Douglas Development defaulted on a $51.7 million loan last month, and three of the 15 properties the company used as collateral are in Old Town.
The balance on the 2014 loan was not paid by the Aug. 1 deadline, according to loan documents found by the Washington Business Journal.
Mayor Justin Wilson said that the news keeps getting worse for the commercial office market.
“The vacancies are cascading across the region as a parade of horrible news continues for commercial real estate and development in general,” Wilson wrote in his September newsletter. “Clearly commercial landlords and private developers are not high on the list of those in need or deserving of sympathy. Markets go up and down, and investors benefit or suffer accordingly.”
The three properties are:
- 106 N. Washington Street, the two-story former Chase Bank
- 119-125 N. Washington Street, a mixed-use four-story building
- 700 King Street, a Lululemon store
Alexandria’s office values fell 12% this year, and have plummeted nearly 25% in the last five years, going from $4.16 billion in 2019 to $3.14 billion today. Wilson wrote that slowed growth will hurt the city’s ability to fund critical services.
“The pipeline of new development is slowing as development costs have risen, financing has been more difficult to come by and competition growing,” he said. “Some private projects have had to seek alternative financing in order to proceed.”
ALXnow reached out to Douglas Development Corp. for comment.
