By Brian Trompeter
Persistently high office-vacancy rates are forcing Fairfax County officials to think creatively about how to get businesses back into those buildings, or perhaps demolish those structures or reuse them for other purposes.
The county’s office-vacancy rate stood at 17.2 percent at the end of 2023 and continues to rise, albeit at a slowing rate. In 2021, that rate rose 1.4 percent, then the rate of increase dropped to 0.7 in 2022 and 0.5 percent last year.
While 17.2 percent is not a healthy rate, the slowing rate of increase may indicate that “we’re getting close to a peak on that and might be approaching the recovery status,” said Stephen Tarditi, director of marketing intelligence for the Fairfax County Economic Development Authority.
Fairfax County’s office market is “right-sizing,” Tarditi said July 23 at the Board of Supervisors’ Economic Initiatives Committee meeting.
While the county before the pandemic reliably had about 2 million square feet of office space under construction annually, that statistic has been cut in half. In addition, 3 million square feet of office space has been demolished since 2020, he said.
The Economic Development Authority will try to fill some of the empty office space with companies in high-growth industries such as artificial intelligence, space commercialization and quantum computing, Tarditi said.
Other competing markets around the country also are struggling with high office-vacancy figures, but ones on the West Coast are seeing their rates increase at higher levels, Tarditi said.
Seattle and San Francisco have seen their year-over-year rates jump by 6 percent, while the rate went up 5 percent in Austin, Texas, he said. Northern Virginia’s office-vacancy rate edged upward just 1.4 percent during the same period.
Locally, about two-thirds of the office-vacancy increase could be attributed to business decisions made pre-pandemic, Tarditi said. Fairfax County has done a good job holding on to its existing commercial tenants, he said.
“We’re seeing a lot of tenants, when they are given the opportunity to walk away or severely reduce their footprint, they’re either keeping or even expanding on their footprint,” Tarditi said.
County officials also are monitoring 70 office buildings, totaling 7.1 million square feet (up from 6.5 million square feet last year), that are slated for demolition. Sixty of those buildings were constructed before 1990.
In about 90 percent of those cases, the office space is slated to be replaced by residential or mixed-use developments, he said.
Another eight office buildings totaling 1.6 million square feet will be adaptively reused.
Economic Development Authority officials are examining another 3-percent slice of the county’s office inventory, which consists of buildings larger than 50,000 square feet that are less than 33 percent leased, but not scheduled for demolition or adaptive reuse.
There are 28 such buildings, with a total of 3.7 million square feet, and these could serve as landing places for tenants that are slated to be displaced by adaptive reuse or demolition of other office sites, Tarditi said.
The Board of Supervisors over the past decade has approved the repurposing of 12 office buildings for residential use, resulting in 2,194 dwelling units, said Clara Johnson, Branch Chief, Planning Division, Department of Planning and Development. Three similar proposed projects could add 1,144 units, she said.
Despite the high office-vacancy rate, there were more people working, and more businesses operating, in Fairfax County in 2023 than ever before in the county’s history, said Board of Supervisors Chairman Jeff McKay (D).
“Office vacancy is one measure, but people working and businesses being established is another important measure for us to look at,” he said, adding, “We would have a lower office-vacancy rate if we cleared out the old office inventory that is never going to be occupied the way it was before.”
Vacant buildings of any type are the worst thing for the local economy, as they also harm surrounding retail and others businesses that relied upon them, McKay said.
“Where you get people back into those buildings, whether they’re working or living, inspires the ecosystem around there,” he said.
Supervisor Walter Alcorn (D-Hunter Mill) cautioned against long-term commercial vacancies.
“If you have an office building that’s vacant for six months, that’s a problem for the owner,” said. “But if you have a vacant office building for six years, that’s a community problem.”
