The internal attack on the federal government led by President Donald Trump and Elon Musk has been swift and chaotic. Jobs and funding were among the first to go.
Government buildings appear to be next on the list.
According to reports, the General Services Administration, which manages the government’s real estate portfolio, this month earmarked in an internal list more than 500 office buildings it wants to sell from its 1,500 owned properties nationwide.
Two are in San Francisco, according to a report from the Chronicle: the Nancy Pelosi Federal Building at 90 7th St. and the GSA’s regional headquarters at 50 United Nations Plaza, in the Civic Center complex.
Federal government agencies lease and own more than 3.3 million square feet of space in San Francisco across 11 properties, according to data from CoStar. Around 850,000 square feet are tied up between those two prominent locations.
The Pelosi building was in the news in 2023 because of surrounding street conditions that led federal officials to urge employees to work from home because of security concerns.
The latest directive, according to a GSA spokesperson, is a part of an effort to reduce maintenance costs and support the administration’s return-to-office mandate for federal employees. Stephen Ehikian, a former Salesforce vice president based in San Francisco, was sworn in as the agency’s acting administrator Jan. 20.
GSA is also staffed with Musk associates, including X head of real estate Nicole Hollander and former Tesla engineer Thomas Shedd. Last week, Ehikian quote-tweeted a post from the Department of Government Efficiency, in which the Musk-led unit took credit for selling a vacant building in Washington, D.C., even though the auction was actually initiated in September, during the Biden administration.
The @USGSA is focused on right sizing our real estate portfolio and working with the private sector to invest in our local communities https://t.co/vFzmdlLUUj
— Stephen Ehikian (@sehikian) February 21, 2025
Federal government workers in any “non-core” buildings that are sold will reportedly relocate to offices leased in the private market. But several longtime office brokers in San Francisco told The Standard that the request has yet to be communicated to them.
In theory, nearly 1 million square feet of office demand should be a boon to San Francisco’s sluggish commercial real estate market, but leaving an equal amount of vacant space behind won’t improve numbers in the aggregate.
“Owners that occupy their own buildings are always more cost-effective,” said a San Francisco developer who requested anonymity to protect working relationships. “It makes zero sense, then, to go out into the private market considering all the money they had already sunk into both buildings.”
For instance, the United Nations Plaza building, which was built in the 1930s, reopened in 2013 after an eight-year, $122 million renovation. Around the same time, the government spent $144 million to construct the 18-story Pelosi building, utilizing unconventional green architecture.
Experts agree that the federal government should not expect to recoup costs at either building since the city is littered with newer distressed commercial properties.
If the feds go out shopping for even a quarter of the office space they previously used — say, 250,000 square feet — that requirement is neither cheap nor readily available. From Mid-Market to the northern Financial District, the average asking rent currently ranges from $50 to $70 per square foot, which is likely higher than what GSA pays for its current offices, where it is exempt from property taxes.
One broker pointed out that should the government need to scale up its operations in San Francisco, an improved, tighter office market might drive up rents and costs further; this is why the San Francisco Unified School District is likely to hold onto its real estate even if it decides to close schools.
Additionally, Musk doesn’t have the best tenant track record in San Francisco. In August, X departed its headquarters in Mid-Market despite having leases that didn’t expire until 2026 and 2028.
The federal government owns five buildings in San Francisco totaling 2.8 million square feet, according to CoStar. The Securities and Exchange Commission, Department of Housing and Urban Development, and other federal agencies lease about 571,000 square feet in six other buildings.
If the dump-and-lease strategy comes to pass, it won’t be the first time the federal government suddenly entered the market as a tenant in a big way. In 1987, during a similarly sluggish time for the city, Lyman Jee, a local developer, was stuck with a newly constructed, vacant, 20-story office building at 75 Hawthorne St.
Two years later, the Loma Prieta earthquake forced the Environmental Protection Agency from its previous home at 215 Fremont St. into Jee’s building, where it leased nearly 290,000 square feet. The building, which achieved a LEED Platinum Certification in 2014, was subsequently found to be emitting dangerous chemicals that made workers sick.
Under the Biden administration, the GSA was in the midst of “rightsizing” its real estate footprint, with hopes of disposing of nearly 11 million square feet of federally owned space across the nation. San Francisco offices were not on that list of cuts.
“GSA is actively working with our tenant agencies to assess their space needs and fully optimize the federal footprint,” said a GSA spokesperson. “We’ll share more information on specific savings and facilities as soon as we’re able.”
Sources speculate that the United Nations Plaza building should be easier to offload than the Pelosi building, since it is low-slung and amenable to other uses, such as conversion to housing.
The Pelosi building — which lacks internal temperature control and has elevators that stop only at every third floor — has hardly been popular since opening in 2007.
“If it was in Mission Bay, then maybe you could lease it up,” said the broker. “But at that location right now? Might as well get a stick of dynamite.”