Musk’s DOGE moves to cancel leases for federal offices across Illinois

Already reeling from the pandemic and the work-from-home trend, the office market in downtown Chicago and across the metro area is facing another big hit as the federal government — which leases space in more than 100 buildings in the city and suburbs — has begun to terminate many of those deals.

As part of its efforts to curb what the new president and his aides describe as rampant waste, the Trump administration has set a goal to shut down half of the properties the government owns and cancel half the leases with private property owners.

The General Services Administration, which manages buildings the government owns and manages federal leases, pays landlords more than $91 million a year in rent for about 2.4 million square feet of office space in 112 properties across the Chicago area, according to Trepp Inc., a New York-based firm that analyzes commercial real estate finance industry data.

And the federal government has contractual rights to terminate more than a third of those leases by the end of the year, potentially siphoning about $30 million a year in rent from owners of properties here, said Tom Taylor, senior manager of research at Trepp.

Administration officials have not said where or if they would relocate employees who work in those offices, or where the functions of those offices would be performed going forward.

“In a market that’s already contending with large shifts in demand from the influence of remote work, changing the office demand paradigm, any large-scale GSA terminations could really exacerbate the existing problems with vacancy and office values in that market,” Taylor said.

Some building owners with federal leases rely on them to help service debt on the properties, Trepp data shows. But Taylor added that leases with the federal government represent just a little less than 1% of all the office space in the Chicago area — far less than in Washington, D.C., and some other metropolitan areas with a large federal presence, such as Kansas City.

The so-called Department of Government Efficiency, led by Elon Musk, has listed seven leases in Illinois as being marked for imminent termination. At the DOGE website, the administration claims it will save the government more than $2.4 million a year by shuttering federal facilities in rented properties in Chicago, Hoffman Estates, Rockford, Rock Island, Champaign, Springfield and O’Fallon.

The office that would be shut down in Chicago belongs to the Federal Transit Administration and the move would save more than $471,000 a year, according to the DOGE website. The FTA’s office for a six-state region is in downtown Chicago, at 200 W. Adams St.

According to the DOGE website, the lease is being terminated for a Social Security office in Rockford and a National Archives facility in Hoffman Estates. The website does not provide further details about the leased space in the northwest suburb, but the government has rented an old furniture showroom in Hoffman Estates to store papers for the presidential library of former President Barack Obama.

That lease was scheduled to end this year anyway, officials had said, because the library will become completely digital. DOGE credits its decision on the Hoffman Estates property with saving almost $1.5 million.

For now, a photo of the former president and his wife Michelle Obama remains on the wall of the lobby of the building in Hoffman Estates. A spokesperson for the Obama Foundation referred questions about the facility to National Archives officials, who did not respond to a request for comment from WBEZ.

DOGE says its list online represents a “subset” of what it’s doing with federal real estate interests and promises to update the data frequently.

And those closures reported already are just a few of many leases that would be terminated in the coming months, a GSA source told WBEZ.

The source — who requested anonymity because officials instructed employees not to speak to the media — said the leases that are being brought to an end imminently include space in several other buildings in downtown Chicago in addition to the FTA offices at 200 W. Adams.

The buildings with federal leases that would soon end, the source said, include office space within the Rookery Building at 209 S. LaSalle St., 231 S. LaSalle, 224 S. Michigan Ave. and 175 W. Jackson Blvd.

More than 30 federal leases in Illinois are being targeted, including properties in Oakbrook Terrace, Lisle, Schiller Park, Downers Grove, Naperville and Tinley Park, the source added.

A GSA spokesperson in Chicago declined to detail the cuts that are being planned.

“GSA is reviewing all options to optimize our footprint and building utilization,” the spokesperson said in a statement to WBEZ. “GSA is actively working with our tenant agencies to assess their space needs and fully optimize the federal footprint, and we’ll share more information on specific savings and facilities as soon as we’re able.”

Although some local elected officials in the largely Democratic state fear the closures will significantly diminish public access to government services, Cook County Republican leader and county Commissioner Sean Morrison said he believes the real estate moves directed by DOGE are garnering clear and bipartisan support from voters and taxpayers.

“The main crux of this whole thing is the use of taxpayer money,” Morrison said. “This has happened over the last 40 years, where there's been money spent in a wasteful manner.

“The whole DOGE movement is basically to cut generational waste that occurs on a yearly basis. They truly do believe that it's close to a trillion dollars in annual waste a year.”

Marcy Owens Test, group head of the Federal Lessor Advisory Group at CBRE, said she and other analysts are trying to get more information from administration officials about what exactly their plans are for the government’s real estate dealings.

The government’s 50% goal for reducing leases “would be a fairly dramatic cut, and that's why it's important to understand how the administration plans to get there,” she said. “Where's their process to get to that square footage reduction? And that's not clear yet.”

Owens Test noted the federal government already had been gradually reducing the total amount of commercial space it leases for more than a decade, under Republican and Democratic presidents. The leased space for federal offices is down about 13% since the peak in 2013, she said.

The office vacancy rate in Chicago was 24.4% at the end of last year, with another rise in vacancies in the final three months of 2024, according to CBRE.

Dan Mihalopoulos is an investigative reporter on WBEZ’s Government & Politics Team.