taxes

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

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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Stormwater tax teed up for County Board adoption this weekend

By Jo DeVoe
Examples of impervious area that causes stormwater runoff (via Arlington County)

This weekend, the Arlington County Board is set to consider a new tax based on how much hard surface your property has.

Property owners with more hard surfaces that do not let rain soak into the ground — such as roofs and driveways — can expect to pay larger fees than those with fewer such surfaces. Revenue would support the county’s stormwater management fund, which pays for flooding mitigation projects.

The proposed rate would cost residents $258 per 2,400 square feet of impervious area, though this figure could change annually to support the budget, similar to how the county approves other fees and taxes. Property owners can receive credits for steps they take to reduce stormwater runoff.

Like the current sanitary district tax, the stormwater fee will be billed twice a year on the real estate bill, a county report says. The first bill will be sent to property owners in May, due June 15, 2024, and the second bill will come in September, due Oct. 5, 2024.

Homeowners can get a sense of their bill by plugging their address into an online map, which estimates impervious area using satellite imagery. This can range from $154 for a home under 1,600 square feet to some $19,000 for one local Catholic church.

The rate structure for the stormwater utility (via Arlington County)

If approved, the stormwater utility tax would replace the current sanitary district tax ($0.017 per $100 of assessed value on all taxable property) starting in the new year. The county says this is a fairer approach than using property assessments because there is not much of a correlation between property assessments and impervious areas.

“The rationale for using the amount of impervious area on each property, rather than all taxable real estate, is that it directly correlates with stormwater runoff that contributes to the County’s stormwater system,” a county report says. “Under the stormwater utility model, properties with more impervious area, which are therefore contributing more to the stormwater system, pay a higher fee.”

Following state requirements, Arlington will offer credits to customers who reduce the runoff their properties contribute to the stormwater system. In an informal Q&A last week, county staff said the number of credit applications coming in has kept them busy.

Arlington’s credit program rewards voluntary actions such as adding rain gardens. Now through Jan. 15, all property owners can apply for voluntary credits to offset up to 35% of their bill, or about $80 per 2,400 square feet. Details on credit options are spelled out in this county manual.

Properties where owners have added stormwater facilities mandated by statute, around 1,900, will automatically receive credits. These properties add up to about 1% of projected revenue and the county budgeted a total of 2% of revenue for credits.

Staff said the county will evaluate the amount of credits it dolls out each year, against the amount of revenue it needs to generate, to determine rates, and will study its rates every five years.

Senior and disabled residential property owners as well as disabled veterans and their surviving spouses are eligible for total fee relief, as they currently qualify for real estate tax exemptions and deferrals.

The idea of funding the county stormwater program with a tax on impervious surfaces has been in the works for three years. In May 2020, a consulting firm recommended Arlington transition to a utility funding model after researching how such a fee would affect different types of customers and examining different rate structures.

One year later, the Arlington County Board directed staff to do more analysis, engage the community and provide options for a utility fee by the 2024 proposed budget. In April, the Board adopted a resolution signaling its intent to adopt the stormwater utility ordinances.

County weighs tentative wage increases for trades workers against predicted 2025 budget gap

By Jo DeVoe
County workers fix a valve in Ballston (via Arlington Dept. of Environmental Services/Flickr)

Unionized trade workers have tentatively negotiated with Arlington County for wage increases and safety protections for the next four years.

Predicting a budget gap in the 2025 budget, however, the county says it will have to raise taxes or make budget cuts to pay for these provisions, according to a fiscal analysis the Arlington County Board is set to hear about during its Saturday meeting.

If the county opts to raise taxes, residents could see their bill go up $5-9 on average. This would be in addition to a predicted 1.8% increase in real estate values, which works out to an average increase of $146. For reference, property values increased 4.5% for 2023.

Higher taxes or budget cuts would cover most of the increases. The rest would be covered with a nearly $3 utility fee increase and a new stormwater utility fee that residents will begin paying in 2024 in lieu of the current sanitary district tax.

Arlington County held steady residential real estate taxes this year, at $1.013 for every $100 in assessed value. Arlington County Board Chair Christian Dorsey has foreshadowed this could go up next year, however. To cover the tentative wage increases, county officials are suggesting raising the rate to $1.0136 or $1.0141.

County government and the Service, Labor, And Trades (SLT) Bargaining Unit have tentatively agreed to 55 provisions, of which only a handful, including higher wages, have financial impacts, according to the county. Another would ensure employees do not end up getting less weekly pay after responding to emergencies.

“Crews work on emergency situations, like water main breaks, often outside of the normal workday schedule and can be scheduled outside of their normal hours to complete such work,” Director of Management and Finance Maria Meredith says.  “In cases where this occurs and impacts the normal work schedule, this premium ensures that staff will receive at least 40 hours of pay in the week if such a situation arises.”

SLT union members also requested more subsidized parking for unionized employees and the ability to do union-related work without forfeiting docked pay or paid time off.

This works out to about $1 million in additional expense in the 2025 fiscal year budget: $511,000 from the General Fund, $401,000 from the Utility Fund and $94,000 to other funds. Budgets through the 2028 fiscal year will be affected, too, and the county is now looking for funding sources.

“Given the projected budget gap in the FY 2025 General Fund budget, the $0.5 million FY 2025 impact of this potential agreement cannot be absorbed within estimated revenue growth without taking service reductions, increasing taxes, or a combination of these options,” per a county report.

The following chart shows two scenarios for how the tax bill could go up to cover the tentative agreement:

Scenarios for paying for wage increases for service and trades workers (via Arlington County)

If the Board opts not to raise taxes, it could pay for the $511,000 General Fund obligation with across-the-board cuts to the tune of 0.1% or eliminating about four full-time employees who earn $125,000 each, including benefits.

Any reductions “would be considered with input and engagement from the community,” the county says.

“In prior years, similar FTE reductions have been taken across a variety of agencies, including planning, public safety, human services and environmental services,” the county says.

Arlington County proposes a modest increase to the water-sewer rate to cover the $401,000 in increased costs coming from the utility fund.

On average, residential customers would see their water bill go up $2.85 per year. A $0.20 per thousand gallon rate increase to cover expenses to the Stormwater Utility Fund will be included in next year’s new stormwater utility fee.

In December, the County Board “can resolve to make a good faith commitment to appropriate funding to meet the obligations under the tentative agreement,” the report says. If the Board does not, either the County Manager or the union may reopen negotiations.

Photo via Arlington Dept. of Environmental Services/Flickr

Morning Poll: What are you going do with your Virginia tax rebate?

By ARLnow.com
Letter accompanying a Virginia tax rebate (photo courtesy anonymous)

Virginia residents have been receiving state tax rebates over the past week or so.

The rebates for those who paid taxes in 2022 — $200 for individual filers, $400 for joint filers — were approved by the Virginia General Assembly in a compromise budget and signed into law by Gov. Glenn Youngkin.

Putting aside the eyebrows raised by the checks going out during election week, we were wondering what our readers in Arlington are planning to do with their rebate.

Are you planning to go right out and spend it, invest it for the long term, or something in between?

Early voting picks up with November election less than two weeks away

By Jo DeVoe
Voting in Courthouse (staff photo by Jay Westcott)

Early voting is picking up speed in Arlington while Arlington County Board candidates focus on Missing Middle and taxes.

The general election on Nov. 7 is less than two weeks away and at this point, far more people are voting early in person this year compared to 2019, the last election year without gubernatorial or presidential races.

More than 4,700 mailed ballots have been returned, leaving around 9,000 still outstanding, while some 3,000 people have already hit the polls, per Arlington’s voter turnout dashboard. Early in-person voting appears to have picked up this week with the election drawing nearer and after polling places opened Tuesday at Madison and Walter Reed community centers.

Early in-person voting in Arlington in 2019 and 2023 (via Arlington County)

As Election Day looms nearer, Arlington County Board candidates have focused on few key local issues and the importance of voting, generally.

Republican Juan Carlos Fierro weighed in after a judge ruled residents have standing to sue the county for its Missing Middle ordinances.

“One of the reasons I entered this campaign for the County Board is because of my concern that the existing County Board was ramrodding Missing Middle without considering the views of most citizens, and for not conducting adequate development impact analysis,” Fierro said in a statement.

If elected, he said he will question all projects that increase density without considering negative impacts and respect that homeowners “do have in fact ‘standing’ to challenge the County’s development policies.”

Not enough study of potential impacts is one of the charges the residents who sued levied against the county. Arlington County did hear from many residents about a myriad concerns while deliberating the zoning changes and, after a three-phase study that included a financial analysis, the county determined impacts would be “manageable because the pace of change will be gradual and incremental.”

“While the Judge’s ruling is a positive step to either repeal or modify Missing Middle, it underscores the fact that the County’s public engagement process is not very democratic,” he continued. “The Judge admonished the County Attorney for stating that the lawsuit was a ‘subversion of our democratic process.’ The County Attorney’s comment illustrates the lack of understanding by the County on what is true public engagement.”

Repeat independent candidate Audrey Clement, meanwhile, is focused on lowering taxes and convincing residents not to vote for a straight Democratic ticket.

In a recent email newsletter, she noted Arlington County Board Chair Christian Dorsey discussed a possible tax increase next year during this month’s Arlington County Democratic Committee meeting.

“ACDC is confident that it can quell any taxpayer revolt by simply passing out the Democratic Party Blue Ballot at the polls on Election Day,” Clement said. “When voters refuse to hold their elected officials accountable at the ballot box by blindly voting the Blue Ballot, excessive taxation is the result.”

She urged readers to “turn this situation around” by voting for fiscal conservatives such as herself and Fierro. Together, she says, they will also revisit Missing Middle ordinances, emphasize basic services and reduce the office vacancy rate.

The two appear to have formed an informal alternative joint ticket to Democratic nominees Maureen Coffey and Susan Cunningham, to fill the seats vacated by now-former Board member Katie Cristol and being vacated by Dorsey.

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Virginia shoppers get a tax break on certain items this weekend

By James Jarvis
Point of sale payment at a store (Photo by Blake Wisz on Unsplash)

Don’t be surprised if your receipt lacks a sales tax charge this weekend.

Starting Friday at 12:01 a.m. and running until midnight on Sunday, a variety of products, from school supplies to refrigerators, will be exempt from taxation during a three-day tax holiday.

Virginia shoppers can take advantage of this tax break on certain items categorized into three groups

School supplies, clothing, and footwear

  • Qualified school supplies under $20
  • Qualified clothing and footwear under $100

Hurricane and emergency preparedness products

  • Batteries, flashlights, bottled water and other preparedness supplies under $60
  • Portable generators under $1,000
  • Gas-powered chainsaws under $350

Energy Star™ and WaterSense™ products

  • Qualifying Energy Star™ or WaterSense™ products under $2,500 purchased for noncommercial home or personal use

These eligible products can be purchased both in physical stores and online, as well as through mail or telephone orders.

The three-day “holiday” traditionally falls in August. However, this year, it was postponed due to a delay in state lawmakers approving a spending bill, which was ultimately passed in September.

“As Virginians continue to face inflation and high prices, Virginians will receive some needed tax relief this weekend,” Gov. Glenn Youngkin said in a press release. “This sales tax holiday is an important measure to help Virginians keep more of their hard-earned money when purchasing essential school supplies, hurricane preparedness items, and clothing.”

Photo by Blake Wisz on Unsplash

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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Once-soaring vehicle tax delinquencies in Arlington are coming down

By Jo DeVoe
Vehicle tax delinquencies spiked for the 2023 fiscal year compared to the two years prior (courtesy Carla de la Pava)

Last year’s soaring car tax values resulted in more people behind on their vehicle taxes, according to Arlington’s Treasurer.

Despite the uptick, Arlington County ended the 2023 fiscal year with historically few people behind on their taxes, Treasurer Carla de la Pava told the Arlington County Board on Tuesday.

The county closed out the fiscal year on June with the lowest delinquency rate in its history: under 0.16%.

Car assessments are determined by the office of Commissioner of Revenue Ingrid Morroy, weighing several factors including oil prices and supply-chain issues.

Bucking a century-long “depreciation pattern,” vehicle values — especially for SUVs, trucks and hybrid and used vehicles — rose last year due to widespread pandemic-era car shortages, Susan Anderson, a spokeswoman for the Office of the Commissioner of Revenue, tells ARLnow.

“Covid-19 had the largest impact when vehicle production and supply lines collapsed,” she said. “New cars were in tight supply and the laws of supply and demand were in full effect. Production of less-new cars available at elevated prices from dealers had a cascade effect on the used car market driving up prices.”

In response, the County Board in 2022 adopted a one-year-only reduced assessment rate at 88% of the clean trade-in value of vehicles. Despite this, the Treasurer’s Office, which collects the vehicle taxes, “still saw the highest tax delinquencies not just since the pandemic but the highest since the fallout of the Great Recession in 2008,” de la Pava said.

Taxes levied on vehicles make up the lion’s share of delinquencies, or 77% of the total delinquencies at the end of this fiscal year. Vehicle tax delinquencies went up 33% despite a far smaller increase in delinquent accounts, 3.4%. Almost half of these delinquencies involved vehicles worth at least $20,000.

Most delinquent accounts were opened the year prior and are concentrated in densely populated, highly transient areas, de la Pava said, which she attributes to new or short-term residents unaccustomed to a vehicle tax. Her office also hears from residents surprised their taxes went up after buying a new car.

The treasurer credited the 2022 reduced rate and delinquency prevention efforts for avoiding a surfeit of delinquent vehicle owners.

Compared to vehicle taxes, real estate taxes make up most of 88% of taxes levied and only 6% of delinquent taxes.

Delinquencies for the business tangible tax — for furniture and equipment inside businesses — were half a million dollars higher last fiscal year, compared to the year prior, though still lower than pandemic years, she said.

De la Pava credited the county’s online payments system for helping to keep a lid on delinquencies.

“People ask me all the time: ‘How is it that we have such a low tax delinquency rate?'” she  said. “Delinquency prevention is a big part of that. The Customer Assessment and Payment Portal, otherwise known… as CAPP, is one of the most important tools we have to prevent delinquency.”

Automated withdrawals via CAPP made up $51 million of the taxes Arlington collected, she noted.

Tax delinquencies by type (courtesy Carla de la Pava)

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Starting in 2024, Arlington County will tax your impervious surfaces

By Jo DeVoe
1/4

Last week, residents may have received a postcard outlining a new tax they can expect next year: a stormwater utility fee.

Like electric, gas, or water utility bills, this fee effective Jan. 1, 2024, would charge properties a fee based on use of and impact on Arlington County’s stormwater system. The new fee will replace an existing sanitary district tax calculated based on property assessments.

Residents of properties with more hard surfaces that do not let rain soak into the ground — such as roofs and driveways — can expect to pay larger fees than those with fewer such surfaces. Property owners can receive credits for steps they take to reduce stormwater runoff.

Revenue from the fee will fund stormwater capital projects — to the tune of $331 million over the next decade. To mitigate flooding, Arlington is also buying properties in flood-prone areas, adding stormwater detention vaults and making small drainage improvements, among other projects.

“The County is making this change now because the rise in severe flooding in recent years requires us to increase investments in our stormwater system, and a utility is a fairer way to distribute the cost,” per the county website. “These investments will help maintain, upgrade, and scale our stormwater infrastructure to better protect Arlington from future severe rainstorms.”

The Arlington County Board approved the fee with the 2024 budget earlier this year. It comes on the heels of a 2020 study by a consultant that recommended the switch and further study by staff.

The new model is fairer, says Arlington County, because it found property assessments were “weakly correlated” to impervious surface and these impermeable areas are “a better estimate of usage of the stormwater assessment.”

Before, the sanitary tax amounted to $0.017 per $100 of assessed value, or $136 a year for a home assessed at $800,000. Now, single-family homes could see a similar starting point for the stormwater utility fee, of $138 for homes under 1,600 square feet, with fees increasing as square footage increases.

Apartment and condo dwellers could see a flat rate of around $45.

This fee is based on a unit of measure Arlington County devised, called an “Equivalent Residential Unit.” The county calculated this by finding the average impervious coverage for single-family detached properties, which is 2,400 square feet.

Currently, one ERU is roughly $230-250, according to the county, though the final rate for 2024 will be set this fall and annually thereafter. Property owners would be charged based on how many ERUs compose their property. They can estimate that fee using a tool the county created.

The rate structure for the stormwater utility (via Arlington County)

People looking for some relief can apply for a credit program that rewards voluntary actions such as adding rain gardens. From Nov. 1 through Jan. 15, all property owners can apply for voluntary credits to offset up to 35% of their bill, or about $80 per ERU.

“The credit program is not a bill assistance program, but rather a thank you to customers for doing the right thing for the environment,” the county website says.

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Office vacancy rates are in a ‘transition’ phase, analyst says

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

(Updated at 2 p.m.) The newest trend in office leasing may be painful for Arlington County’s office vacancy rate in the short term — but it could be beneficial in the long run.

As companies try to coax employees enjoying remote work back to the office at least part of the time, some are trading spacious leases for smaller agreements with more amenities. Landlords are responding with more investments in renovations.

“We are right-sizing from the pandemic,” said Chaise Schmidt, a senior vice president of and broker with real estate company Colliers. “It’s truly a transition period.”

Arlington County’s office vacancy rate is continuing to climb, reaching 23.7% in the first quarter of 2023. That is up from 20.8% in the summer of 2022, up from 16.6% at the beginning of 2020 and 18.7% at the beginning of 2021.

Meanwhile, a Washington Post poll published on Friday found that “two-thirds of D.C. area remote-capable workers want to work from home ‘most’ or ‘all’ of the time.” Only 3% wanted to work from home “rarely” or “never.”

Much of Arlington’s local tax base comes from commercial property with tenants in it, so a high vacancy rate can mean more pressure on residential property owners to make up the difference in their taxes — if they want the forthcoming budget to pay for the level of services currently offered.

Northern Virginia rental rates over vacancy rates (courtesy Colliers)

But the news is not all bad. Organizations are still seeking to lease — they are just reducing the size of their office floor plans by 20-50% and, instead, paying more for higher-quality amenities, Colliers found. Schmidt said this has been christened the “flight-to-quality trend.”

“Business leaders are realizing you cannot build a company culture and innovation in an old, dark office space,” she said. “You need a beautiful, comfortable space, with lots of natural light, outfitted with a variety of meeting rooms of all different sizes.”

That will mean a higher vacancy in the short term but, she predicts, that rate will even out.

Some companies are moving out of older, less technologically equipped offices in lower-demand areas, dubbed “Class B and C buildings,” into more marquee “Class A and trophy class” buildings in Arlington, particularly in Rosslyn and Ballston.

“People want to be in Arlington,” Schmidt said. “Ballston and Rosslyn are getting a lot of attention.”

Two buildings in Ballston are set to come online soon: 3901 N. Fairfax Drive at the end of this year and George Mason’s FUSE at Mason Square next year.

Above-grade construction started in the fourth quarter of 2022 on 3901 Fairfax Drive, consisting of 178,131 square feet of office space, 16,185 square feet of retail and 7,311 square feet of “other space,” per a development tracking report from the Arlington County Dept. of Community Planning, Housing and Development.

The FUSE building, meanwhile, consists of 345,000 square feet for laboratories, classrooms, offices, startup incubators, co-working facilities and other uses.

“They are both true speculative buildings,” she said. “That’s showing us the confidence landlords have. They’re doubling down on Ballston.”

As for existing buildings, landlords are upgrading their leasable spaces and sweetening the deal with allowances for moving costs and for making improvements.

Common upgrades for business include establishing a tenant lounge and creating conference centers. But there are more distinctive changes.

“We’re seeing really fun amenities as well, like golf simulators,” she said. “It’s business but it’s fun, too. You want to pull people to your building.”

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