Facing a decline in job growth, a struggling commercial real estate market and a climbing population, today (Friday) Alexandria released the draft of its first economic development strategy in nearly two decades.
The 63-page ALX Forward draft plan makes a number of recommends to reverse negative trends, including leveraging economic opportunities in Old Town North, Eisenhower East, the West End, and Potomac Yard; retaining local businesses and attracting high-growth industries like artificial intelligence firms; and strengthening support for the city’s entrepreneurial ecosystem.
City Council will receive a presentation on the proposal at its Nov. 25 meeting.
The plan was drawn up by Texas-based TIP Strategies and aims to provide “a path to shoring up Alexandria’s economic strength for the next five years and beyond.”
It is the city’s first roadmap for economic growth since 2007, when city planners recommended enhancing the city’s Metro stations, transforming the former Landmark Mall property and developing the waterfront. One decades-long recommended measure that hasn’t born fruit, however, is evening out the city’s commercial and residential tax bases.
City Council Member John Taylor Chapman was a community participant in the 2007 economic development process. He said it’s about time the city updated its strategies.
“While I see new opportunities, I’m interested in seeing stronger details around executable strategies that will take advantage of Alexandria’s position in the region and result in not only additional revenue in the city but new jobs and additional commercial development,” Chapman told ALXnow.
The city faces varied challenges, from an “increasingly unaffordable” housing market and excess office inventory to federal layoffs. According to the draft report:
The characteristics that have made the City a great place to live and work also present long-term challenges for people trying to establish a home base in Alexandria, especially those early in their careers.
Housing has become increasingly unaffordable, and the City’s general fund has become overly reliant on residential property tax revenues. While trends toward remote and hybrid work have increased the daytime population in many neighborhoods to the benefit of retailers and restaurants, they have also created excess office inventory, especially in Carlyle, leaving a limited number of available sites for commercial and industrial use to rebalance tax revenues.
Recent changes in federal policy have also had an impact on the local office market, the workforce, and small businesses, reinforcing the need for a redoubled approach to diversifying Alexandria’s industry mix and commercial tax base. While the full extent of these impacts remains to be seen, this framework will help to ensure the community is well-positioned for the future.
Job loss declines in Alexandria
While Alexandria’s population has grown by 44,000 residents since 1990, the city has lost more than 20% in workforce since 2007.
The median home value in the city is also nearly $700,000, “significantly more expensive” than surrounding jurisdictions, “contributing to the City’s relatively low housing affordability,” according to the draft report.
The city’s largest traded industry employers — business services (12.2% of jobs) and education and knowledge creation (5.6%) — saw a respective decline of 13% and 20% since 2001.
Additionally, Alexandria’s federal positions (10.1% of jobs) have declined by 4,700 from 2021 through 2024.
“This downward trend will likely continue amidst significant and unpredictable fluctuations in the federal workforce and office locations over the coming years,” the report said, adding that the performing arts, hospitality and tourism industries have “failed to reach pre-pandemic levels.”
The Performing Arts cluster has exhibited a similar post-pandemic trend, while the Local Entertainment & Media cluster has seen a significant drop in concentration within the past two years.
The action plan
The draft report recommends leveraging real estate opportunities with anchor investments in the city’s “catalyst sites” in Old Town North, Eisenhower East, West End and Potomac Yard.
The plan also says the city should continue to look for economic opportunities along the waterfront, in commercial corridors and pedestrian-friendly areas. Further development should “contribute to, and diversity, the local tax base.”
“Currently, hospitality and tourism, performance arts, local entertainment, and entrepreneurship are not considered competitive advantages in Alexandria’s economy, though they hold strong potential for growth,” according to the plan.
Recommendations include developing catalyst sites, such as the Virginia Tech Institute for Advanced Computing, Northern Virginia Community College, Inova Hospital and the City’s five Metrorail stations.
“The City should not shy away from bold investments to maintain, create or reimagine its neighborhoods, including infrastructure investments that may be required to make catalyst sites market- or investment-ready,” the plan states. “The City, along with its partners, should strategically deploy underutilized assets that it determines are not needed specifically for a public purpose, after determining what is the highest and best use of those properties.”
The plan made the following recommendations.
- Pursue bold, transformative investments in catalyst sites and underutilized assets to spur mixed-use development, enhance Alexandria’s quality of place, and generate new revenue
- Focus on retaining local businesses and attracting high-growth industries to diversify Alexandria’s economy and create quality jobs
- Strengthen Alexandria’s entrepreneurial ecosystem by expanding support for small businesses and fostering the growth of innovative, high-growth startups
It also highlighted the following industries as targets for growth.
- Emerging and advanced technologies
- Cybersecurity and defense
- Entertainment and tourism
- Professional services
- Nonprofits and associations
- Health care and innovation
Measuring success
The city can calculate the success of these ventures by looking at the following aspects, according to the report.
- The amount of capital investment the city pours into real estate developments
- The city’s annual retail sales taxes
- The median sales prices and median rents for existing residential units
- The number of new hotel rooms added
- The number of new residential units added to the market
- The occupancy levels and average rates for existing hotels
- The property tax revenues by commercial and residential development
- The tax revenue from new development projects
- The total new retail/restaurant, industrial, and office space added
- The vacancy and median rental rates for existing retail/restaurant, industrial, and office space
- The annual economic impact of tourism-based activity on the local economy
- Annual hotel tax revenues
- The number of visitors to arts and culture, entertainment, and performance events or venues
- The number of events, including festivals, concerts, and sports tournaments
The public can comment on the ALX Forward: A Strategic Framework for Economic Growth draft plan online by Dec. 5.
