Alexandria’s commercial real estate market is struggling, although the city is a leader nationally with office conversions, according to the Alexandria Economic Development Partnership (AEDP).
That’s according to AEDP’s 2025 Mid-year Market Report, which outlines business trends and impacts.
“In Alexandria, growing office vacancies persist, and leasing activity for larger office blocks is limited or non-existent,” AEDP said.
AEDP said that federal government changes have impacted the city, including The U.S. Patent and Trademark Office “shedding” of its leased space.
“However, the Department of Housing and Urban Development is planning its relocation to Alexandria, intending to occupy the building that currently houses the National Science Foundation,” AEDP said. “While this move will not impact the Carlyle submarket vacancy rate, it marks the first time a cabinet-level agency will locate in the City.”
According to the report:
Alexandria’s commercial real estate market continues to face the same challenges as the Northern Virginia region—higher vacancies, slower leasing, and federal shifts, but the story doesn’t end there.
The City remains a national leader in office conversions with 3.7 million square feet either approved or converted over the past decade. Old Town retail vacancy rate is at 5.8% and foot traffic is up 4.6% year-over-year. Overall, as of June 2025, the City’s office vacancy rate of 21.6% remains below the Northern Virginia regional average of 23%, proof of the City’s forward-looking resiliency…
Visits to Old Town are up 4.6 percent year-over-year, and Del Ray saw a growth in its resident population from 2022 to 2023. These signs all point to a healthy market for retail and restaurants across the City. The foresight to adapt has cemented Alexandria’s reputation for reimagining obsolete office space. Over the last 10 years, the City has continued to be a recognized leader in office-to-residential conversions, with 3.7 million square feet either approved or converted into thriving residential and mixed-use developments—some even incorporating community needs such as elementary schools. Despite continued high construction costs, the pipeline for additional developments remains strong.
SEE: Five-story office-to-residential proposal in Old Town is heading to the Planning Commission
MORE: Major Old Town North office-to-residential project moves forward
