Federal employees head back into the office. Will it help downtown?

Daytime activity downtown has noticeably dipped following the 2020 COVID-19 shutdown and the following rise in remote and hybrid work schedules. The absence of workers hammered downtown’s retail industry, leading to the closure of some businesses, such as the Walgreens in the historic Olympia Building.

MARTA trains appeared to be more crowded Monday morning. Foot traffic outside the main government office buildings downtown, however, was not heavy before noon. Federal workers approached by a reporter from The Atlanta Journal-Constitution on Monday morning declined to comment.

Many downtown business owners hope to see a lift from the return of federal workers.

“We’ve been told that they’re coming back for awhile now, but it hasn’t happened,” said Shafi Jamil, whose parents have owned Subs & Salads Junction since 1996.

The immediate impacts of that return, however, will likely be counteracted — at least some — by the wave of layoffs taking place at blazing speed as Trump and his allies cull the size of federal workforce. Some agencies, such as the Atlanta-based Centers for Disease Control and Prevention, saw about 10% of its employees laid off, and few federal departments were left unscathed during Trump’s first month back in the Oval Office.

“Pushing more government workers to go back to the office will be good for the commercial real estate sector,” said Tomasz Piskorski, a finance professor at Columbia University’s business school. “But on the other hand, cutting head count has the opposite effect.”

With the federal government following in the footsteps of many private companies requiring their employees to report in-office every weekday, downtown stakeholders expect additional morning commute traffic and foot traffic in areas that have struggled to support retail and restaurants.

“Hopefully it’s not just additional cars on the street, but it’s people walking the sidewalks and inhabiting the businesses and seeing what’s changed,” said April Stammel, who handles retail leasing within the 10-block South Downtown development district owned by Atlanta Ventures.

Credit: Miguel Martinez-Jimenez

Credit: Miguel Martinez-Jimenez

A spokesperson for the U.S. General Services Administration, which oversees the government’s leased and owned properties, said its “approaching its return-to-office strategy through the implementation of stages of employees coming into offices.” The number of returning employees and their in-office schedules are dictated by individual agencies and was not provided.

“GSA is committed to ensuring all employees have a workstation and suitable space when they return to in-person work,” the spokesperson said.

Consistent business

A half-mile stretch of Martin Luther King Jr. Drive between the Downtown Connector and the Five Points MARTA Station acts as a tour of government agencies. The Gold Dome and Atlanta City Hall anchor the corridor, while a trio of federal buildings define the area around Five Points.

Stammel said the absence of federal workers cratered retail in the area. A corner store called Buddy’s Snack Bar along Mitchell Street was a clear victim.

“COVID hit and he had some pretty substantial government catering orders that were recurring,” Stammel said. “And the minute that those went away, he said there was no business for me down here, and he had to leave.”

Thai restaurant TydeTate Kitchen and coffee shop Spiller Park have managed to open and survive in South Downtown, but Stammel hopes more federal feet on the street will further boost business. Delilah’s Everyday Soul is set to join the area later this year.

Startup incubator Atlanta Tech Village opened its South Downtown location within the 115-year-old Sylvan Hotel in January, and Stammel said the dozens of workers based out of there have boosted restaurant sales.

“It’s been remarkable what even that additional 50-60 people in the building has done to the businesses down the street,” she said. “You need like 1% of those (federal workers) to actually take a walk around the neighborhood every day, and it would make a sizable difference.”

LeBlanc echoed that optimism, saying lunch rushes and office parties are vital for business. Private companies have generally led the return-to-office push in Atlanta, which he said has been felt.

“A lot of the private sector companies as they were bringing people back in engaged in events,” he said. “Putting together a happy hour or small dinners … making work fun again.”

Same space, fewer workers

The federal government is one of Atlanta’s largest commercial real estate owners and office tenants, but its presence is shrinking.

Since the Obama administration, the federal government has shrunk its leased office portfolio about one percentage point each year.

Spearheaded by Tesla CEO Elon Musk, the Department of Government Efficiency has already canceled more than 150,000 square feet in office leases in metro Atlanta, a figure first reported by online outlet Bisnow. GSA indicated that widespread review and scrutiny will continue.

“GSA is reviewing all options to optimize our footprint and building utilization,” the agency spokesperson said. “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.”

Credit: Miguel Martinez-Jimenez

Credit: Miguel Martinez-Jimenez

The city’s largest federal buildings — the Sam Nunn Atlanta Federal Center, the Richard B. Russell Federal Building and the Martin Luther King Jr. Federal Building — are all owned by GSA, not leased. The U.S. Environmental Protection Agency is the primary tenant within Sam Nunn and began its return-to-office push Monday.

“It is a top priority of the president, and therefore a top priority of mine, to have our offices fully staffed with employees who want to further our mission every single day,” EPA Administrator Lee Zeldin said in a statement. “I look forward to making my way down to Atlanta to visit our Region 4 office very soon, and I hope our building is the busiest on the block.”