In light of the current economic environment and trends among retail and office occupiers, cities must rethink their policies on commercial development and their existing commercial properties. In recent years, Alexandria has seen several significant office building conversions, including EYA’s stunning conversion of a dated owner-occupied office building on the waterfront (pictured below) and Novus Residences’ revolutionary live-work e-lofts project, a transformation of an old federal government agency office building on the west end of the City.

Spotting this trend, City Council commissioned a study on Office Obsolescence and Conversions. This study revealed that conversions are driven by market and economic forces unique to each property such as lease expirations, building design, location, and ownership. Buildings which have become obsolete — declined in economic value and desirability — have been prime candidates for conversion. AEDP also discovered that every significant conversion project identified in Alexandria was preceded by the sale of the building. Finally, Alexandria’s extremely flexible zoning regulations when it comes to allowable uses may be more of an incentive then barrier to conversions.

According to another recent city study, many conversion projects have had a significant net positive impact on tax revenue. This is because the significant capital investments made by developers to reposition buildings to a higher and better use generates more revenue for the city while having a minimal impact on the need for additional city services like schools and public safety. Further, the investment of capital into outdated and underutilized real estate has enhanced neighborhoods and surrounding property.

Alexandria will continue to consider conversions that are not by-right on a case-by-case basis, however, the new understanding and ability to model fiscal impacts means the city is likely to be more supportive of adaptive reuse in the future. AEDP is slated to present the City Council with new policy options in the fall of 2017 designed to encourage and incentivize adaptive reuse of legacy office properties.