DOGE’s Next Target: Government Office Space
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Why is shopping in person less enjoyable?
Why buying stuff in person is so much less enjoyable than it used to be. Plus, Doja's next target? Government buildings. And D.C. 's entire office real estate market could feel the impact.
By and large, with a shrinking government, a shrinking workforce, things do not look good for Washington in the immediate future.
And the pensions of thousands of employees on church retirement plans may be in trouble. It's Tuesday, February 25th. I'm Alex Osola for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. First up, yet another sign that consumers are not feeling too chipper.
How is consumer confidence affecting the market?
The conference board released its closely watched index of consumer sentiment for February. Consumer confidence fell for the third straight month, with the biggest month-on-month drop in the last three years. Also, for the first time since June 2024, consumer expectations crossed the threshold that usually signals a recession ahead. Economic worries and tariff fears dragged on U.S. markets today, with tech stocks among the hardest hit after yesterday's sell-off. The Nasdaq fell about 1.3 percent, and the S&P 500 dropped roughly half a percent, while the Dow ticked up about 0.4 percent. The rise of online shopping has made it easy to buy pretty much anything at any time without ever leaving your couch.
Unfortunately, it's also made the experience of shopping in person much, much worse. My colleague Pierre Bien-Aimé spoke with Suzanne Kappner, who writes about the retail industry for The Wall Street Journal, and asked her why the in-store experience has become worse for many customers.
What factors contribute to the decline of in-store shopping?
Retailers, they've expanded the breadth of their online offerings tremendously in recent years, you know, to compete with this endless aisle that... Amazon offers. On top of that, they've been opening smaller stores. So there's been a confluence of factors that have contributed to this sense by consumers that, God, shopping's not so much fun anymore. IBM conducted a survey last year that found that Three-quarters of consumers actually prefer shopping in physical stores, but only 9% are satisfied with the in-store experience. And a big complaint is that the stores lack product variety and availability. The consulting firm Alex Partners recently looked at 30 retailers. and compared their online assortment to what they carry in stores.
And they found on average only 9% of the online offering of women's clothing was available in physical stores. For department stores, the percentage was 7%. At mass merchants, it was only 2%. Specialty retailers were a bit better with about a third of their online goods available in stores. And does this have any effect on the bottom line when online purchase versus one done in store? You know, it's funny because a lot of retail CEOs will say, well, I don't really care where a customer shops. They can shop wherever they want, online, in-store, a combination of the two. But in fact, when a customer shops in-store, it's much more profitable than when they shop online because the cost of packing that order and shipping that order and then online returns tend to be higher.
All of that eats into profits of online orders.
That was reporter Suzanne Kappner speaking with Pierre Bien-Aimé. Coming up, why Doja's effort to cut federal leases could be a hit to the office market from California to D.C. That's after the break. In Washington, 21 federal employees who had been working with Elon Musk's Department of Government Efficiency have resigned. In a letter, the ex-employees who didn't list their names criticized the Doge process and said that they wouldn't offer their expertise to overhaul the government if it meant undermining essential services. Meanwhile, Doge is targeting nearly 100 leases at government agency offices for termination or consolidation, on top of the Trump administration's effort to sell two-thirds of federally owned office buildings, which we've talked about before on the show. Abandoning so much office space could have a ripple effect on the office market in Washington and beyond.
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Chapters
6 chapters
1
Why is shopping in person less enjoyable?
0:03–0:51
2
How is consumer confidence affecting the market?
0:51–1:53
3
What factors contribute to the decline of in-store shopping?
1:53–4:44
4
Why are government office leases being targeted?
4:44–6:17
5
What impact could government lease changes have on the office market?
6:17–7:31
6
How might DC's office market be affected by government lease changes?
7:31–11:07
Speakers
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