State Plans to Cut Its Real Estate Costs by Nearly $40 Million Annually

Nearly half of the state of Oregon’s more than 45,000 employees rarely go to their offices, and officials are ready to take action—by shrinking the office-space footprint.

The state’s top administrator, Berri Leslie, the director of the Oregon Department of Administrative Services, told agency managers in an Oct. 28 letter that it’s time to reduce state office space in recognition of the new reality.

“Our office footprint statewide is extremely underutilized,” Leslie wrote. “Survey results revealed approximately 45% of state employees are designated remote or hybrid and most agencies are using about 25% or less of their offices. Given the permanence of hybrid work, DAS estimates the office footprint can be reduced or identified for reduction by 30% by year end 2027, saving approximately $78 million per biennium.”

Remote work, of course, spread across the public and private sectors during the pandemic and many workspaces around Oregon continue to be lightly used. That’s caused a glut of office space in Portland and every Oregon city, a factor of which Leslie is well aware.

“Exercise caution in rural areas and smaller markets to avoid economic disruption,” she wrote.

Leslie also urged managers to make sure if they keep space it’s in state-owned buildings rather than in privately owned ones. She encourages agencies to co-locate when possible and, if they must lease new space, to make sure “all new market leases will be located in areas that support economic development or revitalization wherever possible.”

One complication: Leslie told managers they should also require employees who work at home to come to the office periodically. She wants to “require agencies with hybrid employees to establish in-office work (with meaningful engagement) approximately 1–4 days each month.”

In response to a question about whether the move to employees working from home is producing the quantity and quality of work the state requires, DAS spokeswoman Andrea Chiapella pointed to policies Gov. Tina Kotek put in place after her election.

“At the start of her term in 2023, Gov. Kotek implemented 11 rigorous initiatives to evaluate agency operations and put some consistent rigor around common operations,” Chiappella says. The information the agencies submit is here and their strategic plans, also new under Kotek, are here.

Chiapella says the motivation for Leslie’s memo is Kotek’s desire for the state to operate more efficiently. All options, including the sale of state-owned properties, are on the table.

“Gov. Kotek has asked DAS to look for opportunities to improve agency performance to better serve Oregonians and to save taxpayer dollars,” Chiapella says. “The hybrid workplace has created unique opportunities to recruit and retain employees. It has also provided the opportunity to rethink the traditional office space, save money on consolidating buildings and consider more creative uses of physical spaces.”