V
ermont's federal footprint is shrinking, with the Department of Government Efficiency (DOGE) terminating leases for three office buildings in the state. The affected properties include a NOAA facility in Barre, a HUD building in Burlington, and an NRCS office in St. Johnsbury. According to DOGE's website, these closures will yield savings of $170,306 from the conservation service lease, $13,161 from the NOAA lease, and $77,079 from the Burlington HUD lease.

    This downsizing effort is part of a broader federal initiative to cut costs, with the U.S. General Service Administration (GSA) identifying 440 non-core properties nationwide for sale or closure. In Vermont, these include the Social Security office building in Montpelier, the U.S. Post Office and Customs House in St. Albans, and the Winston Prouty Federal Building in Essex.

    Landlords leasing to GSA across the country are feeling uncertain about their future prospects, as office space vacancies continue to rise. In Vermont, real estate experts describe reactions from landlords as "all over the map," with some expressing concerns about lease terminations and others citing uncertainty about federal policies.

    The commercial real estate market in Vermont is already facing challenges, with office vacancy rates hovering between 11 and 12%. Higher interest rates and fewer tenants are disincentivizing banks from lending to landlords, who may struggle to finance or refinance their buildings. As a result, smaller office spaces under 5,000 square feet are more likely to be affected by the market downturn.

    While the federal return-to-office order may seem counterintuitive in light of these developments, it's unlikely to impact office vacancies in Vermont, as most leased properties were already committed before the policy change.