The Office of Management and Budget (OMB) has issued a National Strategy for Real Property that directs agencies to lower the real estate footprint beginning next year.

In a memo to federal agencies, OMB Controller Dave Maulder said the National Strategy for Real Property “establishes a new strategic framework through which the government can manage its real property.” This framework will “guide agencies’ real property management, increase efficient real property use, control costs, and real property holdings,” he stressed.

In 2013, OMB ordered agencies to freeze their domestic real estate footprint and better utilize existing space through consolidation and higher occupancy rates. Under the “Freeze the Footprint Policy,” agencies were prohibited agencies from increasing “the total square footage of their domestic office and warehouse inventory compared to the 2012 baseline.”

OMB is calling the policy a success. Between 2012 and 2014, agencies cut 21.4 million square feet of space, according to OMB. In 2014 the government “disposed of 7,350 buildings, 44 million square feet of space, and eliminated $17 million of annual operation and maintenance cost,” OMB said.

The new Strategy will build on this success, Mr. Maulder stressed. The Strategy has three key steps: 1) freeze inventory growth; 2) measure performance; and 3) reduce real estate inventory.

The inventory freeze will continue through 2020. Measuring the performance of office and warehouse assets will “identify opportunities for efficiency improvements through data driven decision-making.” Inventory will be reduced by consolidating, co-locating, and disposing properties. The disposal of excess and underutilized properties will also be accelerated.

The “Reduce the Footprint” (FTF) policy issued to implement the Strategy directs agencies to establish targets for annual cuts in domestic buildings square footage and implement space design standards in using domestic office space.

The FTF requires agencies to develop a five-year Real Property Efficiency Plan by July 10, 2015. Each plan will contain a description of internal controls that: describe the processes used by agencies to identify offsets when adding space; describe internal reviews and certification processes required for new leases, acquisitions, and expansions; and justification documentation when not applying standard designs.

Each agency plan will also: describe its use of the President’s Management Agenda performance benchmarks; report on its reduction targets for office and warehouse space; report on its disposal targets for owned spaces; and a plan to identify opportunities for reducing office space and warehouse. Agencies will also document investment costs and total cost reductions through disposal of leased space and owned buildings and provide an explanation of actions taken to maximize and increase office space efficiency.

The agency plans will identify offsets for any growth in total office space “to ensure that there is no net increase in the size of owned and leased office inventory. The Department of Defense (DoD) will be able to count as offsets any office of warehouse space at military installations that are closed or realigned under the Defense Base Realignment and Closure (BRAC) process. However, properties “mothballed,” enhanced use leases or outleases, and properties for which the Federal Real Property Profile (FRPP) use code is changed to other than office or warehouse after the baseline is finalized cannot be counted as offsets.

The final Real Property Efficiency Plan is due September 10, 2015. Each year after that, agencies will submit a plan for the next five-year period until 2020.