A 5.5-acre state-owned parcel near Boston’s South Station will be made available for up to 2 million square feet of development as city and state officials ramp up their efforts to stimulate housing production.

The property at the corner of Atlantic Avenue and Kneeland Street contains an office building used by Massachusetts Department of Transportation’s District 6 offices and the Veolia North America steam plant, which provides heating to 40 million square feet of buildings in Boston and Cambridge. The 30,000-square-foot Veolia plant, which has a footprint of 17,000 square feet, could be reconfigured, with much of the existing infrastructure placed underground, CEO William DiCroce said. Some of the Kneeland Street plant’s capacity has become redundant after Veolia purchased the Kendall Cogeneration Station in Cambridge in 2013, DiCroce said.

“We’ve looked at a number of different options that wouldn’t restrict development. It would have to be blended into the development,” DiCroce said. “The bottom line is: the big building can go away.”

The plans for the Kneeland Street parcel emerged from meetings between Gov. Charlie Baker and Boston Mayor Martin Walsh in recent months as both administrations prioritize the sale of surplus properties to developers, particularly to encourage mixed-income and transit-oriented housing projects. Last week, Boston-based developer Related Beal broke ground on a hotel and 239 units of mixed-income apartments on a parcel leased from Massachusetts Department of Transportation (MassDOT) near North Station. That project emerged from the disposition of parcels made available following the completion of the Big Dig.

The MassDOT offices would be relocated elsewhere in Boston or the immediate area, officials said at a press conference Monday.

State agencies own 20,000 properties, many of which are neglected and would be suitable for development, Baker said.

“I’ve never understood why many of our assets are open space, tall grass, beer cans and burned-out automobiles,” Baker said. “That to me doesn’t look like an asset. We have an opportunity to create more affordable and mixed-use development.”

Boston officials are conducting an inventory of city-owned parcels in an effort to find properties that can be turned into housing, to support Walsh’s goal of encouraging the construction of 52,000 housing units by 2030.

A request for proposals will be issued later this year following a community comment period, Secretary of Transportation Stephanie Pollack said. The public input will shape the terms of the RFP, she said, but “we’re very committed to housing as a component of the project. I think the assumption is it will be mixed-use as well.”

Disposition of some state-owned parcels has been slowed by red tape that requires legislative approval, Baker said.

Details of the land deal, including whether to sell or lease the property, have yet to be worked out, Pollack said.