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State looks to dump leased real estate as remote work leaves offices empty


State looks to dump leased real estate as remote work leaves offices empty

May 24, 2023 | 8:15 pm ET
By Laurel Demkovich
State looks to dump leased real estate as remote work leaves offices empty
A "For sale or lease" sign sits in front of a building at 520 Union Avenue, which used to house a branch of the Secretary of State's office. As part of a statewide effort to minimize government office usage, the Secretary of State is consolidating many of its divisions into a new building in Tumwater. (Laurel Demkovich/Washington State Standard)

The state wants to slash nearly a third of its office footprint over the next four years, as government workers stick with remote work arrangements begun during the pandemic and cubicles they once occupied are now often shared or deserted. 

Take the Health Care Authority, where 98% of the staff are eligible to work remotely. The agency employs almost 1,600 people, Robin Vazquez, its assistant director for employee resources, told a Senate committee in March. But only about 100 to 180 of them, on average, report to work most days at the authority’s Olympia building. “Some days, it’s a ghost town,” Vazquez said. 

It’s not a unique situation. 

While the Office of Financial Management doesn’t have an exact figure for state office vacancy rates, it puts the ballpark average somewhere in the 20-30% range. On the Capitol campus, half as many people are coming into the office when the Legislature is not in session compared to before the COVID-19 pandemic, according to the Department of Enterprise Services.

“We have shifted the entire paradigm,” said Yvonne Knutson, senior budget advisor for facilities oversight and planning at the Office of Financial Management.

An initial step in the state’s real estate downsizing plan is for agencies to leave behind space leased on the private market and move into government-owned buildings. The state leases about 11% of its overall space but in the Olympia area the figure is a much higher 32%. 

The goal is to cut total office space by at least 20% by 2025 and 30% by 2027. The reduction could save the state about $20 million through 2027. Through 2029, agencies plan to close operations at 50, mostly-leased buildings, relocate from 35 sites and demolish seven facilities.

As they begin consolidating, more state employees are likely to start sharing desks. Maurice Perigo, deputy director and chief operations officer at the Department of Enterprise Services, said a target is one desk for every three people who work at least three days a week remotely.

Different downsizing options

In the past, work-from-home arrangements were not the norm at government agencies. 

But after COVID-19 hit in early 2020, governments quickly shifted to telework as part of efforts to keep the virus from spreading. Even as the pandemic has faded, state and local agencies around the country have retained remote work programs, in some cases highlighting them as a perk as they’ve competed in tight labor markets for workers during the past couple of years.

Here in Washington, as more state employees are able to telework, agencies have looked to downsize office space in different ways.

Agencies spread across multiple buildings may consolidate at a single site. That’s the case with the Secretary of State’s Office, which is working to move from six locations into one.

Another option is to relocate several agencies into a single state-owned building. For example, the Natural Resources building may soon house multiple agencies. And the Department of Agriculture is looking to move some of its operations to a new Thurston County location shared with the Department of Labor and Industries. 

At Labor and Industries, more than 90% of employees can work remotely most days, Wesley Kirkman, facilities program director, told Senate lawmakers in March. By this fall, he said, the department is looking to shrink its square footage by about 10%. 

Desk-sharing can help reduce an agency’s space needs, but it can also bring other considerations–like protecting personal information and finding room for file storage. 

Cost-saving opportunities

In a March 10 Senate State Government and Elections Committee meeting, some legislators questioned whether remote work is good for state employee productivity. It’s a concern others have raised outside of Washington in recent months

“How can you stay focused and do that and make sure we’re doing the job we’re supposed to do for the people that we are working for?” Sen. Perry Dozier, R-Waitsburg, said at the hearing. 

While the state doesn’t have data on productivity for remote work, Michaela Doelman, the state’s chief human resources officer, said state employees working away from offices have continued to meet performance goals.

Legislators also wanted to know how much it was costing the state to keep mostly empty buildings open. 

Perigo, with the Department of Enterprise Services, explained that many costs are essentially fixed and that the state pays for utilities, heat or cleaning for entire buildings, regardless of the number of people who go in each day. 

But closing some of those buildings could yield significant savings, he said, and would make the buildings more efficient. The cost to stay in state-owned buildings and repair them as needed would be less expensive than paying for private leases, Perigo added. 

Knutson, with the Office of Financial Management, said opportunities to save money on real estate are “mammoth.” 

As of June 2022, the state government occupied about 11.7 million square feet across 828 office locations statewide. Leases, debt service payments and operating expenses for those facilities cost the state about $218.7 million each year. 

There are, for now, no plans to sell or lease state-owned space, like large buildings around the Capitol campus. Officials expect these sites to come in handy as agencies move out of leased offices.

Knutson, however, said it’s “anybody’s guess” what will happen 10 years from now when it comes to the state government’s office leases and real estate holdings.

She said she hopes the state continues to do what’s best for its employees and not hold onto buildings just in case they need them down the road. “We’re constantly evolving,” she said.