Downsizing the office

By Derrick Perkins (Image/City of Alexandria)

The developer behind a massive building project just a stone’s throw from the future site of the National Science Foundation drove home the dispiriting lack of demand for office space in Alexandria on Saturday.

Carlyle Plaza LLC asked for — and received — city council’s permission to shift the focus of its proposed high-rise at the corner of Eisenhower Avenue and Holland Lane. While the size and scale of the building would not change, the company wants the flexibility to substitute office space for additional hotel and residential development.

When first approved in 2012, Carlyle Plaza envisioned a cluster of mixed-use buildings — between five and 37 stories — with roughly 630,000 square feet devoted to office space, 632,000 to residential and 125,000 for a potential hotel.

But with the unexpected news that Alexandria would become home to the National Science Foundation, the company shifted gears. After receiving city council’s blessing, Carlyle Plaza can deduct 250,000 square feet of offices and reallocate it toward residential and hotel space.

Though city councilors unanimously backed the change, the move had critics. City Councilor Del Pepper went along with decision, but was “holding my nose as I do it,” she said.

“I’m very concerned about the fact that so much residential is coming in an area that we really had hoped would be office,” she said. “It just seems like there are so many plans … throughout the city where we start out having definite ideas of what is needed in this area, and it ends up, oh whoops, residential is what we can sell now.”

Carlyle Plaza’s request comes just weeks after city councilors got a grim briefing on the state of the tax base. While officials want to see office space balanced with residential developments, the ratio shifted even further toward the latter in recent months.

Mayor Bill Euille chalked up the lack of demand to cuts from austerity efforts on Capitol Hill, but City Councilor Tim Lovain saw technology playing a large role in the falloff.

“The need for space is shrinking because of digitalization and telecommuting — you don’t need the copier room and the file room. A lot of companies are finding that they’re shrinking their demand for office space. That, I think, is contributing greatly to the softening of the commercial real estate market,” Lovain said. “I don’t know when that’s going to turn around or change. That’s kind of a permanent shrinkage.”

Carlyle Plaza, though, pointed to the National Science Foundation as the catalyst for the change, according to city documents. One of three local landowners to vie for the highly sought federal agency, the company lost out to Hoffman Co.

Along with new jobs, the foundation is expected to bring a demand for hotel space to the Eisenhower east area.

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