News & Resources

By Jennifer Jette

In January 2025, President Donald Trump issued an executive order requiring federal employees to return to in-person work at their respective duty stations full-time, with exemptions determined by department and agency heads. Such executive order follows a growing trend of many private sector companies ramping up pressure on workers to return to the office – from JPMorgan to Dell and Amazon. Putting politics aside, these directives have the potential to positively impact the D.C.-area economy significantly, particularly the commercial real estate sector. 

Potential Increased Demand for Office Space 

The return-to-work mandates could spark a renewed demand for office space in Washington, D.C. However, this demand differs from pre-pandemic norms as tenants now prioritize features that accommodate evolving work models, including:

1. Flexible Workspaces: Hybrid work models have shifted preferences toward office layouts with open spaces, hot-desking options, and collaborative areas.
2. Amenities and Wellness Features: To attract employees to the office, tenants increasingly value high-quality amenities like fitness centers, outdoor spaces, and advanced ventilation systems. These features help create a more inviting and productive workplace.
3. Sustainability: Environmental considerations play a larger role in leasing decisions. Tenants are drawn to energy-efficient buildings that align with their corporate sustainability goals and help reduce operational costs.

While these trends create opportunities for landlords to attract tenants, they also place pressure on older office buildings that lack modern features, which may exacerbate challenges for less competitive properties.

Revitalization of Business Districts 

The return-to-work mandates also have the potential to help reinvigorate and revitalize D.C.’s struggling business districts. Downtown D.C. is still feeling the impact of the pandemic with office vacancy rates exceeding 20% in Q4 of 2024. While crime is down from last year, several recent incidents such as the brazen mid-day homicide at Union Station and numerous carjackings downtown feed the narrative that the area is dangerous.

With more professionals returning to the office, the perception of these downtown areas as being empty and crime ridden is likely to decrease. Additionally, the mandates will likely stimulate industries like retail and dining that cater to office workers, which have been struggling downtown since the pandemic.

Legal Considerations for Property Owners 

Navigating the complexities of return-to-work mandates and ongoing market changes require careful legal planning. Key considerations for commercial property owners include:

1. Lease Modifications: Landlords must carefully negotiate lease terms to balance tenant flexibility requests with protecting their interests. This includes addressing provisions for early termination, subleasing, and shared workspace arrangements to ensure clarity and mitigate potential disputes.
2. Loan Modifications: Borrowers must also ensure compliance with their loan terms such as occupancy or debt service coverage ratio covenants. To the extent compliance is not feasible, property owners should explore modifications to their loan or determine the best course of action to negotiate a favorable workout with their lender.
3. Renovation and Construction Contracts: Upgrading office spaces requires robust contracts that address budgets, timelines, and liability. These agreements should also include provisions for managing unexpected challenges, such as supply chain delays, regulatory changes, and tariffs, in an attempt to minimize disruptions.

Long-Term Impacts 

Return-to-work mandates mark a step toward revitalizing office use, but they are only one part of a much larger picture. Long-term trends, such as hybrid work models, urban migration patterns, and a growing emphasis on sustainability, will continue to shape Washington, D.C.’s commercial real estate market. 

For landlords, developers, and tenants, adaptability will be key. Embracing new technologies, prioritizing energy efficiency, and finding creative uses for underutilized spaces will be essential for thriving in a rapidly changing environment. 

With strategic planning and investment, the return-to-work era could usher in a period of transformation and renewal for Washington, D.C.’s commercial real estate sector, offering opportunities for growth and innovation in a dynamic market. 

What is still to be seen, however, is how proposed policy initiatives from the newly-created Department of Government Efficiency, including the reduction in the federal workforce, will impact commercial real estate in the D.C. area.  The new commissioner of Public Buildings Service within the General Services Administration has expressed the agency’s desire to eliminate up to half of its total real estate portfolio in the coming years. Given that the federal government is one of the largest employers in the D.C. area, the pledged liquidation of the GSA’s lease portfolio could offset the return to work mandates, in whole or in part.  

For inquiries about the latest return-to-work mandates and their impact on commercial real estate, or for any questions regarding Washington, D.C. commercial real estate law, please contact Jennifer Jette.   

The content on this blog is for informational purposes only and does not constitute legal advice. The information provided should not be relied upon as a substitute for professional legal counsel.