Alexandria property values up 2 percent

Alexandria property values up 2 percent

By James Cullum (File photo)

The notices have been mailed and Alexandria’s overall real estate assessments increased 2.1 percent, or $792 million over last year, to a total of $39 billion.

While the city’s property values are the second highest in the region behind Falls Church, Va., it’s the lowest increase since the height of the Great Recession in 2009 and 2010, and the third-worst in 20 years, according to a staff report presented Tuesday to city council.

Mayor Allison Silberberg tried to find the silver lining in the modest growth.

“One of the signs of a good market is that it just keeps going up every year,” she said. “That’s what happened in Vegas, and, of course, things just tanked. So, it’s good to be going up, but it’s good that it’s a reasonable trajectory.”

But Vice Mayor Justin Wilson was not as optimistic. “I think, given how much we rely on the value of particularly multifamily development over the last several years, the slowing of just that alone is probably going to leave a mark,” he said. “We’re going to have to be ready to deal with potential reductions in revenue. What really worries me is that it won’t be this year or next, but at some point it dries up demand for the real estate market, and that’s a killer for local government.”

Alexandria, at 96.47 percent, is second only to Falls Church for the highest median assessment sales ratio. In third place stands the City of Fairfax at 95.72 percent, Arlington County at 93.34 percent, Fairfax County at 92.41 percent and Prince William County with 91.96 percent. This means that the city’s assessments were closer to full market value than all neighboring localities, except Falls Church, which leads the region at 96.71 percent.

The overall commercial property tax base increased by 2.5 percent — slower than last year’s 3.3 percent — or $398.8 million, for a total value of $16.3 billion.

There is currently no Class A office space — the most prestigious and expensive classification — available in Alexandria, and the city’s overall office sector increased 0.3 percent to $4.5 billion.

Alexandria saw seven commercial office building sales last year following six in 2015. The 605,000 square-foot Victory Center along Eisenhower Avenue has remained vacant for over a decade and its owners are still reportedly looking for it to be occupied by a federal agency.

In 2015, the General Services Administration announced that the Transportation Security Administration would move its headquarters to the property, but a judge vacated that decision following an appeal from a rival property. Last April, the GSA announced it would delay the TSA’s move until 2020.

“The city’s conventional office market is flat and continues to face challenges due to a general lack of demand, particularly in non-Metrorail-accessible sites, tenant concessions, lower effective rents and continued space compression upon renewal,” said City Manager Mark Jinks. “Old Town and Carlyle areas remain the most desirable [locations]. The West End of the city — Park Center, Mark Center and the Landmark area — continues to suffer vacancy problems, as tenants seek office locations within walking distance of Metrorail stations.”

On the residential side, the city’s tax base increased by 1.8 percent or $379.8 million, for a total of $22 billion. The average single-family home value increased to $730,449, a gain of 1.3 percent. And the average value of a city condominium increased by less than 0.2 percent to $310,990.

The value of Alexandria’s 24 hotels increased by 16.4 percent, or $116 million, to a total of $825.3 million, of which $11.8 million can be associated with new growth.

Real estate taxes account for 57 percent of the city’s annual revenues, and council is already envisioning difficult budgeting days ahead as uncertainty looms over potential cuts from the federal government, President Donald Trump’s temporary federal employee hiring freeze and other economic factors.

Former Mayor Bill Euille served from 2003 until 2015, and is familiar with uncertain budgets.

“The budget has been scrubbed, scrubbed, scrubbed down over the last 10 years and to where there is very little you can cut but services,” he said. “Everybody in the region is in the same boat. Fear of further reductions in the federal government’s investments has slowed down the regional economy. Everybody is scared. We still don’t know the impact that the so-called Trump effect will have on housing affordability and local budgets.”

City residents should have received notices by mail on February 15, have until March 15 to request a review with the office of real estate assessments and until June 1 to file an appeal with the city board of equalization.