Alexandria City Manager Jim Parajon presented the first in a series of monthly economic updates to the city council on Tuesday, Sept. 9, highlighting mixed economic signals and rising uncertainty that could complicate budget planning.
The presentation, requested by Mayor Alyia Gaskins, showed commercial office vacancy rates climbing to 21.6% in 2025 from 15% in 2023, while retail markets remained strong with Old Town posting a 5.8% vacancy rate.
“Uncertainty continues at the national level,” Parajon said. “Anytime there’s uncertainty, there’s a question of whether you should invest or not invest, whether you should buy or sell, whether you should move or stay.”
Much of the commercial vacancy increase stems from two buildings at the Patent and Trademark Office campus returning to the market, representing at least 600,000 square feet, according to Stephanie Landrum, CEO of the Alexandria Economic Development Partnership.
Alexandria’s unemployment rate rose from 2.5% in 2024 to 3.6% in 2025, though it remains below state and national averages. Total first-quarter employment of slightly more than 80,000 was similar to 2024 levels.
The residential market showed strength with median sales prices up about 5% year-over-year and properties averaging 23 days on the market. However, active listings increased 44% to 308 properties, which Vice Mayor Sarah Bagley suggested could signal federal workforce concerns.
“That I do worry that might be a sign of the sort of federal government cuts causing people to feel they need to leave the city,” Bagley said.
Parajon cautioned that recent federal workforce reductions may not be fully reflected in current data.
“These numbers really don’t aren’t indicative of the early buyouts, administrative leave and the federal layoffs that are not fully reflected in the unemployment data,” he said.
National indicators showed weakening consumer confidence, with sentiment decreasing 5.7% from July to August. Inflation stood at 2.7% as of July, approaching but exceeding the Federal Reserve’s 2% target.
Parajon noted that construction costs are rising due to uncertainty, with contractors adding larger contingencies for potential tariff impacts.
The retail sector provided a bright spot, with Del Ray showing a 6.3% increase in foot traffic year-over-year and Old Town’s vacancy rate significantly below Washington, DC’s 12%.
Councilman John Chapman urged the city to move beyond tracking to developing proactive responses.
“I think that information rings hollow if we are not bringing forward opportunities to shift the information, particularly to our benefit,” Chapman said.
The city has invested $18.02 million in infrastructure projects from 2022 through the first quarter of 2025, completing 37 projects. Plans call for an additional $11.3 million across seven projects in 2026 and 2027.
Parajon plans to continue monthly updates, with October focusing on visitor activity and tourism impacts. The economic snapshot will inform the city’s budget retreat in November and the formal budget process beginning in February.
