2022 Alexandria Year-End Market Report
Our 2022 Year-End Market Report looks at how market forces have shaped development trends throughout Alexandria, Virginia. Overall, Alexandria is experiencing many of the same trends we’re seeing nationwide as the region continues to recover from the aftermath of the pandemic.
- Lending has largely stalled. Due to volatile interest rates, lending activity from large banks became nonexistent toward the end of 2022.
- Development has slowed as rising construction costs, labor shortages, and increasing interest rates eat into developers’ ROI.
- Still-unanswered post-pandemic questions on office space use means that office development, in particular, is virtually non-existent. Due to market factors, any new development will likely need to be build-to-suit or 70%+ pre-leased.
- Many companies expect that these next three years will be crucial for determining true future office needs and policies. As a result, they are seeking increased flexibility in their lease negotiations.
By the Numbers
Alexandria’s Net Absorption: +474,581 SF. Thanks to the January delivery of the new Institute for Defense Analyses building in Potomac Yard, Alexandria shows a healthy net absorption, especially compared with the rest of the region. But without the IDA HQ, our absorption rate would have remained stagnant at about 1%.
Alexandria’s Vacancy Rate: 14.2%. Offset by the IDA HQ, this mostly-stable vacancy rate obscures a decline in leasing volume. That trend is expected to grow as demand for remote and/or hybrid office settings continues to reshape the market.