Part One: Federal Office Footprint in Flux: Current Landscape and Utilization Trends

SKIP AHEAD TO

• What is the Current State of Federal Telework and Office Space Utilization?
• Has federal employment declined or grown since the COVID-19 pandemic and the rise in remote work?
• How does the rate of telework for federal employees compare to full-time workers overall in the U.S.? 

Federal Office Footprint in Flux: How the 2024 Election Could Reshape Washington D.C.’s Office Market and Remote Work Policies

The Washington D.C. office market, long driven by the federal government, and today where 374,000 federal government workers are employed in the overall metropolitan area,  is undergoing a significant transformation as remote and hybrid work redefine how office buildings are utilized. Since the COVID-19 pandemic hit, federal agencies have increasingly adopted flexible work models, shifting away from the traditional office-based structure. This evolving landscape, combined with legislative efforts, raises key questions about the future of federal office space—what occupancy will look like, how space will be optimized, and how these shifts may evolve depending on the political climate.

Check out part two for Washington D.C. office market trends and the 2024 election’s potential impact on the future of the Federal Workforce and office space.

What is the Current State of Federal Telework and Office Space Utilization?

As of late 2023, federal employees are typically required to report in person only twice per biweekly pay period. However, occupancy rates vary widely across agencies, with some offices operating at just 25% capacity while others reach between 39% and 49%. This wide range reflects the flexibility of the current hybrid model, which seeks to balance telework with a gradual return to more regular in-office work. Yet, the underutilization of federal office space is becoming a growing financial and political concern.

These utilization rates highlight the federal government’s ongoing struggle with unattended office space; however, this problem has existed even before COVID-19. The public and lawmakers alike have raised concerns over the inefficiency and financial waste of maintaining underutilized office spaces. Federal agencies spend approximately $2 billion annually to operate and maintain office buildings and an additional $5 billion on leasing private office space.

Public sentiment is increasingly leaning toward demanding more accountability. This pressure has fueled legislative and executive actions to increase federal office utilization or reduce the federal real estate footprint altogether. In August 2023, the White House Chief of Staff’s Jeff Zients directive urged federal agencies to ramp up in-person attendance to reduce wasteful spending on unused spaces. This broader push reflects growing concerns about spending taxpayer dollars on maintaining and leasing office spaces that remain largely empty.

From Emergency Response to Long-Term Strategy: What Federal Policies Have Emerged to Tackle Office Space Underutilization?

What started as an emergency response to the pandemic in March 2020 has slowly transformed into a tug-of-war between maintaining flexibility for federal employees and addressing the realities of underutilized office space. Initially, the pivot to remote work was a direct response to the COVID-19 pandemic, with agencies moving quickly to protect their workforce by allowing maximum telework. Office spaces across Washington D.C. and other hubs emptied as telework became the new norm, and for a time, it seemed like this could be the future of federal work.

However, by May 2023, with the expiration of the Federal Public Health Emergency, a new era began. Agencies were encouraged to bring more employees back to the office, and the conversation shifted from health to efficiency. A significant moment in this transition came when the Government Accountability Office (GAO) published a report revealing stark numbers of underutilized office space and the White House Chief of Staff Jeff Zients directed federal agencies to bring employees back to the office starting in the fall of 2023. The goal was clear: aggressively reduce the underutilization of office space.

As the fall approached, legislative efforts began gaining momentum. Lawmakers, particularly from the Republican side, introduced several bills aimed at reducing or regulating telework. The Telework Reform Act, introduced in October 2023 sought to formalize the telework policies, requiring federal employees to report in person at least twice per pay period.

By November 2023, the conversation took on a fiscal tone, as the head of the General Services Administration (GSA), Robin Carnahan, testified before Congress that the federal government could cut up to 30% of its office space. The potential savings? A staggering $60 billion over the next decade. Carnahan’s testimony underscored how costly it was to maintain empty office buildings and signaled a broader shift in how the federal government viewed its real estate footprint.

As 2024 began, more legislative action followed. The Telework Transparency Act, introduced in March 2024 by Senators Gary Peters (D-Mich) and Joni Ernst (R-Iowa) focused on gathering details about the impact of telework on agency performance and property management. It moved swiftly through the Senate by September 2024, showcasing the urgency to efficiently manage the federal real estate footprint.

At the same time, the Federal Use It or Lose It Leases (FULL) Act also gained traction. The bill, led by Representatives Chuck Edwards (R-NC-11) and Marie Gluesenkamp Perez (D-WA-03), passed in the House in March 2024 requiring federal agencies to report their monthly occupancy rates and return any office space that was underutilized for more than six months.

Perhaps one of the most significant legislative proposals came in May 2024, with the introduction of the Back to Work Act by Senators Mitt Romney (R-UT) and Joe Manchin (D-WV). This act proposed that federal employees spend at least 60% of their time working in person and required federal agencies to report on the productivity impacts of telework and any challenges associated with remote work arrangements.

Most recently, in July 2024, the Commerce, Justice, Science, and Related Agencies Appropriations Bill required the Equal Employment Opportunity Commission (EEOC) to report on all employees working remotely. There was also a provision addressing federal employees living outside Washington, D.C., while still receiving D.C. pay rates, another contentious issue as remote work became more common.

Has federal employment declined or risen since the COVID-19 pandemic and the rise in remote work?

Washington D.C. federal employment is up 2.2% from February 2020, but down 3.6% from the prior peak reached in July 2010. Moreover, federal government employment in the Washington, D.C. metropolitan area has generally mirrored national trends. Since 2006, U.S. federal employment has experienced two notable surges: the first in preparation for the 2010 Census and the second following the allocation of $2.5 trillion at the onset of the COVID-19 pandemic. National federal employment has decreased by 12% and 5% from those respective peaks. According to Bureau of Labor Statistics (BLS) data, 12.4% of federal government employees are employed in the Washington, D.C. area, down from a peak of 13.5% in December 2013. While federal employment is up slightly from a pre-COVID level, it is important to remember that the BLS measures employment based on the location of the employer, rather than the employee’s residential location, meaning that remote work or a location of an employee’s home office does not alter this data’s results. 

How does the rate of telework for federal employees compare to full-time workers overall in the U.S.? 

According to the telework or work at home for pay data available from the Current Population Survey collected by the BLS, the rate of telework for some or all of the work hours among all full-time workers across all sectors reached a peak in September 2024. Meanwhile, it reached a peak for federal government workers nationally in March 2024 and is now down 290 basis points from that level. Notably, the telework rate for federal employees remains significantly higher than that of all full-time workers, averaging 896 basis points above the overall rate from October 2022 to the present. Although rates have fluctuated, federal employees have consistently maintained a higher level of telework throughout the entire tracking period.

Check out part two for Washington D.C. office market trends and the 2024 election’s potential impact on the future of the Federal Workforce and office space.