Last week’s memorandum from President Obama directing federal agencies to eliminate excess space and reduce real estate-related spending while moving toward a clean energy economy has raised many questions over the impact the new initiative is expected to have on the commercial real estate market.

The government owns or leases 354 million square feet in more than 2,200 localities across the country, according to the General Services Administration (GSA). Under the new plan, which the president expects to generate $8 billion in savings by 2012, all federal departments and agencies are to evaluate their portfolios and strip away any excess properties, as well as make better use of the real estate assets that they have. Obama called for the federal government to take a more cost-effective, asset-management approach to managing its real estate, identifying and eliminating surplus assets; terminating or not renewing leases that are not cost effective; consolidating operations when possible; increasing occupancy in current facilities through better space management and alternative workplace arrangements; and identifying offsetting reductions in inventory when new space is acquired.

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