With the highest office vacancy rate in years – currently around 21 percent compared with 17 percent for Northern Virginia as a whole – Arlington County’s building owners are faced with numerous challenges to attract and retain tenants.
Millennials are attracted to places with world-class transportation options and infrastructure, something worth noting for commercial-property developers.
The Base Realignment and Closure (BRAC) program authorized by Congress, in which Department of Defense bases were reorganized and moved, disproportionately reduced government-contracting office space in Arlington.
New competition from submarkets such as NoMa and Tysons has also impacted the county, forcing Arlington’s commercial property owners to come up with solutions and new types of tenants to fill the empty space.
The good news: Arlington’s location close to D.C. and its numerous transportation amenities give property owners an advantage in attracting potential tenants from other locations in the region.
Transportation Options Bring Development
With the highest concentration of Millennials in the country living within the county’s 26 square miles, employers have a huge pool of talent to tap into. For residents that both live and work in the county, Arlington offers a quick commute to work.
Real-estate developers agree that access to transportation options is a great amenity for employees, residents, and visitors. At the Bisnow Arlington County Summit last month, Penzance Senior Vice President Andrew McIntyre credited Arlington County Commuter Services with making the transportation system more efficient and benefiting the growing number of Millennials who prefer to have options beyond getting behind the wheel.
Many companies that have relocated to Arlington have cited transportation and accessible amenities as major reasons to move employees and operations into the area. CNA Corporation, for instance, recently moved 500 employees from the Mark Center in Alexandria into Penzance’s new property at 3003 Washington Boulevard.
Going from a car-centric, isolated location to a vibrant hub of food, shopping, and transportation options has been an exciting transition for the CNA staff. The building amenities, such as discounted parking for carpools and vanpools, a secure bike cage with space for 60 bicycles, showers, lockers, and transportation information in the lobby are all provided to make it easier for tenants’ employees to get to the office.
Adding these types of amenities in both new and existing buildings is a low-cost strategy that can make a property more attractive to potential tenants, especially those with a younger workforce.
Arlington’s Future Looks Bright
While the current office market in Arlington is not ideal, developers and analysts believe the county’s vacancy rate is cyclical and will improve in the future. The development pipeline and plans for several new urban villages in Arlington show exciting changes ahead.
In Crystal City, property owners are converting older buildings into other uses. One example of this kind of innovative repurposing is the WeWork building, which is part of Crystal City’s promotion of development in the tech sector. In addition, new protected bike lanes and transit options are making Crystal City more accessible and connected.
Other encouraging developments in Arlington County include:
- Rosslyn’s Central Place development by JBG will bring a huge influx of new residents to the neighborhood, as well as more retail options for the day and night crowds.
- Ballston has several projects on the horizon, including upgrades to the Metro station, the redevelopment of the Ballston Mall, and the Marymount University or “Blue Goose” project on Glebe Road.
- The sector plan for Courthouse is nearing completion and includes elements that emphasize pedestrian access, moving parking lots underground, and increasing density around the Metro station.
By providing transportation amenities and tenant programs, and by touting the transit-rich, walkable neighborhoods they are located in, commercial properties in Arlington have many opportunities to set themselves apart from other submarkets while meeting the evolving transportation needs of a less car-dependent workforce.
In these ways, Arlington County should be able to weather the current commercial property slump.