behavior as pre-tariff inventories are depleted and policy clarity emerges. If tariffs persist or expand, further pressure on both retail margins and demand is likely.

INDUSTRIAL: Aging Warehouses Face Upgrade Pressure As Owners Confront Renovate-or-Discount Dilemma

There is a rising need for renovation of industrial warehouses as a result of strong post-pandemic flight to quality, according to a recent report from CBRE. Tenants have chosen to upgrade to newer facilities, leaving a dearth of older warehouse inventory now totaling over three billion square feet, pushing vacancy rates for these properties upward in the past two years to 8%, per the report. Structural improvements owners have to consider include higher clear heights, fire sprinklers, increased electrical capacity and energy efficiency. As a result, owners are faced with a tough choice: upgrade their aging facilities or lease to less demanding users, likely at a lower rent.

CompStak data indicates average work value among bulk industrial buildings built before the year 2000 has increased year over year and is at its second highest level in the data tracked since 2017. The average tenant improvement allowance among leases in bulk buildings built in or after 2000 has fallen 6.7% since 2020 while those of comparable size built prior to 2000 have risen 84.9% over the same period.

Thus far in 2025, work value among leases in bulk industrial buildings built prior to 2000 has reached an average of $5.38 per square foot, slightly below the $5.97 per square foot average among those constructed in the year 2000 and after, according to CompStak data. Evaluated another way, comparing the total work value package to the total value of a lease, that ratio for  transactions in bulk industrial buildings constructed in 2000 and later has declined since 2020 to 5.3% thus far in 2025. Meanwhile, the share of work value to total deal value among leases in buildings built prior to 2000 has also declined from its previous high in 2020 to 2.1% thus far in 2025 but is stable year over year.