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Saturday, August 01, 2009

CRE Report: U.S. Postal Service Might Consolidate up to 14 million Square Feet

by Calculated Risk on 8/01/2009 01:18:00 PM

From Costar: Post Office Looking at Consolidation of 3,243 of its 4,851 Largest Branches and Stations (ht John)

The Postal Service sent a notice to American Postal Workers Union executives this summer that it was considering consolidation options in every major metro market in the country and would consider closing 3,243 of its 4,851 largest branches and centers in the review process. ... The review process was to last most of the summer ... but they want the consolidation to occur by October 2010.
According to USPS records, it owns 8,546 facilities totaling 219.6 million square feet and leases another 25,272 locations totaling 912.2 million square feet. ...

[T]he USPS could be studying the consolidation of more than 14 million square feet of retail/office/industrial space across the country. To put that in perspective, 14 million square feet would be the equivalent of about all of the vacant retail space in a market such as Boston or Cleveland or Denver or the Inland Empire or Tampa.
In May, the U.S. Government Accountability Office (GAO) issued a report en titled "U.S. Postal Service - Network Rightsizing Needed to Help Keep USPS Financially Viable." The GAO study criticized the USPS for failing to take the necessary steps to remain viable, such as "rightsizing its retail and mail processing networks by consolidating operations and closing unnecessary facilities," and "reducing the size of its workforce."
Here is the GAO report:
Network rightsizing by consolidating operations and closing unnecessary facilities is likely to be only one of many steps that USPS will need to take to remain financially viable in the long run. ... We recognize that USPS faces formidable resistance to closing and consolidating facilities because of concerns about the effects of such actions on service, employees, and local communities.
U.S. Postal Service Click on chart for larger image in new window.

The postal service has already reduced their footprint a little since 2003 as shown in the chart from the GAO.

But the GAO report suggests the next reductions may be much more significant. How about another 14 million square feet of vacant retail space on the market?