The 2025 Federal Government Shutdown: Insights for CRE Owners and Operators

The 2025 federal government has shut down, as of October 1, 2025. This is a full government shutdown, which means that Congress did not pass any appropriations bills or extensions to fund the federal government. While it is likely that Congress will pass appropriation bills at some point, we can’t be certain when that will take place. During the downturn, certain funding faucets are essentially paused, which can have an impact on commercial real estate owners and investors. Let’s take a look at a few of the largest first order impacts:

Federal Employees Furloughed

• An estimated 750 thousand federal workers have been furloughed, according to Congressional Budget Office estimates. This means that most are unlikely to go into the office, reducing consumer spending in impacted areas. Food service and retailers in impacted areas are likely to see weaker demand during the shutdown.
• Essential federal employees, including most military personnel, law enforcement, and other critical services, are likely to continue working, but with no pay, which could further weaken consumer spending during the shutdown.

Discretionary Funding Pauses

Healthcare and Life Sciences

• New grant and funding awards are paused, as are grant proposal reviews and admissions to new clinical trials. This can mean many clinical stage pharmaceutical, medical device, and life science companies do not receive critical funding to continue research and development efforts.

Government Contractors and GSA Tenants

• Non-essential contracts held by private contractors may be paused, resulting in weaker cash flow and liquidity for certain federal contractors to make necessary payments, including rent.
• No new General Services Administration (GSA) leases will be signed during the shutdown.
• Leases that are with GSA or other federal agencies are unlikely to receive rent payments on time, but are likely to receive back rent when the government shutdown concludes.

Companies Reliant on SBA Loan Approvals or Other Federal Loan Programs for Funding

• New businesses where founders are reliant on Small Business Administration (SBA) loans to fund the business, are likely to be on pause, which may delay lease negotiations and commencement.
• Companies that have applied for federal funding programs, including Department of Veterans Affairs loans or Federal Housing Administration loans, will likely need to wait until the shutdown concludes for final approvals.

Federal Permitting and Regulatory Approvals

• Commercial real estate companies working on federal land or that require federal permitting or regulatory approvals are unlikely to occur until after the shutdown concludes.

While there may be additional first order impacts, TRA believes the items listed above are the most significant in the near-term for commercial real estate professionals. Second and third order impacts may be felt if the shutdown extends for a prolonged period. Reach out to TRA with any questions.