David Dayen writes:

It hasn’t gotten much attention, but one of Elon Musk’s major DOGE initiatives is a massive fire sale of federal office space. Despite forcing federal employees back to the office by abolishing telework programs, Musk and company want to unload a large number of unused properties and recoup that money for the budget, a process that could expand if worker purges continue.

That theoretical win-win, however, will soon come into contact with the realities of commercial real estate markets, which are particularly depressed when it comes to the very type of inventory the government wants to sell. Older office space is experiencing record vacancy levels, with owners struggling to refinance the buildings. Putting large amounts of it on the market could have dramatic consequences, including damaging the economy in cities like Washington, D.C. It could lead to widespread defaults in financial securities linked to commercial mortgages. And if unchecked, that could lead to broader pain.

“Every additional shock is painful,” said Stijn Van Nieuwerburgh, a professor of real estate and finance at the Columbia Business School. “I’m not sure they’ve thought this fully through.”

“Not thought through” stands to be a familiar theme of the new government brought to you by Silicon Valley’s masters of the universe. [Continue reading…]