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To understand office vacancy rates in Northern Virginia, Art Greenberg, the Washington, D.C.-based vice chairman for tenant advisory firm Savills Inc., employs the turkey sandwich test.

In short, he explains, today’s workers want an office building where they can walk a block or two and find a half-dozen places to get a turkey sandwich for lunch. Maybe several are fast casual joints, and maybe one or two are mid-level restaurants or even a higher-end spot.

In areas where workers can find that, Greenberg expects low office vacancy rates. But in suburban office parks, far from Metro trains or walkable areas, he expects more vacancies.

Office vacancy rates in Northern Virginia remain at record high levels, according to analysis from commercial real estate firms JLL and CBRE. As of June, roughly 24% of the region’s estimated 150 million square feet of office space was vacant. That’s about a half a percentage point higher than in March and about 4 percentage points higher than the beginning of 2020.

These higher vacancy rates have created a cascading concern for municipalities such as Fairfax County, Arlington County and Alexandria, where local leaders are weary of declining value for local office buildings and shrinking local tax revenues.

In turn, the vacancies have forced leaders in Northern Virginia cities and counties to push for a series of changes, ranging from fast-tracking zoning changes to requesting state aid to redevelop critical urban corridors to reconsidering novel uses for traditional buildings.

All the while, office construction has slowed and is expected to result in about one-third of the new square footage added in 2022. Banking and real estate officials are still worried about high interest rates that can squeeze building owners. There’s also a lack of clarity about office space needs amid a post-pandemic remote and hybrid work environment.

But generally, they say, the region is faring about as expected.

“This shoe that was supposed to drop any time within the last 12 or 24 months doesn’t appear to have dropped in as adverse or negative of fashion as a lot of people expected it would with respect to commercial real estate,” says Bruce Whitehurst, president of the Virginia Bankers Association. “Within the regulated commercial banking industry, losses on commercial real estate loans just haven’t materialized in the way that I think a lot of people expected two or three years ago.”

Instead, analysts say, a careful parsing of the numbers reveal two markets for office space in Northern Virginia.

The first, reaching from Dulles International Airport and following to Reston through Tysons, then Rosslyn and on to National Landing, is home to a stretch of trophy Class A office space where vacancies are tight. Those offices are newer, with more amenities (think phone booths and rooftop decks) and more places for employees to socialize at lunch or after work. Office vacancy rates at Reston Town Center are at about 4% to 6%, according to reports from JLL and BXP. It is part of a stretch, to Greenberg’s point, where turkey sandwiches may be found in abundance.

The second market contains much of the rest of the region. About 80% of the vacancies in the region come from older buildings and Class B or Class C office space. Many of those were built in the 1980s and 1990s and lack amenities such as modern IT infrastructure. Some will be redeveloped, and some will simply need to be torn down.

“We have, frankly, [office] product that has become obsolete and that we need to redevelop, reposition or divert, to do something different with,” says Ryan Touhill, Arlington’s economic development director.

The question then becomes what something different looks like.

A new lease on life

Real estate analysts and local economic development officials describe a demand for modern buildings and neighborhoods that are higher on environmental and walkability scores, those with natural light, more breakout rooms for collaboration and more private booths to take a phone call. They also boast infrastructure like whiteboards and videoconferencing technology. They tout rooftop decks with generous seating and updated, modern gyms, not an old closet with a few free weights.

“Trophy office buildings that are highly amenitized, that have great workspaces [and] that are in larger neighborhoods, continue to perform well, while older office buildings that have not been updated for some time or which may have outdated amenities … are struggling … to retain and attract tenants,” Touhill says.

According to JLL, vacancy rates for trophy office space a decade ago topped 35%. Today, it’s about 12.7%, while the remainder of the market is at about 23.7%.

But what the future holds for older buildings is that they may need a new lease on life.

For roughly two years, Arlington County has been working to make it easier to redevelop, reposition or divert properties by removing regulatory barriers and constraints.

When building owners want to invest in a project, they often ask two questions: How long is local government approval for this going to take? And how much is this going to cost?

“Right now, we’re trying to get more competitive on those two things,” Touhill says.

By the end of 2024, Touhill says, the county hopes to have completed a revamping of local ordinances that would provide developers with a streamlined checklist process for gaining approvals to revamp office buildings.

Economic development officials and industry experts point to a host of possible ways abandoned office buildings could be converted into other uses. One possibility, says Michael Hartnett, JLL’s Washington, D.C.-based senior director of mid-Atlantic research, could be data centers. Another could be multifamily residential or townhomes.

One of the oft-cited examples of the latter is the former three-building Park Center office complex in Alexandria. Previously, a combined 568,000 square feet, the site was converted into a 435-unit apartment community with 115,000 square feet of office space along the Interstate 395 corridor in 2022. The project was part of a joint venture between USAA Real Estate and Lowe that turned Class B office space once used by the U.S. Department of Agriculture into living units with dens and walk-in closets.

Alexandria allows developers to convert office buildings to residential “by right,” especially if they increase a neighborhood’s population density. The Foundry, a former federal office building and home to Department of Defense workers, was redeveloped in 2020 by Perseus Realty, ELV Associates and Four Points into a 16-story apartment building.

But the difficulty with such swaps, analysts say, is that such buildings often require a significant reworking of mechanical systems. For example, think about the difference between bathroom plumbing alone or the location of windows.

Another possibility could be hotels. Alexandria economic development officials point to the Heron Hotel, which opened in June on Prince Street in historic Old Town. Formerly known as the George Mason hotel, it operated as an inn from 1929 to 1971. Then it became office space, housing the headquarters of the National Center for Missing and Exploited Children until 2018. Interior demolition to transform the building back into a hotel started in 2019, but when the pandemic hit in March 2020 and tourism plunged, financing fell through.

Alexandria economic development officials were able to help the developers — a partnership between Aparium Hotel Group, May Reigler Properties, and Potomac Investment Properties – with an application for Virginia’s Tourism Development Financing Program, which provided roughly $6.2 million in gap funding in January 2022. Through that program, the developer issued bonds that will then be repaid by the developer and future sales tax revenue generated at the hotel.

But not every building will find a new purpose.

JLL’s Hartnett points to 10.1 million square feet of office space throughout Northern Virginia that is waiting to be torn down before the property can be put to a new use.

“It’s not like they can sort of reskin the building and convert it overnight from an office building to an apartment building,” he says. “They really do have to tear it down. But what we’re finding is that there’s a huge appetite out there to … rightsize the market. … Whether it’s outside the Beltway in your Dulles Airport or inside the Beltway all the way to Rosslyn, just across the bridge for D.C., you’re seeing appetite from landlords to convert … and bring more residential, bring more foot traffic into the market.”

Federal foundation

Despite the record-high office vacancies, industry analysts and local officials note that the Northern Virginia market is insulated by space leased by the region’s numerous federal agencies and contractors. The Rosslyn area of Arlington, near the Pentagon, for example, has the highest gross asking rent for the region, $47.28 per square foot, according to the CBRE report. The region average is about $37.59 per square foot.

That report also notes that much of the leasing activity in the area during the spring came from government agencies, federal contractors and major companies in the region. For example, defense contractor Northrop Grumman Mission Systems renewed its lease for a 300,000-square-foot office near Fairfax Center. Meanwhile, global construction and engineering firm Bechtel is leasing a nearly 300,000-square-foot office in Reston. Additionally, the federal Cybersecurity and Infrastructure Security Agency extended its lease in an 88,000-square-foot building in Arlington’s Ballston area.

And while new office construction remains at low levels, some businesses are making significant investments in urban areas ranging from Dulles to National Landing.

CoStar Group, the global real estate data company behind Homes.com and Apartments.com, paid $339 million for a new headquarters tower in Arlington earlier this year. And Bethesda, Maryland-based JBG Smith is making massive investments into office towers in the National Landing neighborhood being developed around Amazon.com’s East Coast headquarters, HQ2.

While federal government spending can provide a foundation for the region, Touhill says his county department is also targeting dual-use companies that serve both the public and private section, as well as tech startups and aerospace and cyber companies.

Reflecting the county’s efforts to diversify its economy, he says, his office is planning for “future growth that isn’t so heavily dependent on what is the DOD budget this year.”

Such a shift means a greater focus on international business development, attracting companies from overseas and targeting industries such as defense, aerospace, technology, cyber and fintech, he says.

Relying less on federal spending may also make sense because the government has also not been immune to trends in remote and hybrid work and has been reducing its footprint nationwide. That’s reflected by moves such as the U.S. Patent and Trademark Office shrinking its footprint in Alexandria’s Carlyle area by roughly 800,000 square feet, from 2.4 million square feet to 1.6 million.

The path forward

Marian Marquez, senior vice president for the Alexandria Economic Development Partnership, says the partnership is working to “catalyze” neighborhoods throughout the city, including Potomac Yard and the former Potomac River Generating Site in the Old Town North neighborhood.

The question economic development leaders ask themselves, she says, is, “Who are these other users of space that are going to drop people into the neighborhood and what does that look like?”

The answers could include an entertainment venue that generates tax revenue through admission and events.

As for bankers, Whitehurst says, they need to continue to rely on the myriad data that is now available to ensure a loan is best positioned to perform and be repaid.

And, Greenberg says, city and county leaders should think about what they can do to make for smoother, more streamlined transitions of empty buildings. “I think all of the municipalities could reexamine and say, ‘What can we do to be more flexible?’” he says.

But he also mentions another factor for regional leaders to consider: A longer-than-expected commute will disincentivize workers from coming to the office no matter the amenities. In that regard, perhaps the best improvement for office space, he suggested, would be state and local investment in transportation infrastructure to lessen congestion.

Touhill suggests a state program could be developed to help large cities provide some funding to redevelop and reposition underperforming sites with the goal of creating mixed-use developments and at the same time helping to solve the housing supply issue. But in the near term, he wants to continue to tweak the formula.

“What I would consider success is changing that denominator in the vacancy equation to taking some of those older buildings offline … [and paving] the way for new investment and new development or redevelopment,” he says. “I think that’s really what I would consider successful in the next 12 to 18 months, and I think we’re on the path to do so.”  

Old Town Alexandria. Photo by Chris Cruz/Visit Alexandria

Northern Virginia at a glance

The commonwealth’s economic engine, the Northern Virginia region — including Arlington, Fairfax, Loudoun, Stafford, Spotsylvania and Prince William counties, as well as the cities of Fairfax, Fredericksburg and Alexandria — is home to many federal contractors and government workers due to the region’s proximity to Washington, D.C. Higher education institutions in NoVa include George Mason University, the University of Mary Washington
and Northern Virginia Community College.

Population

2.8 million

Major employers

•  Amazon.com  •  Booz Allen Hamilton
•  Capital One Financial  •  Freddie Mac
•  General Dynamics  •  Inova Health System

•  Northrop Grumman  •  RTX

Fortune 500 companies

AES (Arlington)

Beacon Roofing Supply (Herndon)

Boeing (Arlington)

Booz Allen Hamilton (McLean)

Capital One Financial (McLean)

DXC Technology (Ashburn)

Freddie Mac (McLean)

General Dynamics (Reston)

Hilton (McLean)

Leidos (Reston)

Northrop Grumman (Falls Church)

NVR (Reston)

RTX (Arlington)

Science Applications International Corp. (Reston)

Major attractions

Northern Virginia boasts a series of historical and cultural attractions including Mount Vernon, George Washington’s Potomac River estate, Arlington National Cemetery and the Udvar-Hazy Center, the Smithsonian National Air and Space Museum’s annex, where visitors can see the retired Space Shuttle Discovery. Outdoor lovers will find ample parks and trails, including Great Falls Park and Wolf Trap National Park in Vienna, which includes an outdoor amphitheater that attracts national performers. Shoppers love Tysons Corner Center mall, which got a recent shoutout from Foo Fighters’ Dave Grohl, who grew up in Springfield, and Old Town Alexandria, which has cobblestone streets and boutique shops.

Boutique luxury hotels

The Blackburn Inn and Conference Center (Staunton)

The Mimslyn Inn (Luray)

The Georges (Lexington)

Watermark Hotel (Fairfax County)

Top convention hotels

Westfields Marriott Washington Dulles
(Chantilly)
59,538 square feet of event space, 336 rooms

Hyatt Regency Crystal City (Arlington)
53,000 square feet of meeting space, 685 guest rooms

Crystal Gateway Marriott (Arlington)
39,963 square feet of meeting space,
703 guest rooms

Hilton Alexandria Mark Center
(Alexandria)
37,091 square feet of event space, 319 rooms

DoubleTree by Hilton Hotel
Washington D.C. – Crystal City (Arlington)
33,584 square feet of meeting space, 627 guest rooms

Notable restaurants

Virtue Feed and Grain (Alexandria)
Farm-to-table American,
virtuefeedgrain.com

Field and Main (Marshall)
Southern, fieldandmainrestaurant.com

Ellie Bird (Falls Church)
Contemporary casual, elliebirdva.com

Mama Chang (Fairfax)
Chinese, mamachangva.com

Nostos (Vienna)
Greek, nostosrestaurant.com

Ruthie’s All Day (Arlington)
Mid-century modern, ruthiesallday.com

The Salt Line (Arlington)
Seafood, thesaltline.com

VDOT buys Owens & Minor’s Hanover HQ for $33.5M

The Virginia Department of Transportation has purchased the Mechanicsville headquarters of Owens & Minor for $33.5 million, with plans to move the state agency’s central office there in summer 2025.

Much of VDOT’s staff will move from the Annex building at 1401 E. Broad St. into the new building at 9120 Lockwood Blvd. in Hanover County, according to Jessica Cowardin, assistant director of communications for the state agency. The 160,000-square-foot campus in Atlee Station Business Park was built by Timmons Group in 2006. VDOT also purchased an additional 50 acres, according to Newmark Group, which brokered the deal.

Meanwhile, Owens & Minor expects to vacate the building by the end of this year. The Fortune 500 global health care logistics and supplies company plans to relocate its corporate headquarters somewhere in the Richmond region. While declining to specify where the company would move, a company spokesperson said the move “better reflects the current needs of our organization and our teammates.” Owens & Minor has 1,400 employees in Virginia and more than 20,000 worldwide, including hundreds of workers in the Richmond area.

The move will not impact the company’s operations and is a reflection of workplace trends and worker preference, according to the company.

Owens & Minor headquarters
Photo courtesy Newmark

In November 2020, Owens & Minor announced it was pulling the plug on its 90,000-square-foot downtown Richmond call center and would be seeking tenants to sublet the space after so many workers started working remotely.

“We’re proud that Owens & Minor has called Richmond, Virginia, home for more than 100 years, and look forward to our continued presence in the local community,” a statement from the company said.

Brandon Turner, director of Hanover County Economic Development, said Monday that he doesn’t expect Owens & Minor’s next headquarters to be located in the county. “It would be very difficult because we don’t have a lot of Class A office space,”  he said. “What we have is very small, and I think what they’re looking for is larger than what we have available on the market in Hanover.”

Owens & Minor moving to a new headquarters is a double-edged sword, Turner said. The company will be off the county’s tax roll and VDOT, as a Virginia state agency, will not pay taxes.

“That in and of itself is a bit of a hit,” Turner said. “On the flip side, the building is heavily underutilized right now by Owens & Minor due to their [work-from-home] policies. When VDOT comes up, they will bring significantly more individuals up here, and those people will be going out into the neighboring businesses [and] eating, buying groceries, whatever. So if you own a business in this corridor, it’s going to be a boon.”

Andrew Sandquist and Adam Faulk, JC Asensio and Adam Petrillo,  Briggs Goldberg, Will Bradley and Mark Williford, all of Newmark, represented the seller on the transaction.

Owens & Minor reported $10.3 billion in 2023 revenues, up from $9.9 billion in 2022.

This iconic, round office building in Richmond’s Museum District sold for $1.2M

One of Richmond’s most Instagram-worthy buildings has sold for $1.2 million.

Located on the corner of Thompson Street and Floyd Avenue in the Museum District,  the 1950s-era, circular building previously served as headquarters for Ellwood Thompson’s Local Market, a local organic grocer. The building sold on April 23 but Cushman & Wakefield | Thalhimer announced the sale last week.

Rick Hood, the grocery store’s former owner and an architect who previously practiced at Richmond’s Glavé Newman Anderson, bought the building in 2015 for $300,000.

In 2017, Hood went to work renovating the building. Partnering with a project team that included Richmond-based Walter Parks Architects, Dunlap & Partners Engineers, Four Winds Design, Sadler & Whitehead and J.A. Heisler Contracting, Hood’s restoration “kept the architectural integrity of the existing structure but also enhanced functionality and aesthetic details,” according to a news release issued last week about the sale from Cushman & Wakefield | Thalhimer Capital Markets Group.

The renovated building at 3540 Floyd Ave. won the 2021 American Institute of Architects Virginia Test of Time Award, which recognizes a structure that is 25 years old or older that still stands “as originally designed in appearance and in good condition.”

The western exterior courtyard of the building has been often used for community gatherings, such as events for Historic Richmond, according to Hood. “We can accommodate 125 people there,” he said.

After Hood sold his organic grocery store in 2023 to Florida-based Healthier Choices Management, he put the round office building up for sale.

It sold last month to an entity tied to real estate developer Dan Hargett, founder and CEO of Richmond-based Roka Partners, according to the release. Hargett did not immediately return a request for comment. Hood declined to comment about Hargett’s plans for the circular building.

After the extensive renovation, Hood said he didn’t make “much money” on the sale. “A little, but that was fine,” he said. “I wanted to do a nice job.”

A collage of shots of a round building built in the 1950s.
Photos courtesy Cushman & Wakefield | Thalhimer Capital Markets Group

This wasn’t a quick flip for Hood. “It was something that just gave me a lot of satisfaction to to bring back a special building that the community values and then to frankly … find someone that really wanted to continue to treat it in that way, and I think Dan Hargett is just the right person to do it.”

Dr. William Higgins Jr. was responsible for bringing the iconic building to the Museum District. When considering a new office in the 1950s, Higgins Jr., consulted with his friend Leslie Cheek Jr., an architect and director at the Virginia Museum of Fine Arts, according to the news release. He took Cheek’s advice and hired David Yerkes, a Washington, D.C.-based architect.

“It was done very, very well by Yerkes,” Hood said. “And you know the details and the quality of the materials. All the trim was redwood. And it’s old growth redwood, so all of it remains today in good shape.”

Dr. Jack Ashworth went on to practice for more than a half century — until 2016 — in the 2,750-square-foot office building. In the release, Ashworth praised the way the building’s floor-to-ceiling windows allow morning light to stream inside.

The transaction was handled by Catharine Spangler of Cushman & Wakefield | Thalhimer’s Capital Markets Group.

 

Fredericksburg warehouse leased by food bank sells for $2.9M

A warehouse leased by the Fredericksburg Regional Food Bank has sold for nearly $3 million.

Nellis, a Maryland-based private investment company, purchased the 24,000-square-foot industrial warehouse on 2.89 acres from Fredericksburg-based entity MDC 480 Central for $2.925 million, according to an April 25 news release from Cushman & Wakefield | Thalhimer.

The Fredericksburg Regional Food Bank has leased the property since 2021 and uses it for additional office space, to store food supplies, operate a grocery pickup program and conduct volunteer assembly line activities, according to Dan Maher, the food bank’s president and CEO. The food bank’s lease on the property runs through the fall of 2026, he wrote in an e-mail.

The property, which is located at 480 Central Road, includes 19,700 square feet of open warehouse space, 4,300 square feet of finished office space and 4,300 square feet of mezzanine space, according to Fredericksburg-based Johnson Realty Advisors. Its offerings include six offices, one conference room, one large lunchroom and an elevator.

Previously, the property was owned by Rappahannock Goodwill Industries, which used it as a commercial laundry, according to Cushman & Wakefield | Thalhimer.

Jamie A. Scully of Cushman & Wakefield | Thalhimer handled sale negotiations on behalf of the purchaser.

 

Making the office cool again

It didn’t take long for Spurrier Group employees to want to be back in the office after the pandemic began.

Within the first four weeks of workplace shutdowns in 2020, the women working at the Richmond-based strategy and media-buying firm started asking CEO Donna Spurrier when they could return to the company’s comfortably fashionable office, with its Restoration Hardware furniture, overstuffed chairs and full kitchen. During a recent interview, Spurrier even had a chicken roasting in the office’s kitchen oven.

Her 14 employees — all women — returned to the office only weeks after the initial pandemic shutdowns. Spurrier says she wants them to feel comfortable at work, and among other benefits, she pays for weekly on-site 30-minute massages and car washes. “Moms are busy — busy. Women in general, we’re busy,” she says. “Who has time to wash their car? No one. So, if I can bring somebody in here washing [cars] in the parking lot while we’re working and being productive, well then, that’s a bonus. People love it.”

While Spurrier’s team is all-in on in-person work, that’s not the case for every company listed among Virginia’s Best Places to Work — or even nationwide. A March 2023 Pew Research Center survey found that, among U.S. full-time workers whose jobs can be performed remotely, 35% were working remotely and 41% were working hybrid schedules.

Whether their employees are working remotely, hybrid or in-person, the 100 companies making up Virginia Business’ 2024 Best Places to Work cohort have one big thing in common: showing appreciation to their employees through special perks, gifts, rewards and flexibility.

Now in its 14th year, the Best Places to Work in Virginia program started in 2011, when Virginia Business and Pennsylvania-based Best Companies Group began collaborating to identify the state’s top workplaces. Best Companies Group selects the winners based on surveys conducted with companies and their employees that include detailed questions about culture, worker satisfaction, training opportunities, benefits and more.

In-person perks

Reston-based ThunderCat Technology, which has made the Best Places to Work in Virginia list for more than 10 years, happens to employ a lot of golfers, which makes its in-office golf simulator a very popular perk. Employees at the federal information technology contractor play golf together outside of the office, sponsor golf events and take golf trips together, says co-founder and CEO Tom Deierlein, so prioritizing an in-office space for practice was a no-brainer.

Even though golf is sometimes viewed as an “old boys’ network,” women at ThunderCat also have embraced the game and have created a women’s golf group, whose members receive lessons at local driving ranges paid for by the company. Other employees also have taken training “courses to help them learn, be more comfortable and have fun on the golf course,” Deierlein says.

After moving last year to a new headquarters office in Reston that included more meeting spaces, plus access to a gym and a deli, ThunderCat installed the high-tech golf simulator.

“Once we found a building with those basics, we then turned our attention to special things that would motivate folks post-pandemic to want to come back into the office,” Deierlein says. “We knew that our shared love of golf could be a factor, along with the business and convenience aspects, to motivate folks to come back to the office.”

Now, ThunderCat has started a company league in which people are blindly matched with a partner playing in two-versus-two matchups on digital courses. ThunderCat has also added a racecar simulator since they have “quite a few folks into cars and racing,” Deierlein says.

Along with the golf and racing simulators, ThunderCat provides an on-site gym and a dedicated “quiet wellness room” for nursing, rest and reflection time. Employees also have standing desks “to minimize physical strain,” as well as dual monitors, blue light glasses and noise canceling headphones. Employees can unwind by playing a game of cornhole, putting together puzzles, coloring posters, or enjoying healthy snacks like fresh fruit, yogurt and cheeses. They also have the option to work outside, where the company has provided chairs and couches with a pond view.

At Richmond’s Good Run Research & Recreation, in-person work looks a little different from most offices. Employees at the consumer market research firm are greeted by two tire swings — a pillar of the “Rec Room,” the nickname for the office where
17 full-timers work. A candy wall, massage chair and puzzle board round out the space.

“The whole building is designed so that it feels vibrant and fun and engaging from the minute you walk in,” says Good Run President and CEO Stacy Thomas. “We are naturally — as people — imperfect and messy, and we color outside of the lines, and so, we really wanted to create a physical space, as well as a conceptual space, that really embraces that truth that we are.”

Richmond consumer market research firm Good Run Research & Recreation workers nicknamed their office — featuring tire swings, a candy wall and massage chair — “the Rec Room.” Photo by Caroline Martin Bookbinder

Out of office

Another way that companies recognized as Virginia’s Best Places to Work have earned recognition is by providing unconventional benefits outside of the workplace. Sometimes this means company-hosted trips or out-of-office events. For example, Troika Solutions, the Reston-based management and technology consulting firm that won this year’s small employers category, has taken its workers and their significant others on vacations to Disney World and Las Vegas.

When the pandemic started in 2020, the company treated employees to a stay at the W Washington D.C. (now the Hotel Washington), a luxury hotel across from the White House, says Kenneth Lasure, president and CEO of Troika Solutions.

“It’s my responsibility to make sure I can provide that environment for them,” he says. “I think that makes it enjoyable.”

Similarly, ThunderCat Technology hosts companywide trips. These vacations used to be available only to top performers, but company leadership struggled to set fair and objective criteria to qualify for the trip. A few years back, the company had a “particularly good year,” and decided to take all employees on a trip to the Caribbean.

“A funny thing happened when we were there,” Deierlein recalls. “I looked around the final dinner and saw the connections, the laughs and the smiles. I was happy to see us all together. So, from that night forward, we decided this wouldn’t be a one-time thing, and announced on the beach that the club trip was open to everyone every year.”

Now, that companywide vacation has morphed into an annual trip at no cost to employees that also includes corporate trainings and other team-building activities.

Awards programs are also commonplace among 2024’s Best Places to Work in Virginia — whether themed for holidays, fun contests or simply recognizing employees randomly.

At ALKU, a Massachusetts-based staffing and recruiting firm with an office in Herndon, employees participate in sales-motivated competitions. Prizes include afternoons off on Fridays and box seats at Washington Capitals NHL games.

The competitions help provide the “motivation going to keep hitting our numbers,”
says Lauren Husson, a talent marketing coordinator with ALKU. “It’s just another little extra bonus for people to look forward to, because especially on the revenue side, people are making those phone calls all hours of the day.”

Good Run Research & Recreation likes to treat its employees to special events and gifts throughout the year. Every month or so, the company hosts Good Run Fun events, all of which are meant to provide time and space for employees to share an in-office cocktail or mocktail and do an activity. Some Good Run Fun events are also open to friends, family and clients, like in December 2023 when the firm served Moscow mules while employees put up holiday decorations. Good Run also has an RV that sleeps eight to 10 people and is available anytime for employee use.

There’s a reason that “recreation” is part of the company’s name, Thomas says. “We believe we are the best versions of ourselves — at work and at home — when we’re having fun.”

Other ways that Good Run rewards and recognizes employees include its annual “12 Days of GRRRISTmas,” a program in which the company makes donations to nonprofit organizations that have personal meaning to its workers and gives gifts like company swag and gift cards. 

“It’s not the traditional benefits necessarily that make the difference,” Thomas says. “It’s the little things. Life’s too short to just have a job, right?”  

Fix-it shop

Since becoming Arlington County’s economic development director in November 2022, Ryan Touhill’s most pressing challenge has been sharply delineated: The county’s office vacancy rate has hit 23.7%, nearly twice the national rate of 13.1%, a record high itself, according to the National Association of Realtors.

Like other localities, Arlington is coping with multiple factors that create urban building graveyards: fully remote white-collar jobs, hybrid work policies that require less office space, and a preference among businesses for streamlined, modern offices ready for the latest technology, as opposed to aging facilities.

Considering how best to generate tax revenue for the county, Touhill says, his immediate concerns are, “How do we drive more demand? How do we remove oversupply of office space? How do we impact value?”

Arlington’s certainly not alone in asking such questions, although its situation is more dire than other Virginia localities. In Richmond, just 10% of offices are sitting empty, and only 8.1% in Hampton Roads, according to statistics released for 2023’s first quarter. As of July, Fairfax County had a 16.7% office vacancy rate, and Washington, D.C.’s rate was 18.9%.

Washington and its surrounding localities were particularly hard hit by the pandemic-driven office shutdowns and subsequent slow returns to in-person work.

Kate Bates, president and CEO of the Arlington Chamber of Commerce, says the high vacancy rate is a crisis that is impacting local government funding for services such as social services, schools and parks, all of which are reliant on commercial tax revenue.

“Arlington’s tax base on the real estate side is 50% residential and 50% commercial. It’s important to everything that we keep as much of a balance as possible,” she says.

The county’s real estate tax revenue makes up 58% of its general fund revenues, and Arlington generated $852.2 million in real estate tax payments last year, according to its fiscal 2023 budget. Residential real estate taxes made up 29% of local taxes collected, compared with 16% for commercial real estate levies. And while commercial property assessments increased by 0.6% in 2022, office property values declined by 9.6%.

“There is no silver bullet, or we would have figured this out already,” Touhill says, but his department has launched a series of initiatives to shrink the vacancy rate and expand long-term business opportunities in the region.

Rezoning initiative

Tina Leone, CEO of the Ballston Business Improvement District, says loosening regulatory barriers for the use of office-zoned properties has made a big difference in opportunities offered in Arlington.

To attract employees from at-home work, Leone says, “you have to adapt to the new ways people are working.” That means repurposing some office space to offer services such as child care, pet boarding, indoor recreation and distilleries.

Ballston Business Improvement District CEO Tina Leone says office spaces have needed to adapt to attract workers. Photo by Will Schermerhorn

“There’s a host of new uses. There’s pickleball. There was a request from a company that wanted to put in ice hockey coaching, with flooring that doesn’t require ice. There’s some industrial uses and makerspaces. Designing and constructing clothing is now allowed. There’s urban farming,” Leone says. “We’re on the cusp of something huge.”

Known as the Commercial Market Resiliency Initiative, the program started last year with an update of zoning ordinances.

It’s one way to help reduce the glut of office space, Touhill says. “We wanted to make sure that if a landlord found a tenant, there was not any obstacle.” The results so far, he says, have been “a dozen new uses.”

Bates lauds the streamlining of what she says was an outdated, overly restrictive zoning process. “There are a lot of the uses we see now that weren’t invented when the zoning code was written,” but the chamber would still like to see the county make some adjustments. For instance, don’t try to anticipate and list allowable uses, but “just make a list of things you don’t allow,” she says. “We are working hard to raise the awareness of commercial brokers, to let them know they don’t have to go through a big, long process” to receive permission for an alternate use of office space.

Leone praises Touhill and his team for their hands-on approach to working with businesses to solve problems. “It’s a great competitive advantage to have a county that is willing to think a little further ahead.”

Tracy Sayegh Gabriel, president and executive director of the National Landing Business Improvement District, where Amazon’s multibillion-dollar HQ2 East Coast headquarters is located, appreciates the county’s “commitments to placemaking, with investments in multimodal transportation infrastructure, next-generation parks and small-business development.”

That, she says, delivers “the kind of connectivity and vibrancy that companies and residents are seeking.”

Touhill’s team is also looking at adaptive reuse of commercial buildings as a tool in the county’s efforts to grow the local talent pipeline.

“My experience — driven by Amazon HQ2 — made it clear that helping the development of the workforce is a big driver” in attracting top businesses to the region, Touhill says. “Our region has an imbalance of worker supply to job demand. We’re helping chip away at that” by attracting and supporting higher education in the region, including the Virginia Tech Innovation Campus under development in Alexandria and George Mason University’s growing Mason Square presence in the Rosslyn-Ballston corridor.

The county’s decision to encourage the use of commercial office spaces for educational programming “has sparked a thriving education hub in Rosslyn,” including, most recently, institutions like the University of Virginia’s Darden School of Business and Northeastern University, says Mary-Claire Burick, president of the Rosslyn Business Improvement District.

“The ripple effect is drawing more students to Rosslyn, creating additional vibrancy and feeding our talent pipeline,” she says, an approach that “helps cultivate an ecosystem of innovation and provide support for emerging companies.”

Supporting startups

Startup support is not a new idea, but two recent county initiatives are aiming to help local small businesses thrive and grow — and hopefully lease office space in Arlington.

The Rosslyn Jazz Fest featured Galactic and Anjelika “Jelly” Joseph in Gateway Park this year. Photo by Josh Brick

One is the newly created $1 million Arlington Innovation Fund, which provides technical assistance and nondilutive,  co-investment grants ranging from $25,000 to $50,000 to early-stage tech startups.

“We want to help local entrepreneurs extend the life of early-stage capital, a crucial stage in their life cycle,” Touhill explains. The fund targets companies “that have already raised some funding but need more. We’re not looking to seed first round. We want tech companies that have gained some traction.”

In return, the county hopes “to develop a homegrown pipeline of tech companies that will then create jobs,” he says, and encourage those companies “to become office tenants and grow into thriving members of Arlington’s business community.”

Touhill says he’s confident that the county can build relationships with growing companies. “We have a great location. We have talent. We have a positive business environment. We have the university system and federal agencies. The environment is there.”

Started in 2021, the second initiative, ReLaunch, is an assistance program that provides small-business owners access to business consulting and marketing services and can also help with technology solutions. Arlington Economic Development is seeing tremendous demand for ReLaunch, Touhill says. Since launching in 2021, the program has assisted more than 200 small businesses in Arlington.

Meanwhile, AED is also focused on developing tourism and increasing traffic to county businesses. In August, the Arlington Convention and Visitors Service launched a new tourism brand, “All in Arlington,” to market the county’s arts and cultural offerings. And AED’s Arlington Cultural Affairs division is supporting the effort in a variety of ways, including by making grants to local artists and arts organizations. The division even designates a biennial Arlington poet laureate, an award that comes with a small stipend.

“We’re one of the few economic development offices in the nation that has a cultural affairs division for the promotion of the arts and our rich cultures,” Touhill says. “It shows our commitment and it helps economic growth.”

Burick praises AED’s cultural affairs team “for partnering with us to create a distinctive sense of place that makes Rosslyn more than just a location, but a destination.” For instance, its Rosslyn fall Jazz Fest draws close to 10,000 people each year.

In addition to supporting performances and festivals, the county has commissioned more than 70 art installations throughout Arlington, and it has venues that run the gamut from dance studios to a mini gallery and an 80-seat theater.

“‘All in Arlington’ is the first branding effort we’ve made in a number of years,” Touhill says. “We’ve got a new website and marketing.”

This emphasis on art and culture contributes to overall vibrancy in the county, Leone says. “It makes it more like our European counterparts. Others are trying to get to it. We’re just about there.”

To achieve the right balance, she says, the BID regularly surveys Ballston workers and residents to determine “the amenities that people need or want.”

Art and culture can differentiate a place, Leone notes. “It sets us apart. It offers something that you don’t see everywhere. It creates connections and stickiness — people don’t want to leave. They know this is the place for them.”  

 

Arlington National Cemetery Photo courtesy U.S. Army/Elizabeth Fraser

Arlington at a glance

In 1790, the land that makes up almost all of Arlington County, as well as the city of Alexandria, was ceded to the federal government and officially became part of the nation’s capital. In 1847, the land — known as Alexandria County — was returned to Virginia, and in 1920, Alexandria County was renamed Arlington, after the home of American Civil War Confederate Gen. Robert E. Lee. Today, Arlington is home to the Pentagon, Ronald Reagan Washington Airport and Amazon HQ2. George Mason University, Marymount University, Northern Virginia Community College, the University of Virginia and Virginia Tech all have presences in Arlington. 

Population

234,000

Top employers

Accenture  

Amazon.com

Deloitte   

Federal government

Local government and schools

Major attractions

Near the Pentagon is the 9/11 Pentagon Memorial and the Arlington National Cemetery, where President John F. Kennedy and his brothers, Sens. Robert F. Kennedy and Edward M. Kennedy, are buried. In Ballston is the MedStar Capitals Iceplex, the training center for the NHL’s Washington Capitals, as well as a center for public skating. Rosslyn Jazz Fest has been held since 1991, and in September the free, outdoor event was at Gateway Park. Shirlington is home to the Signature Theatre, a regional theater company that has received a Tony Award.

Top convention hotels

Hyatt Regency Crystal City

686 guest rooms,
53,000 square feet
of meeting space

Crystal Gateway Marriott

701 guest rooms,
38,000 square feet
of meeting space

DoubleTree by Hilton Hotel Washington D.C. – Crystal City

627 guest rooms,
31,464 square feet
of meeting space

Sheraton Pentagon City Hotel

419 guest rooms,
30,429 square feet
of meeting space

Notable restaurants

Café Colline French, cafecollineva.com

Cheesetique Wine bar and comfort food, cheesetique.com

Ruthie’s All-Day Upscale American diner, ruthiesallday.com

Sfoglina Rosslyn Italian, sfoglinapasta.com/rosslyn

Yume Sushi Japanese, yumesushiva.com

Fortune 500 companies

RTX

Boeing

AES

Norfolk warehouse sells for $1.3M

A 10,044-square-foot office and warehouse building in Norfolk sold Tuesday for $1.3 million.

The building, on 1.71 acres at 1301 Marsh St., was previously owned by Daughters Trust 3557. Piedmont Land Development bought the property, which is fully leased, as an investment. It is currently leased to Hepaco, an environmental cleanup company.

William C. Throne and Robert L. Phillips with Cushman & Wakefield | Thalhimer handled sale negotiations on behalf of the buyer.

CFA Institute sells Charlottesville HQ for $21.9M

The Charlottesville headquarters of CFA Institute sold for $21.9 million, Cushman & Wakefield | Thalhimer announced Tuesday.

The 150,000-square-foot office building, at 915 E. High St., is the former Martha Jefferson Hospital, which opened in 1904, according to Cvillepedia. CFA Institute, a nonprofit association of investment professionals, will lease back 47,000 square feet for its ongoing operations. The location has been the institute’s home since 2014, after a renovation that included sustainability features.

Thalhimer has been awarded the leasing by the buyer, Lo-Hi LLC, and the building will remain Class A office space. It is the only Class A building near downtown with parking. Lo-Hi will also be opening Lo-Hi Coworking, which will provide private executive office space for companies with up to 10 employees.

John Pritzlaff and Jenny Stoner of Cushman & Wakefield | Thalhimer handled the sale and lease negotiations on behalf of the buyer and will handle the office space leasing going forward.

Five Guys moving HQ to Alexandria

Five Guys Enterprises LLC is moving its corporate headquarters from southern Fairfax County to Alexandria this month, a spokesperson confirmed Friday. The new main office for the family-owned hamburger chain will be in leased space at 1940 Duke St., starting July 17.

Friday was the company’s last day at its Lorton headquarters at 10718 Richmond Highway, which Five Guys leased in 2012. The new headquarters, with 39,673 square feet, will be on the fifth floor of the 220,000-square-foot Carlyle Crescent building. The building is owned by I&G Direct Real Estate 25 LP and is assessed at $59.8 million, according to Alexandria property records. JLL handles leasing for the building.

Five Guys was founded in 1986 by CEO Jerry Murrell, whose five sons joined the business, which started with a single burger shop in Arlington. After 27 years of regional success, Five Guys began offering franchises in 2003, and in less than two years, the company sold more than 300 franchises. Today, there are approximately 1,700 Five Guys locations worldwide with 20,000 employees. According to the company, there are approximately 600 employees in Virginia.

 

2,000 Amazon employees move into HQ2 during first week

About 2,000 employees moved into the first open tower at Amazon.com Inc.’s $2.5 billion HQ2 East Coast headquarters in Arlington this week.

Floors 1-14 of Merlin, one of Amazon’s two 22-story office towers in Metropolitan Park, the first phase of HQ2, opened Monday. The tech giant anticipates opening the remaining floors in phases, likely two floors at a time, with plans to have the 15th floor open before the end of June. The company has hired 8,000 employees locally so far.

“On the first day, in the afternoon, people were bringing their kids in and their partners, I think to show off [the building],” said Rachael Lighty, Amazon’s head of public relations for policy and HQ2.

Amazon expects to have roughly 1,000 to 2,000 more employees move in by teams each week. The lower floors of HQ2’s second building, dubbed Jasper, should be completed in the next 30 to 40 days, around the end of June, according to Holly Sullivan, Amazon’s vice president of economic development and public policy. By the end of September or early October, all HQ2 teams will be invited into the towers’ 2.1 million square feet.

Under its current office policy, Amazon is “encouraging” employees to come into the office at least three days a week, but vice presidents set office policies for their teams.

HQ2 will house a variety of teams, including devices, Amazon Web Services and corporate functions like finance, legal, public policy, communications and corporate facilities teams.

“It is truly a headquarters. We have that diversity of roles within HQ2,” Sullivan said.

Met Park’s two towers can house more than 14,500 employees. Despite beginning large-scale layoffs in November 2022, Amazon has remained firm on its commitment to create 25,000 jobs at HQ2 by 2030. The global e-tailer said in March that it was delaying HQ2’s second phase, PenPlace, but has been resolute that the delay is not a cancellation: “Our commitment remains unchanged,” Sullivan said.

Met Park will house 14 ground-floor retailers and also includes a 2.5-acre public park with walking paths, a children’s playground and a dog walk, as well as a dog park that will open once grass has firmly taken root.