Philadelphia Inquirer: Dwight Evans calls on IRS to recommit to University City as feds consider downsizing office space.

The federal government’s lease at the enormous office building doesn’t
terminate until 2030, but the Philadelphia-area Congressional delegation
wants renewal negotiations to begin now.

U.S. Rep. Dwight Evans and much of the Philadelphia-area congressional delegation want the
federal government to recommit the Internal Revenue Service (IRS) — and up to 5,000 of its
employees — to University City.

In a Dec. 19 letter, which Evans shared with the media earlier this week, they urged the Genera
Services Administration (GSA) to begin negotiations for a new lease at Cira Square at 2970
Market St. Located next to 30th Street Station, the 863,000-square-foot former post office is
slated to house local IRS workers until 2030.

“Repurposing the building for alternative purposes subsequent to a departure by the IRS could
only be done at a considerable expense and would introduce employment instability in a
neighborhood crucial for greater regional economic revitalization,” the letter reads.

The plea comes as the federal government reevaluates the need for its current volume of office
space in the era of remote and hybrid work. As of last April, the GSA leases 180 million square
feet of office space across the country, and the federal government owns 500 million square feet.
While Evans hasn’t heard that the GSA is considering leaving 2970 Market, he said wanted to
begin negotiations sooner rather than later.

The letter is also signed by Reps. Madeleine Dean, Mary Gay Scanlon, Brendan Boyle, Brian
Fitzpatrick, Susan Wild, and Chrissy Houlahan.

“I’m trying to just send a message that is about jobs and opportunity,” Evans said in an
interview. “That’s the message I sent along with my colleagues.”

Brandywine Realty Trust began redeveloping the former U.S. Postal Service building into office
space in 2007, then leased it with an accompanying parking garage to the GSA in 2010. The IRS
was the intended tenant from early on and insisted on a number of defensive installations that
made the building inaccessible to the public.

Brandywine sold the building in 2015 for $354 million before joining with two other investors to
buy it back again in 2022 with $28.6 million toward a $383 million purchase. As part of the deal,
they have a 20% equity stake and are responsible for managing the property, according to a 2022
story in the Philadelphia Business Journal.

Brandywine is heavily invested in that area of the city. The company is currently developing the
multibillion Schuylkill Yards mixed-use project in the area and owns the nearby FMC Tower.

Brandywine declined to comment for this story. A GSA spokesperson said only that they are
working with the IRS to determine their future office needs in Philadelphia.

The federal government’s return-to-work policies have proven to be a divisive subject, with
Republicans in Congress arguing that workers need to return in-person. Washington D.C.’s
government has also called for a federal return-to-office, as remote work has contributed to the
hollowing out of its downtown since 2020.

A recent report from the Government Accountability Office (GAO), which surveyed 24 federal
headquarters in the D.C.-Baltimore area, found that only 25% of available office space was being
used on average across the study area. At the highest range, only 39-to-49% of office space was
being used.

The federal government is considering downsizing office space “everywhere and for good
reasons,” said Daniel Schuman, governance director at the Washington D.C.-based POPVOX
Foundation, which focuses on modernizing American government. “It costs taxpayers millions
and millions of dollars to maintain these facilities, particularly when they’re mostly empty.”
The GAO found that the federal government spent $5 billion a year to lease office buildings and
that half of its leases were due to expire between 2023 and 2027.

In the letter, the Philadelphia-area congressional delegation acknowledges that the GSA doesn’t
usually begin reviewing future options until four years out from the end of lease — 2026 in this
case. But they encouraged the agency to consider negotiations anyway.

“We urge you to consider authorizing the beginning of discussions with IRS, as well as relevant
stakeholders and property owners,” the letter reads, “to explore whether the magnitude, timing,
efficiencies, and long-term interests of the federal government might be best served by an out-of-
cycle negotiation for a future lease at Cira Square.”