US government to shed $750 million worth of properties

A dozen multimillion dollar properties owned by the U.S. will go on sale to the public over the next few months in high-demand locations like Silicon Valley.

The United States government plans to shed $750 million worth of properties, based on the recommendations of the Public Buildings Reform Board, commissioned by former President Obama’s Federal Assets Sale and Transfer Act of 2016. The act requires the Office of Management and Budget and the General Services Administration (GSA) to identify opportunities to reduce the federal government’s real estate holdings.

The government owns 885 million square feet of real estate in the U.S., which costs a total $8 billion to maintain each year. It had 3,817 unused or underutilized buildings in 2018, out of a total of 57,840 owned buildings, according to most recent GSA data.

The federal government is taking “a closer look at what properties are non-mission critical to agencies, and trying to incentivize them to… consolidate their offices and take a harder look to get surplus property back on the tax roll,” said David Winstead, a member of the Public Buildings Reform Board.

The reform board made the decision to sell these sites in six months, after legislative delays left the board with a tight deadline. Barring unforeseen delays, these properties have been approved to enter the market within the next five months.

The federal agencies that own the properties are incentivized to sell its real estate because they become eligible to receive some profits from the sale of a property after six years. The property sale is administered by the GSA and money earned from the sale will go into the U.S. Treasury’s General Fund.

Properties up for grabs

Southwest Fisheries Science Center; Pacific Grove, Calif.

Perhaps the most stunning property for sale is the Southwest Fisheries Science Center, an abandoned fishery in Pacific Grove, Calif. Surrounded by luxury residential properties, hotels and golf courses, the beachside property near Monterey, Calif. is likely to be snapped up by developers looking to build a luxury development.

“Some properties were certainly more dramatic than others,” said Winstead, referring to the Department of Commerce-owned, 4.2-acre property., adding that the “Southwest Fishery Science Center is a spectacularly beautiful setting, overlooking the ocean.”

While the property’s asking price has not yet been determined, residential Pacific Grove properties asked for an average $752 per square foot in 2019, according to a market report by Zillow, which could mean the 11,220-square-foot fishery could be listed for about $8.4 million, if not more for its beach access, which adds more value to the property.

The site has been empty since 2014. Currently, only two part-time employees work on the site. In addition to the profit made on the sale, the government will save $1.2 million in deferred repairs to the outdated building, built in 1952.

GSA’s Menlo Park campus; Menlo Park, Calif.

The GSA’s 17-acre campus in Menlo Park will also go on sale, opening up highly-desired real estate for wealthy investors and tech companies in Silicon Valley. The site is occupied by the United States Geological Survey, which will be relocated and consolidated to an office in Mountain View, Calif.

In 2019, office building sales in the surrounding county went for about $638 per square foot, according to market data by Cushman & Wakefield. So at 412,663 square feet the property could be worth about $263 million

“The Menlo Park area is the epicenter of the technology sector and home to such companies as Google, Apple, Intel and E‐Trade and the real estate market is one of the strongest in the country,” the Public Buildings Reform Board wrote.

Nike missile site; Gaithersburg, Md.

The Department of Commerce will be selling a patch of land — a 13.7-acre former missile site in Gaithersburg, Md., near Washington, D.C.

The Nike site, not affiliated with the Oregon-based athletic footwear company, was home to the Nike missile battery W-92. It was the “line of sight” missile defense base against Soviet attacks during the Cold War, according to reports.

The site includes a barracks, a kennel, launch pads, and storage buildings. Since operations closed in 1968, the Department of Commerce-owned site mostly sits empty, except for hosting occasional robotics tests, which will be relocated.

Last year, industrial property sales in Gaithersburg averaged $153.75 per square foot, which would bring the Nike site’s value to about $5 million, according to 2019 Cushman & Wakefield market reports.

“Demand for developable land is strong in the Gaithersburg area, particularly because of its proximity to Washington D.C.,” wrote the Public Buildings Reform Board.

National Archives Seattle facility; Seattle, Wash.

But not everyone is happy about these sales. A beloved Seattle library, the Federal Archives and Records Center, is a 73-year-old building on a 10-acre lot — and it needs $2.5 million in renovations. The building currently holds historical records for Alaska, Hawaii, Idaho, Oregon, Washington, and the South Pacific, including treaty documents for 272 Native American tribes. Records will be relocated to facilities in Missouri and California.

The community mourned the dislocation of Pacific region records with cultural significance, according to reports. Senators and representatives from Washington, Alaska, Oregon and Idaho also protested the property sale, citing its importance and significance to the region. Three tribes in the area, the Muckleshoot, Puyallup and Port Gamble S’Klallam, also sent letters to the Office of Management and Budget, according to reports. Washington State Attorney General Bob Ferguson has assigned an attorney to review the Public Buildings Reform Board’s decision, according to reports.

“There are a lot of factors, which we obviously as a board are very sensitive to. All of these have come through a review process. We didn’t go in and grab something that the agency didn’t feel was surplus,” said Winstead, citing the board’s prioritization of minimizing job loss and coordinating with communities.

The property was worth $43.17 million in 2013 when it was last assessed, according to public records. But land values in the area have grown almost 25% since then, according to a LoopNet market report.

Among the other properties the U.S. government plans to be put up for sale include an Idaho Falls office building, a Harrisburg, Penn. courthouse, warehouses in Auburn, Wash., and a mixed-use building in Laguna Niguel, Calif.

Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter

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