A view capturing the historic and contemporary federal buildings in downtown Boston.
The federal government is exploring the sale of three major office buildings in downtown Boston, including the JFK Federal Building and the O’Neill Federal Building. This decision stems from high maintenance costs and low occupancy rates, as federal office spaces remain underutilized post-pandemic. The initiative, led by the Public Buildings Reform Board, reflects a significant assessment of federal real estate management in light of rising expenses associated with aging properties. Potential sales could reshape Boston’s commercial real estate landscape during a challenging market period.
Boston – The federal government is contemplating the sale of three significant office buildings in downtown Boston: the John F. Kennedy Federal Building, the Thomas P. O’Neill Jr. Federal Building, and the John W. McCormack Post Office and Courthouse. These buildings, collectively covering 2.6 million square feet and valued at over $586 million, are among the largest federally-owned properties in the city. The consideration for their sale comes as part of an assessment by the Public Buildings Reform Board (PBRB), which seeks to address underutilization and high maintenance costs associated with federal real estate.
The PBRB, an independent body established by Congress, recently convened with the city’s Planning Department to explore potential sale options. A public hearing focused on the Kennedy and O’Neill buildings, both situated in prime locations near City Hall Plaza and North Station. The McCormack building, known for its historic significance and designation on the National Register of Historic Places, serves crucial functions as the U.S. Post Office and Courthouse and has been identified as suitable for potential residential redevelopment.
Currently, federal office buildings like these are operating at low occupancy rates, with utilization levels reported between 25% and 50%. Consequently, the costs of maintaining these spaces are substantial, estimated to range from $36,664 to $309,212 per employee depending on attendance patterns. The PBRB is weighing the option of consolidation to curtail these expenses against the potential revenue generation from property sales.
As the COVID-19 pandemic continues to reshape the commercial real estate landscape, any sale of these buildings could mark the largest transaction in Boston’s office market since the onset of the public health crisis. The PBRB has until December 2026 to submit a final recommendation regarding these properties, although an earlier decision is anticipated. Optimism about the market’s potential presents opportunity for significant financial returns on these established federal assets.
There is also mention of the PBRB considering various methods for disposing of the properties, which might include outright sales, joint ventures, or ground leases. The board’s mission reflects broader concerns regarding the aging federal property portfolio, with the average age of buildings managed by the General Services Administration (GSA) exceeding 50 years, leading to mounting repair costs that Congress can no longer solely subsidize through appropriations.
The ongoing decline in Boston’s commercial office market values since the pandemic has raised concerns among potential stakeholders. In particular, the buildings included in this review have seen significant drops in their sales prices compared to pre-COVID levels. The JFK building, constructed in 1966, includes twin towers covering 1 million square feet, while the O’Neill building, completed in 1985, spans 810,407 square feet and is adjacent to the mixed-use Hub on Causeway project. The McCormack building, a granite-clad structure, is notable not only for its governmental functions but also for the development potential it represents in a changing urban landscape.
Additionally, the PBRB is exploring the sale of other federal properties in Massachusetts, including a warehouse and parking lot located at 11 Channel St. near the Seaport. This broader initiative reflects a concerted effort to streamline federal real estate management while maximizing potential revenues for the government. With the local real estate development community poised to respond to any forthcoming announcements, the potential sale of these prime downtown properties remains a high-stakes topic in the ongoing evolution of Boston’s commercial landscape.
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