Even as Alexandria’s office vacancies improve, city officials learned about a missed opportunity with Potomac Yard’s 0% vacancy rate.
During City Council’s Tuesday (Oct. 13) legislative meeting, Alexandria Economic Development Partnership staff briefed officials on economic progress since City Council in January approved ALX Forward, a framework for the city’s economic future.
AEDP reported last month that office vacancies fell from 21.6% to 18.8% year over year through June 30, which in part was due to retention of the National Science Foundation when it moved in May to a former 86,600-square-foot U.S. Patent and Trademark Office building to make way for the U.S. Department of Housing and Urban Development’s relocation. Another factor was the start of construction to convert the long-vacant Victory Center office building into affordable housing.
On the neighborhood level, vacancies fell in all but Old Town and Old Town North.
While Potomac Yard had a 0% reported vacancy rate, the neighborhood appears to be losing out on not having enough desirable office space.
“Potomac Yard continues to have increased demand from tenants desiring office space that is proximate to Virginia Tech,” AEDP’s vice president of real estate Christina Mindrup said. “And unfortunately, there are no new office options available to place them. We continue to lose highly desirable businesses to neighboring counties because there’s no new trophy office space available in Potomac Yard.”
City Council members expressed concerns with the Potomac Yard outlook.
“Zero is great, but also what I heard was it’s also, we’d almost not want it to be zero,” Vice Mayor Sarah Bagley said. “We’d like to see a reasonable vacancy rate indicating possibility, indicating movement.”
Councilman John Taylor Chapman said he’s “struggling with” the lack of inventory in Potomac Yard.
“Obviously that’s on landowners wanting to build there, wanting to see a market, sensing they’re gonna have some viability there, but it’s a tough pill to swallow knowing that what we constructed there, what we’ve invested with [what] the community has wanted to see,” Chapman said.
Mayor Alyia Gaskins pointed to the success of maker and warehouse spaces like Building Momentum and Saltbox in the Eisenhower Avenue corridor.
“We got to get the office space going, but also what is the office space of the future and what does it look like for some of these warehouse spaces where people want to come?” Gaskins said. “Maybe there’s office on the top, this cool flexible space on the bottom, and are there lessons we could learn from Eisenhower that could be carried over to Potomac Yard that could be really helpful in maybe accelerating some movement?”
On the workforce front, economic development officials reported 2,790 jobs retained or gained, which include 1,600 from the NSF moving to an 86,600-square-foot U.S. Patent and Trademark Office building. The city is also expecting about 2,700 jobs from HUD’s relocation from D.C. to the old NSF headquarters.
“Together those two represent 4,300 federal jobs anchored in Alexandria, which is something to be very excited about, especially in this moment when we’ve seen so much change,” AEDP’s senior vice president Marian Marquez told City Council.
According to AEDP, the D.C. region lost about 56,000 jobs in 2025, including about 54,000 federal positions. Marquez said Alexandria’s federal employment has been around a steady 9,000 jobs since 2023, but the city has been hit with federal contractor reductions and economic uncertainty that affects office demand.
There is optimism on the new development front, too. According to AEDP, there are 27 active economic development projects in the city.
One of the most anticipated is the WestEnd development anchored by a relocated Inova Alexandria Hospital campus. AEDP also assisted the Potomac River Generating Station redevelopment as it gained major approvals and a $135 million infrastructure package.
“These are long-term catalytic projects that are going to transform the neighborhoods in the city and spur economic development, and we are working hard at AEDP to attract the commercial tenants to both of these experiences,” Marquez said.
Other highlights reported to City Council were the West End’s Systems Planning and Analysis‘ 500 new jobs, a $50 million investment and a $126 million Navy contract; the launch of the Accelerate ALX business accelerator; and the launch of the new National Innovation Quarter in Alexandria and Arlington County. The latter initiative received a $3.93 million Go Virginia grant, $800,000 of which will go toward an innovation lab in Alexandria.
“Our continued focus on innovation, national security, non-office uses such as healthcare, tourism, sports and entertainment, and of course, major mixed-use redevelopment is really designed to make our economy more resilient,” Marquez said. “And we’ll see in our pipeline a little bit later, we have a really nice mix of all of those uses.”
