D.C. Lost 850,000 SF Of Office Space In 2025 As Federal Agencies Downsize Under Push To Cut Costs

A wave of federal agency cutbacks and canceled leases has pushed Washington D.C.’s office market into negative absorption, with 850,000 square feet shed in just six months, according to a new CBRE report.

Washington, D.C. is feeling the effects of a federal pullback, with government agencies vacating major office space across the city. In the first half of 2025, the federal government shed approximately 850,000 square feet of leased space, according to CBRE’s latest Q2 report — a clear sign of the Trump administration’s push to reduce the federal real estate footprint.

This is playing out in high-profile leases. The Department of Justice, for example, renewed its lease at Two Constitution Square for 403,000 square feet, but returned 172,000 square feet in the process, which was a 30% space cut, according to BisNow.

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Meanwhile, the FBI is preparing to relinquish 200,000 square feet at the Woodies Building downtown.

Other agencies are scrapping plans entirely. The U.S. Agency for Global Media, under pressure from officials aiming to trim spending, cancelled a pending 290,000-square-foot lease at 1875 Pennsylvania Ave. NW. The space was originally secured during the Biden administration but later criticized as wasteful by Trump-aligned leadership.

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As a result, the larger D.C. office market posted 396,000 square feet of negative absorption in Q2, adding to the 165,000-square-foot loss in Q1. Overall office vacancy remains high at 22.6% across the city’s 123 million square feet of office inventory.

In contrast, D.C.’s trophy office segment — generally less dependent on government tenants — continues to outperform, with a vacancy rate of just 11.5%.