commercial real estate

Arlington to consider several ways to combat office vacancies this year, starting with looser parking restrictions

By Daniel Egitto
An office building with a leasing availability sign in Courthouse in December 2022 (via Google Maps)

Several measures designed to combat Arlington’s persistently high office vacancy rate are slated for discussion next month.

On the table are expanded opportunities for shared and offsite parking, as well as more lenient parking requirements for fitness centers. Officials are also set to consider whether to allow large media screens for outdoor entertainment in some business districts.

The Arlington County Board is scheduled to vote next month on whether to advertise requests to amend Arlington’s zoning ordinance to make these changes. County Manager Mark Schwartz told the Board last week he hopes that these and other ordinance changes can make it easier for Arlington businesses to get started and grow.

“Very often you’ll have a business that, if it could take advantage of parking very near to it, would be able to move ahead,” he said on Tuesday.

Schwartz noted that fitness centers have particularly strict parking requirements.

Large media screens, meanwhile, could assist with “placemaking” in certain commercial business districts. Currently, it’s an exceptionally arduous process to get large outdoor displays approved.

The county also plans to pursue bigger-picture ordinance changes, Schwartz said. Later this year, the Board is expected to discuss guidance on office-to-apartment conversions as well as potentially simplifying the major and minor site plan amendment process, which landowners must navigate when repurposing or renovating large development projects.

Within the next six months, Board members are also expected to consider plans to facilitate change of use within existing buildings and adopt a more flexible ordinance around signage.

Other possible ordinance changes concern storage uses at office buildings as well as the process for converting underutilized parking spaces.

“We promised we’d be coming to you with sort of a regular rhythm of items, and starting next month we will do that,” Schwartz told officials.

Arlington’s office vacancy rate is currently just over 22%, the county manager said — up from 21.5% in October. Arlington Economic Development predicted in October that this number would continue to rise, as about a quarter of Arlington office space is at risk of sustained vacancies.

The county has scrambled to find uses for its office buildings since the pandemic, passing several zoning changes on a compressed community engagement timeline. Recent adjustments allow urban farms, breweries and podcast studios to move into older office buildings without seeking special permissions.

Despite these efforts, a shrinking commercial base has left Arlington residents shouldering a growing portion of the county’s budget. Historically, the commercial and residential tax base split the budget 50-50 but in recent years, this has shifted to a 55-45 split.

Board member Matt de Ferranti last week called office vacancies “a huge challenge” and praised ongoing efforts by county staff.

“I think it is important to reiterate strong support for the direction we are going in,” he said.

Photo via Google Maps

Fresh Impact Farms reaps benefits of more farming space with eye toward expanding in the coming years

By Jo DeVoe

Sponsored by Monday Properties and written by ARLnow, Startup Monday is a weekly column that profiles Arlington-based startups, founders, and other local technology news. Monday Properties is proudly featuring Three Ballston Plaza. 

One of Arlington’s only urban farms, Fresh Impact Farms, is continuing to enjoy success catering to the taste buds of high-end D.C. restaurants, from Seven Reasons to Oyster, Oyster.

Founded in 2017, the urban agriculture startup in a strip mall on Langston Blvd has experienced significant growth in the last year. With support from a state grant, it doubled the size of its indoor farm and began reaping the benefits of this expansion last year, says founder Ryan Pierce. As a result, its sales grew rapidly in 2023 — a pattern Pierce says he hopes to continue going into 2024.

“If 2024 goes as well as we hope it’s going to go, we’ll start looking for additional expansion space, with the goal of staying here in Arlington,” he said. “We have rather unique needs for real estate… [and Arlington] keeps us really close to our primary clientele.”

That has been and always will be D.C.’s pioneering chefs in the fine dining scene, who Pierce says are “the first movers in terms of new trends in food.”

This drives Fresh Impact Farms to keep trying out dozens of new and uncommon varieties of edible succulents and herbs as well as different color combinations of rare, edible flowers. Overall, the farm is home to well over 400 varieties of crops, he said.

Fresh Impact Farms growing area in a strip mall on Langston Blvd (courtesy photo)

“We’re always introducing new products,” Pierce said. “That’s something they expect. They’re always asking us, ‘What’s new? What can we get from you that we couldn’t get from you in the summer?’ Half of our job is finding out what we should be growing and then our team has to figure out how to grow it.”

Pushing the boundaries of edible plants requires highly skilled staff, he noted.

Fresh Impact Farms is taking a more modest, or cautious, approach to growth when it comes to adding clients — too many would strain his farm’s production levels — and incorporating new tech.

“There’s always the initial push to make everything as complicated as possible and get as much tech into the farm as possible,” Pierce said. “What we’ve found is that sometimes, the human approach works better. While we automate watering, lighting and climate control, we don’t automate harvest or seeding. For those, we’ve found, it’s better to have a human touch.”

Beyond Fresh Impact Farms, Arlington has one other urban farm, Area 2 Farms, located in a brick industrial building in Green Valley. While neither is in an office building, Arlington County has taken steps to make it easier for urban farmers to begin growing plants in vacant, underused and outdated office spaces by loosening its zoning restrictions.

Like the county, Pierce — who sits on Arlington’s Industrial Development Authority — says he is constantly thinking about how Arlington can fill its office space. Upfront building conversion costs, however, might make it difficult for more farms to take advantage of these looser zoning rules.

“How do you adjust the centralized HVAC to accommodate plants over people? While the temperature and humidity is about the same you’d want it in your house, the systems in which you do that are completely different. It’s a much different challenge than someone people realize,” he said.

The county has to attract new talent and to its credit, is doing so via its Innovation Fund, he said.

“As far as putting farms, that’s a real big challenge,” he said. “Ultimately, it’s one of those things where I want to look for solutions but it doesn’t mean my business is the solution for that particular problem.”

JUST IN: Home values up in Arlington, but growth continues to slow

By ARLnow.com
Illustration of a real estate for sale sign in Arlington (generated by DALL-E)

The value of residential properties is up in Arlington, but the torrid growth of past years has slowed.

Arlington County announced today that residential property assessments are up 3.2% for 2024. The overall property assessment growth was 2.5%, with commercial properties up 1.6%. New construction contributed significantly to the overall growth.

The announcement comes as the county starts to mail assessment notices to property owners today. Assessments will also be available online starting at 6 p.m.

Single-family home values rose more than $25,000, on average, according to the county.

“The average single-family property value increased from $798,500 to $824,700,” Arlington County said in a press release. “For 2024, approximately 70 percent of residential property owners saw their assessed value increase while the rest remained unchanged or declined.”

The 3.2% residential assessment growth this year is lower than the 4.5% reported last year, 5.8% in 2022, 5.6% in 2021 and 4.3% in 2020. Inflation last year, meanwhile, just clocked in at 3.4%.

The full press release is below.

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Office vacancy rate is leveling out but Arlington is not yet out of woods

By Jo DeVoe
Office buildings, including the Nestle building, in Rosslyn (staff photo by Jay Westcott)

Arlington’s office vacancy rate remains high but may be stabilizing after an initial, sharp increase due to Covid remote work policies.

As of the fourth quarter of 2023, the countywide office vacancy rate stands at 24.4%, according to a new report from commercial real estate company Colliers.

Since 2020, Arlington’s overall vacancy rate has risen 4.3% points, per the report, prompted by the pandemic-era shift to remote work and in defiance of return-to-office efforts. The county saw a 3-percentage-point jump between 2020 and 2021 followed by a more modest 1-percentage-point increase over the last year.

“The big story last year was the delivery of Amazon’s HQ2 which drove absorption earlier in the year,” Colliers Research Manager Miles Rodnan tells ARLnow. “Sublet space across the D.C. region has leveled off, which has helped slow down vacancy increases.”

“Additionally, as companies continue to settle into their return-to-office/hybrid policies, the decisions to offload space have been made in many instances,” he continued. “As leases continue to expire, there will be downsizes, but the rate should taper off.”

The vacancy rate in Arlington since 2015 against the average asking rent price (courtesy Colliers International)

(Arlington County also tracks its vacancy rate and, notably, it reported a rate hovering around 21.5-22% this fall. This discrepancy may be because the county and Colliers have different numbers for total office buildings and rentable square footage. Graphs tracking rates over time, from the county and Colliers, have similar trend lines.)

At the end of 2023, the Colliers report says vacancy rate was slightly higher for the Rosslyn-Ballston corridor, at nearly 25%, than for National Landing — Pentagon City, Crystal City and Potomac Yard — at 24%.

While the difference is marginal, the rate is trending down in National Landing dropping 0.7% point over 2023, while the rate increased 0.8% point on the R-B corridor, the report said.

Compared to National Landing, where all the new office construction was tied to Amazon, the R-B corridor saw more speculative office projects: 3901 Fairfax Drive in Virginia Square, slated for delivery next year, as well as George Mason University’s FUSE at Mason Square building, which will house university programs in addition to private office space.

Overall, however, these projects contribute less than a million square feet of leasable office space. Rodnan says this could be a saving grace, given predictions that vacancy rates will continue to rise.

“A breath of fresh air comes from the restrained construction pipeline, which will hopefully allow vacancy rates to stabilize in the region as negative absorption is still anticipated in the near future,” he said.

Generally, newer office buildings — which real estate analysts dub “Class A” — are attracting tenants who are willing to pay upwards of $2 more per square foot to get out of dated office stock, or so-called “Class B/C” buildings.

This is a trend playing out across the region, Rodnan said, not attributing the submarket-level upticks to any tenants in particular.

Amid the well-established “flight to quality,” Arlington County is working on several initiatives to make it easier to reposition these obsolete buildings from which people are moving.

“The work is cut out for us: zoning needs to become reasonably more flexible and less burdensome,” Arlington County Board Vice-Chair Takis Karantonis said during his New Year remarks this week. “We need to be innovative and courageous in repositioning and reusing obsolete buildings.”

County Board member Matt de Ferranti spelled out what this office vacancy rate means for the county budget.

“We depend on our office vacancy rate, which leads to a lower tax rate than our surrounding localities in northern Northern Virginia,” he said, noting that commercial real estate comprises a greater percentage of Arlington’s budget than that of neighbors.

Either this month or next, Arlington County will learn the extent of the impact of decreased office property values on the expected budget deficit, which is preliminarily projected around $20-$40 million.

“That will be sobering news, or perhaps hopeful news,” de Ferranti said.

Through April, the 2024-25 budget process will address the ongoing challenge of high office vacancies.

“Why is this budget more difficult than our last? Haven’t we known about the work-from-home paradigm shift for two years?” said de Ferranti. “Well, we have, but the office assessment process and that market is based on 5-, 10- and 15-year leases. So this year, we’re seeing the reality come home to us.”

County says it needs new policies to tackle rising office vacancy rates

By Jo DeVoe
A partially vacant office building in Courthouse in December 2022 (via Google Maps)

(Updated at 12 p.m. on 10/19/23) County leaders say Arlington is facing a grim future due to its rising office vacancy rate, which now stands at 21.5%.

Arlington is leading the region with its vacancy rate, which works out to 9 million square feet of empty space, according to Arlington Economic Development Director Ryan Touhill. He predicts the vacancy rate will continue climbing, as AED has determined about one-quarter of office buildings are at risk of sustained vacancies.

Compounding the vacancy issues, many leased buildings have space available for sublease and significantly lower rates of people going into the office, according to Arlington Economic Development Commission.

These conditions are set to have serious impacts on Arlington County’s future budgets, with County Board members and County Manager Mark Schwartz already predicting belt-tightening this budget cycle.

Last week, staff told the Arlington County Board about new strategies and policies they are considering to further combat this issue as part of the ongoing Commercial Market Resiliency Initiative. Yesterday (Tuesday), the county’s Economic Development Commission discussed its own recommendations for dealing with these vacancy rates.

That follows several zoning changes made in the last 12 months — on a compressed community engagement timeline — to get emerging businesses into older office buildings by allowing them to operate without seeking special permissions. This includes micro-fulfillment centers, urban farms, breweries, dog boarding facilities, pickleball courts and podcast studios.

Board Chair Christian Dorsey said Arlington is facing a different challenge than it has before.

“This is a little bit different than some of the elevated rates of vacancy that we’ve experienced in the past,” Dorsey said last week.

During the Base Realignment and Closure process, for instance, the office vacancy rate peaked at 20.1% in 2015 after major Department of Defense offices decamped from the county, per the Economic Development Commission.

Arlington managed to bounce back by landing deals with Nestle, Boeing and RTX — formerly Raytheon — Amazon and Microsoft, Dorsey said.

“But this is a little bit different because this is in the midst of a paradigm shift in the commercial market,” he said, pointing to the impacts of remote work. “And then, of course, there’s a market which is in turmoil, with incredibly low valuations and commercial space, which impacts lending and trading.”

Rising office vacancy rate (via Arlington County)

With a potentially protracted dip in tax revenue from commercial properties in Arlington, residents will have to pay more for essential services, Touhill said.

“Historically, we’ve had that 50-50 split between our commercial and residential tax base,” he said. “But in recent years, we’ve seen that increase to more of a 55-45 split. And this means that our residents are carrying more of the burden to fund our essential services.”

To weather this storm, the economic development commission, AED and the Dept. of Community Planning, Housing and Development (CPHD) intend to streamline onerous county processes and tackle restrictive ordinances.

‘Work flows’ in the second stage of the Commercial Market Resiliency Initiative (via Arlington County)

One under scrutiny will be the major and minor site plan amendment process, which developers and property owners go through to repurpose or renovate large, existing development projects.

“The site plan process’s length and variability are amongst the biggest impediments to redevelopment,” says the commission, which calls for an expedited process for these types of projects. “As these buildings already exist, all that will change is the building’s use.”

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JBG Smith wants fewer restrictions on signage for two Crystal City offices, but some balked at the idea

By Jo DeVoe
1/2

JBG Smith is asking Arlington County to relieve it of restrictions that it says present serious obstacles to putting up new rooftop signs.

The real estate company is specifically asking the county to remove language restricting the number and size of signs allowed on two office buildings in the Crystal Park development it owns in Crystal City. The proposal is set to go before the County Board this Saturday.

Not everyone is comfortable with the language change, however. Two area civic associations told the county that the restrictions should stay, fearing this would pave the way for more signs going forward.

Currently, Crystal Park offices are governed by a document that “ties certain approved signs to specific tenants, some of which no longer occupy the premises, limits installation of rooftop signs to a single, prescribed rooftop sign and contains outdated requirements for approved signs,” land-use attorney Kedrick Whitmore wrote in an application to the county.

This hamstrings JBG Smith, he continues.

“Collectively, these restrictions complicate the ability to re-design existing signage for new tenants and present obstacles to achieving new rooftop signage,” Whitmore wrote.

JBG Smith is requesting the county remove restrictions for Crystal Park 1 and 3 office buildings, located at 2011 Crystal Drive and 2231 Crystal Drive. Instead, it asks the county evaluate new signage only in accordance to the Arlington County Zoning Ordinance.

In 2012, the zoning code was updated, providing new clarifying parameters for signs and only requiring staff review. This change did not apply to a smattering of older developments throughout Arlington governed by more restrictive agreements.

County staff say this change would make it easier for JBG Smith to compete for tenants.

“As commercial buildings mature and market themselves for new tenants, it is imperative that building owners be able to avail themselves of sign permissions available to other similar buildings so as to not place themselves at a competitive disadvantage,” the report said.

The county notes that other building owners have made similar requests and had the support of staff, as this “allow[s] for fair administration of building signage.”

The report says Crystal City and Aurora Highlands civic associations told the county they do not support JBG Smith’s request because it could allow for more signs.

The other reason, leaders told the county, is that the current provisions were decided through negotiated community benefits during the site plan review process.

“The community accepted less in the way of other benefits to limit the number and size of signs, so they believe that changes to allow more signs would not be fair,” the report says.

The county says it found no evidence that the more restrictive language was related to community benefit packages.

“Rather these were common site plan conditions approved in the absence of comprehensive sign provisions of the [zoning ordinance], which are now in place,” the report said.

Eric Cassel, the president of the Crystal City Civic Association, told ARLnow this morning that, as of now, the issue is “relatively minor.”

“JBGS downgraded the proposal significantly and we are not spending resources to oppose it,” he said.

Public review of four major redevelopment projects could start up this fall

By Jo DeVoe
1/9

Arlington County expects to accept a handful of major development applications this month, teeing them up for public engagement down the road.

The four pending projects span Pentagon City and Crystal City to the south and Rosslyn and Courthouse to the north.

Apartment buildings figure into all the proposals, though two developers are mulling a mix of office or hotel uses, too. Of those in the queue, two are straightforward, single-phase apartment projects while two are far-afield, multi-phase redevelopments with details still to iron out.

First up, between Rosslyn and Courthouse, sits the future home of an apartment building by D.C.-based developer the Fortis Cos.

Fortis proposes demolishing the existing National Science Teachers Association headquarters at 1840 Wilson Blvd, and surrounding restaurants, to construct an apartment building with 188 units and about 12,000 square feet of retail space. It purchased the properties at the start of this year for $14 million and filed its application, complete with new renderings, this summer.

Next up, in Crystal City, JBG Smith proposes to build a 7-story tower with 370 apartments and about 3,300 square feet of retail or equivalent space on land dubbed Block W, located at 2451 Crystal Drive.

The site is bounded by Crystal Drive, a National Airport access road, and railroad tracks, and is currently home to a gravel parking lot, an off-ramp from the access road and a small, JBG-owned workout park.

The off-ramp would be removed for construction, as envisioned in the Crystal City Sector Plan, but JBG Smith will be keeping adjacent sand volleyball courts.

Heading to Pentagon City, two developers are taking steps forward on long-standing redevelopment plans.

The first, plans from Brookfield Properties to redevelop the old TSA headquarters at 601 and 701 12th Street S., marks progress after a years-long pause. Brookfield held off on advancing these plans while Arlington County was developing the Pentagon City Sector Plan, approved last year.

Now, Brookfield proposes carving up the land, dubbed 12th Street Landing, into three bays. It is mulling either apartments, condos and an office building, or a apartments and a hotel, per filings with Arlington County.

To keep its options open, it asks Arlington County to approve the overall “density and intensity consistent with the maximum allowed by the [Pentagon City] Sector Plan,” the materials say.

More concrete details would be approved with a later site plan application, the letter to the county said.

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Air & Space Forces Association moving to Pentagon City for more modern digs

By Jo DeVoe
1/3

The Air & Space Forces Association will be moving out an office building north of Rosslyn to something closer to the Pentagon.

The association, which supports members the Air and Space Forces, was looking for a more modern space for its national headquarters after spending about 40 years in an office building from the 1980s. It sold its digs on Langston Blvd earlier this year before agreeing to move into the Westpost development, formerly Pentagon Row, in Pentagon City.

Federal Realty Investment Trust, which owns Westpost, announced the deal yesterday (Tuesday). The association, also known as the AFA, will be taking over some 31,000 square feet of space previously occupied by thermal imaging camera company FLIR Systems in 2024.

“The Air & Space Forces Association is excited to relocate our headquarters closer to our Pentagon customers and to continue our strong partnership with stakeholders in the Arlington County area,” said now-retired Air Force Lt. Gen. Bruce A. Wright, the association’s president and CEO. “We look forward to creating a more modern and flexible facility that will enhance AFA’s operational capability and open new doors to growth in the future.”

This summer, the Washington Business Journal reported that the AFA sold the building on June 1 for $16.25 million — after buying the land on which the office building stands in 1982 for just under $1 million.

It noted that Arlington County’s online property database said, and still says, the sale price was $19.1 million. At the time of the sale, the building was 79% leased and had 10 tenants outside the AFA.

The property was sold to an affiliate of Arlington-based Taicoon Property Partners, a recently-formed “privately owned investor and developer.”

Posts on LinkedIn by those involved in the transaction foreshadowed forthcoming development plans for the site.

In its announcement, Federal Realty Investment Trust said the AFA’s new offices are a “convenient” distance from the Pentagon and Reagan National Airport, as well as the Virginia Railway Express station and Metro. It noted, as many such press releases do, that Amazon’s second headquarters complex is nearby.

“We are delighted to welcome the Air & Space Forces Association to Westpost at National Landing,” FRIT Senior Vice President Deirdre Johnson said in a statement.

“Westpost continues to evolve alongside Amazon’s HQ2 as an exciting office destination for Arlington County, and the greater Washington, D.C.-metro region,” Johnson continued. “We are eager to see the Association thrive in its new location and utilize the highly amenitized environment of retail, restaurants and services that Westpost has to offer.”

Per a leasing map, Westpost now has just five ground-floor retail spaces available.

Photos (2-3) via Google Maps

Amazon is vacating temporary office space, teeing up at least one redevelopment project

By Jo DeVoe
1/3

(Updated at 10:20 a.m.) With half of its planned HQ2 now open in Pentagon City, Amazon is planning to leave most of its leased spaces in Crystal City.

Once the leases expire for temporary Amazon offices at 1800 S. Bell Street and 2100 Crystal Drive, in 2023 and 2024, respectively, JBG Smith intends to “take off-line and entitle [them] for alternate uses,” per a new report.

One of the buildings, 1800 S. Bell Street, could get the redevelopment treatment as early as 2026, the report says. JBG Smith included the property at the tail end of its near-term development pipeline for National Landing, the area composed of Crystal City, Pentagon City and Potomac Yard. It appears slated to remain for office use.

JBG Smith’s development pipeline in National Landing (via JBG Smith)

Amazon has always planned to consolidate its office space and move employees to its permanent HQ2, the first phase of which — Metropolitan Park — opened in June. There is still no word from the company on when the stalled second phase, Pen Place, could begin, though the delay may only be a year or so.

The tech company’s departure from two of its three leased offices will pile on more vacancies in JBG Smith’s portfolio, according to the real estate company’s report.

By the end of 2024, the company anticipates 1.2 million square feet of office space in National Landing will be vacated. Amazon currently occupies about half that square footage.

Amazon plans to continue to occupy 1770 Crystal Drive, located near the Alamo Cinema Drafthouse, the taqueria Tacombi and the proposed second entrance to the Crystal City Metro station, at the northwest corner of Crystal Drive and 18th Street S.

Excluding Amazon, JBG Smith says its current retention rate between now and the end of 2024 is about 50%, versus an annual average of about 70%. To bring the rate up, the company will focus on filling more up-to-date buildings going forward.

“Our efforts to re-lease certain spaces will be targeted toward buildings with long-term viability,” wrote Matthew Kelly in the report. “We expect to repurpose older, obsolete, and vacant buildings for redevelopment, conversion to multifamily, or another specialty use, ultimately reducing our competitive inventory in National Landing.”

JBG Smith declined to elaborate on what other specialty uses it envisions as well as properties it plans to either retain for tenants or develop.

Its report, however, outlines when each of its commercial holdings in Crystal City was built and when it was last renovated.

Of the four built in the late 1960s, three have not been updated since the mid-2000s. Another 10 were built in the 1980s and were renovated over the course of 15 years starting in 2006.

The report also provides a timeline for forthcoming redevelopment plans. It says Crystal City is slated to get new apartments in the following places:

A new office building is slated to come to 101 12th Street S. and either offices or apartments could come to 2525 Crystal Drive. JBG Smith has studied both at the site and the report currently lists its estimated residential redevelopment potential.

A map of JBG Smith’s commercial holdings in the area, as well as its pipeline of commercial and residential development opportunities, is below. Click on the window in the top left corner to see a description of the map, the different colors, and individual addresses.

Available offices on the rise in Courthouse due to aging buildings

By Jo DeVoe
A vacant office building in Courthouse in December 2022 (via Google Maps)

(Updated at 5:15 p.m.) One pocket of Arlington County has the most office space on the market and seeking tenants in the D.C. area, according to a new report.

A submarket made up of Courthouse, Clarendon and Virginia Square tops the charts for its “availability rate” — which includes any offices that can be leased now or in the next year — because of its high concentration of older office buildings.

“There are a number of dated 1980s-constructed buildings that sit idle as tenants continue to re-evaluate their office needs and often move to newer or renovated buildings in different submarkets,” says Ben Plaisted, vice chairman at commercial real estate company Savills, which produced the report.

In this submarket, Arlington Economic Development staff says 80% of offices were built more than 20 years ago.

“National and regional trends show that new leases tend to prefer buildings built in the past 10 years,” the county’s economic development arm said in a statement. “As a result, submarkets with newer product tend to have lower availability and submarkets with older product tend to have higher availability.”

Across Arlington, vacancy is concentrated in older buildings: about 75% of vacant square footage is within buildings at least 30 years old, says AED.

In response, why Arlington County is trying to infuse old office buildings with a mix of emerging businesses, such as research and development, artisan workshops, breweries and distilleries, and even pickleball courts.

Office availability rates and rents in the D.C. area (courtesy Savills)

AED provided a few caveats to the report.

It says Savills combined Courthouse, Clarendon and Virginia Square into one submarket, while another real estate company, CoStar, only combines Courthouse and Clarendon. That changes the overall availability rate.

Without Virginia Square, Clarendon-Courthouse has the second-highest availability rate in Northern Virginia and the D.C. area, behind Herndon, according to July 2023 data from CoStar, AED said.

Including Virginia Square means adding one major construction project to the mix: George Mason University’s FUSE building, says AED. The new facility has over 100,000 square feet listed as available for tenants.

The economic development division also says availability rates should be taken with a grain of salt.

“Availability rates can mask available square feet, as submarkets vary greatly in size,” AED said. “Therefore, the same amount of available square footage would appear as much lower availability rates in larger submarkets.”

Like other parts of the nation, Arlington is seeing tenants seek out smaller offices in higher-quality buildings, dubbed the “flight to quality.”

Overall, the report notes Arlington has some of the highest rent prices in the D.C. area, which is due to building quality plus proximity to D.C. and Metro. Over 60% of Arlington’s office product is listed by CoStar as Class A, or those built recently with attractive amenities and high rents, among other features.

“[Tenants] are willing to pay top dollar for high quality space but by reducing their footprint, they are not increasing their overall real estate costs,” Plaisted said. “The war for talent continues to be prevalent in the market and occupiers are looking to incentivize staff to be at the office by upgrading their physical location and space.”

Not everyone is reducing their footprint, however. AED says a half-dozen Arlington-based firms, from consulting firms to to government contractors, expanded their offices over the last year.

Meanwhile, a handful of British tech firms recently opened outposts in Arlington, while shipbuilding company Huntington Ingalls moved some of its offices from D.C. to National Landing.

Arlington has scored some commercial real estate wins with retention of tenants. The only notable tenant that AED says — to their knowledge — fully moved out of Arlington over the past year is the tech company Ostendio, which is now fully virtual.

Photo via Google Maps

New zoning changes make it easier to deliver food, operate shared kitchens

By Jo DeVoe
1/3

In another bid to encourage business growth, the Arlington County Board has made it easier to open shared kitchens and catering and food delivery operations.

On Saturday, the Board voted to amend the zoning ordinance to allow these uses by right in mixed-use, commercial and industrial zones throughout Arlington County. The changes streamline the regulatory approval process for several food-related uses, according to a county report.

“The outcomes of expanding food delivery to a by-right use support small business resilience by relieving businesses of unnecessary work,” the report said. That includes going before the County Board to seek approval for each use.

The changes are part of a flurry of approvals in the last 14 months to allow more uses by-right in these zoning districts. So far, the County Board has greenlit uses such as breweries, micro-fulfillment centers, podcasting studios, indoor pickleball and other emerging businesses to operate where they previously could not set up shop or needed special permission to do so.

All these updates happened in quick succession because County Manager Mark Schwartz debuted a faster zoning approval process that streamlined community engagement. The intent was to help Arlington respond quickly to changing market conditions and, ultimately, tackle the high office vacancy rate.

Food service was the next candidate for an update because, the report says, local regulations treated delivery operations like it was still 1988. (The iPhone debuted in 2007.)

Per the report, the zoning ordinance “does not account for the present-day popularity of modern food delivery services,” requiring food delivery not to exceed 20% of a restaurant’s sales.

Restaurants were relieved of that kind of provision — borne from a concern about delivery vehicle congestion — during the pandemic, the report said.

Food delivery has become a permanent part of how Arlingtonians eat, even after Covid dining restrictions lifted. This new way of doing business was under threat by the expiration of the Covid-era Continuity of Governance ordinance that relaxed delivery regulations.

The changes approved on Saturday, then, came in the knick of time for new and existing businesses, as the ordinance is set to expire in August — meaning the county would have reverted to 1988 delivery standards.

Businesses would have had to obtain County Board approval to continue delivery, had the Board voted down the zoning change. Some already did — Foxtrot in Rosslyn, for instance, went before the Board earlier this year to continue delivering beverages, ready-made food and grocery items.

Saturday’s vote also is helping another player in the app-based food delivery ecosystem: trailer-based ghost kitchens, the kind of which you might see in a parking lot between Clarendon and Courthouse. Ghost kitchen operators will no longer need certain permits to continue cooking.

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