David Dayen describes how the effort by the DOGE-infiltrated General Services Administration (GSA) could lead to an even greater office building valuation meltdown (boldface mine):

This would be exactly the wrong strategy for the moment, as Van Nieuwerburgh explained. A reliable government tenant is the only thing making any building the government currently owns at all valuable. “If the government sells the building and also vacates it, that building will be close to worthless, especially in a market with a lot of vacancy,” Van Nieuwerburgh said. Maybe some buildings could be converted into apartments as a potential win-win, but those conversions are maddeningly complex and expensive, and would require selling at even bigger discounts to make the financing work…

“The federal government as a tenant is considered to be a very strong creditor,” said Van Nieuwerburgh. “If the GSA leaves, that building will be marked down dramatically. If you have to refinance the debt, you will have a hard time refinancing that mortgage.” Van Nieuwerburgh noted that in 2024, 39 percent of office loans that came up for maturity defaulted, and fewer than half actually paid off the loan. If a building is worth less, has reduced cash flows, and higher interest rates, it’s something of a perfect storm for defaults. And a GSA fire sale would be what precisely triggers that.

The reason I wrote “even more of an office building meltdown” is that, in D.C., with the exception of some A-tier buildings, office prices are cratering, often sixty to eighty percent less than the previous sale price. I don’t see how the GSA walking away from a bunch of leases while simultaneously the selling buildings the government owns will do anything other than crush prices further–and I’m old enough to remember when downtown office workers were to supposed to return to the office to keep office building tax evaluations from cratering (sorry, I meant increase productivity).

Though I suppose for certain well-connected people this would be a great opportunity to buy up a bunch of cheap real estate.