Empty government buildings pose post-pandemic liability and opportunity for taxpayers

There may be no return to normalcy post-pandemic when it comes to working remotely. Not just for businesses, but also for another huge segment of the workforce — government employees.

The magnitude of the liability and potential savings on the line for taxpayers becomes clear in the dilemma faced by bureaucrats in neighboring North Dakota. The AP reports the state government’s biggest and costliest office space remains unoccupied after clearing out because of COVID with little prospect of employees coming back anytime soon.

North Dakota taxpayers are on the hook for nearly $3 million in rent over the next two years for unused office space for a state agency that intends to allow most of its more than 400 employees to work from home indefinitely.

The North Dakota Information Technology Department’s 85,000-square-foot leased space in a newly remodeled, privately owned office building in north Bismarck is unoccupied, except for about a dozen employees, said Greg Hoffman, the agency’s director of administration.

It is the largest and most expensive leased office space in the state, North Dakota Capitol Facilities Manager John Boyle said.

But that’s just a fraction of the total rental bill for North Dakota taxpayers for what’s become minimally occupied government office space over the last year.

Documents obtained by the AP show the state pays more than $10 million in rent for agencies at about 170 locations statewide, at an average rate of $13.33 a square foot.

The IT agency’s original 10-year lease expires in 2025.

Hoffman said the agency will still need some “physical space” but “I don’t think we’ll be asking for as much in the future.”

The same situation confronts governments at every level across the country. As COVID restrictions fade on employees returning to the office, governments must assess how many workers need to be physically present on the premises to do their jobs. California is among the states analyzing the potential savings of assigning more employees to continue working remotely, according to the publication Government Technology.

CIOs [Chief Information Officers] are working with facilities and real-estate executives to understand the long-term impact of the pandemic on their physical space needs. “We are definitely encouraging and working with departments to identify positions that can telework full and part time post-pandemic, which will lead not only to space savings, but also to cost and energy savings as well,” said Jason Kenney, deputy director of the Real Estate Services Division for the state of California. 

By definition government will likely be slow in responding to the inexorable shift to telecommuting. But experts say the trend should ultimately lead to consolidation and efficiencies that benefit taxpayers.

Kate Lister, president of Carlsbad, Calif.-based consulting firm Global Workplace Analytics said that, traditionally, state and local government has been behind on the telework curve. “The resistance in government and elsewhere has been the middle management attitude that you have to be seen and have butts in seats. … It’s just that managers don’t trust their employees, and government, more than a lot of places, has that command-and-control nature,” she said.

But the widespread adoption of remote work starting last year is changing minds. “Forced into it, they find that it’s working very well, and productivity and employee engagement are up,” Lister added.