Tech companies are not the only big office users that are cutting back in space and costs. The California government, a major player in workplace real estate, plans to save about $35 million a year by trimming 132 leases, or 1.16 million square feet across 40 departments, according to the state’s 2023-2024 governor’s budget summary.

The summary reports that the Department of General Services will continue to reduce the state’s leased portfolio, while prioritizing the largest leasing clients to gain the greatest efficiencies. California will expand telework strategies, reconfigure office space, reduce leased space and promote flexible work schedules.

The announcement is tough news for the already beleaguered office sector, however, the state will continue to utilize office space to conduct core business functions. In addition, Governor Gavin Newsom’s budget proposal also mentions that the state remains committed to investing in the construction and renovation of the assets.