On the eve of an annual report on the city’s economy from the Alexandria Economic Development Partnership, ALXnow sat down with AEDP CEO Stephanie Landrum to discuss the future of development in three areas of the city: Carlyle, the Landmark-Van Dorn Corridor, and Potomac Yard. These will be broken up into a multi-part series covering each location.
The Carlyle neighborhood is in a tough spot.
One of the largest, most visible office occupants in the region, the Patent and Trademark Office (PTO), wrapped up a dramatic downsizing last week. The PTO shed 764,000 square feet in office space.
What’s worse, AEDP CEO Stephanie Landrum said finding a new occupant for that space could prove particularly difficult.
“A natural fit would be another federal agency,” Landrum said. “It was purposefully designed as a government campus. The nuance of that is those two buildings don’t have their own cafeteria, it’s elsewhere on the campus. Same with access to parking and daycare. It would be incredible if another agency with similar security issues could just move into those buildings and still take advantage of the way it was designed.”
But finding that perfect match is an increasingly unlikely prospect for the former PTO office space. Office space, particularly government office space, could be difficult even before agencies started downsizing offices post-pandemic. The Victory Center sat vacant a few miles west on Eisenhower Avenue for nearly a decade before developers decided to demolish the building to make way for more residential development.
“That’s not an impossibility,” Landrum admitted, “but it’s a longshot given that the entire federal government is downsizing.”
Landrum said the office space vacated by the PTO is also connected to the rest of the office’s “campus”, which makes it less likely to convert to residential space, a trend that’s Alexandria’s been leading in. While it could be turned into a hotel, Landrum said there are already plenty of other hotels in the Carlyle neighborhood.
“It’s going to come down to telling the story about Carlyle, which is not really different than what we’ve been doing for years,” Landrum said. “We have the PTO and the Courthouse: who would benefit from being proximate to those?”
Landrum said new office tenants in Alexandria now tend to be suburban office locations looking to decrease their footprint and move to a more transit-oriented space, like the recently relocated Five Guys headquarters.
Like Crystal City in Arlington, Carlyle has had a reputation in recent years as a somewhat bland concrete jungle. Landrum said a few new businesses, like Lost Boy Cider, Atlas Brew Works and Wegmans, have helped make the neighborhood a little cooler.
“There is some younger and cooler retail going in there, so maybe you’d see more entertainment on the west end of Carlyle, but I can’t think of anything short of new reconstruction changing the look and feel of Carlyle,” Landrum said.
Landrum said even before Covid, the office market was seen as a risky investment.
“Then, with the pandemic, every industry across the board is shrinking,” Landrum said. “It’s even harder to get financing now. We’re not seeing office buildings built in Alexandria or really anywhere without some pre-commitment.”
While it may not help with the PTO building, Landrum said Alexandria being ahead of the game on residential conversion has helped keep the city’s vacancy rate slightly lower than the region. Alexandria’s vacancy rate is 15.5%, which she said is 5% lower than the average for the region.
AEDP was initially reticent to replace too much office space with residential, Landrum said, but it eventually changed tune and there are more conversions on the horizon, particularly in the Carlyle neighborhood. Landrum said the Motley Fool office building, which sold at a foreclosure auction earlier this year, could be a prime target for residential conversion.
“There’s more to go,” Landrum said. “The easy ones have already been done, but we talk to people once a week who are looking at office assets and assessing whether or not they’re conversion targets.”
