When it comes to office vacancy, Alexandria may be faring better than its neighbor to the north and west.
Its vacancy rates are lower than the average for the region and its rents are cheaper than every submarket in Arlington County, according to a new report from real estate company Savills.
Savills Executive Managing Director Wendy Feldman Block said Alexandria has an edge for two reasons: cheaper rent with proximity to top destinations and walkable commercial centers.
“Alexandria really is a great place to be,” she tells ALXnow. “The retail and restaurants are outperforming other areas because it walkable and has the ability to have one street to capture a lot of customer traffic [such as on] King Street.”
Alexandria Economic Development Partnership Vice President of Real Estate Christina Mindrup agrees, saying the city is benefiting from a trend dubbed the “flight-to-quality,” where companies are looking for new offices that offer more amenities for employees.
“We think the flight-to-quality also capitalizes on Alexandria’s strengths,” she tells ALXnow. “We already have vibrant, mixed-used neighborhoods that have seen growth throughout the pandemic.”
Meanwhile, Block said, it offers tenants proximity to top locations such as National Airport and D.C. while offering lower rent than National Landing, which is also close by. In National Landing, the rents are $38.14 per square foot, versus $36.43 per square foot in Old Town, $33.78 per square foot along the I-395 corridor and $34.14 in Huntington and Eisenhower.
Right now, Alexandria has some of the lowest amount of available sublease space in the region: less than 300,000 square feet compared to 5.8 million square feet across Northern Virginia, Block says. The city recently landed the largest lease in the D.C. area, the restructuring of United States Patent & Trademark Office to 1.6 million square feet.
“Even though the Patent Office is downsizing, new leases like Five Guys are choosing that neighborhood because it has trophy buildings with high visibility close to transit and adjacent to Old Town on one side and the booming Eisenhower corridor on the other,” Mindrup says.
In addition, Old Town has seen a marked decrease in available office space, from 28% in 2022 to 24.2% currently, Block said.
Mindrup also chalks up the city’s strong office leasing to the fact that its office buildings — especially its older, shorter or less desirable offices — tend to be smaller
“So while we do have less office inventory than our neighbors, we also have buildings that are better positioned with smaller floorplates to be converted into housing, schools, or other uses,” Mindrup said.
She noted the city also stays competitive by offering bonus density in exchange for affordable housing, allowing office-apartment conversions, keeping commercial uses broadly defined so offices, stores, hotels and other businesses can move in and focusing development on the West End and the Potomac River Generating Station site.
This could offset any lease changes the government makes because many of its workers are still mostly remote.
“We’re keeping an eye on the market and the region as government leases start to come up for renewal,” Mindrup said.