- The Washington Times - Monday, August 20, 2001

Alexandria attracts development, with crowds, congestion

Alexandria's building boom is transforming the home of George Washington into a viable center for business, raising the hopes of city officials and quality-of-life concerns of homeowners.

The 333-foot high George Washington Masonic National Memorial looks down on the City of Alexandria from Shooters Hill like a lone sentry. From the observation deck of the structure that resembles an ancient Egyptian lighthouse, one can see the explosive growth along the west end of Old Town, the heart of the city.

The completion in the late 1990s of the mammoth Albert V. Bryan Federal Court House for the Eastern District of Virginia sparked the building boom that continues today. Various businesses and institutions have sprung up over the past few years along Duke Street, upper King Street and the four-mile-long Eisenhower corridor, which runs parallel to the Beltway. Time Life, Society for Human Resource Management, the investment house AG Edwards, Regent University, the Hilton Hotel and the Fairfield Resorts, a time-share luxury condominium, have all moved in.

But it is the mixed-use development at Carlyle off Duke Street and the controversial 2.4 million-square-foot U.S. Patent and Trademark Office (PTO) to be built nearby that has attracted so much attention, not all of it favorable.

Residents worry that the 7,100 people that will be relocated from PTO's current headquarters in Crystal City will further burden Alexandria's already strained roadways. City and PTO officials say traffic will be manageable because many PTO employees will use public transportation and are expected to operate on a flexible schedule.

Residents also are concerned about how the new Woodrow Wilson Bridge will affect their lives. The bridge is expected to be completed by 2007. As part of a settlement agreement to the new bridge, Alexandria will get an access road from the inner loop of the Beltway directly into the Eisenhower valley, which should ease congestion. A second promised access way from the Beltway to Telegraph Road will not be built due to lack of funding.

As for the PTO, the 15.5-acre headquarters campus is expected to attract a variety of hotel, retail and residential units, increasing Old Town's inventory by 50 percent, according to city officials. In anticipation of the PTO's arrival in 2004, the patent law firm of Oblon, Spivak, McClelland, Maier & Neustadt has leased 205,000 square feet of space at 1940 King St. Computer Patent Annuities Inc., a large patent renewal service, recently signed a 10-year lease agreement for 15,000 square feet at King Street Station.

"We see the PTO as the catalyst for the completion of the Carlyle project, particularly the retail component," says Bill Hard, executive vice president for LCOR Inc., the principal developer for the PTO headquarters. Groundbreaking on the new headquarters is expected this October.

Wasting open space

Not everyone is enamored with PTO as a new neighbor. Alan Rudd, a resident of the Carlyle Towers, adjacent to the Federal Court House, objects to the PTO's plan to erect two 71-foot-high parking garages above the ground, which will provide parking for 3,800 cars.

"That is a horrendous waste of open space," says Mr. Rudd. The garages will provide one parking space for every two PTO employees, a violation of the national capital guidelines for parking, says Mr. Rudd.

In addition to PTO, there will be 3,000 residential units in the Eisenhower corridor and 5 million square feet of office space. Plan approval has been given to the Simpson Development for the Alexandria Technology Center V and VI, which will need 128,000 square feet of office space. The nearby Hoffman Town Center is taking shape with the just-opened 22-screen AMC Theatre. Recently, Alexandria approved the building of a 493,460-square-foot office building; 33,512 square feet have been earmarked for retail stores and restaurants in the Hoffman Town Center. Including the PTO, the city's planning department has identified 14 million square feet of development or redevelopment potential in the Eisenhower corridor alone.

Times have changed for Alexandria. Before the building boom, Old Town was known more as a nightlife alternative to Georgetown and a haven for trade associations taking advantage of reasonably priced office space. In the early 1980s, Alexandria made a concerted effort to attract trade associations from the District and elsewhere with the promise of reasonable lease rates and easy access to the nation's capital and Ronald Reagan Washington National Airport.

Today, the city is home to more than 300 associations that employ more than 9,000 people and 400 technology companies, employing more than 10,000 people.

As of the first quarter 2001, Alexandria employed 92,984 persons, compared to 88,761 for the year earlier quarter, according to the latest local economic indicators released by the Alexandria Economic Development Partnership (AEDP). That number is expected to rise dramatically as new businesses come in. AEDP, a public and private partnership funded by the city, indicated that the vacancy rate for industrial space was just over 4 percent, a further indication of the city's growing popularity.

Retail sales in the city for the first quarter were slightly more than $508 million compared with $489.4 million for the first quarter of 2000.

Why choose Alexandria, a city with a limited amount of undeveloped land? "A number of businesses have come to Alexandria because they want something other than a sterile office park," offers Alexandria Mayor Kerry Donley, referring to those businesses that line the Dulles corridor. "The same things that brought a lot of the trade associations here has served us well in attracting various businesses."

Mr. Donley says the city is well into its third phase of development that began in the 1960s with the restoration of the historically rich Old Town, incorporated in 1749. Public and private funding help concerned residents restore some of the luster of the city that was a leading trading port for tobacco and flour in the 17th century. Some of the federal funds were obtained through the Model Cities Program created by the Lyndon Johnson Administration.

A change in Virginia state law allowing liquor to be sold by the drink plus a repeal of the Blue Laws prohibiting stores and restaurants from operating on Sunday in the 1970s opened the door to Old Town for the food and beverage industry.

Those events were followed by the redevelopment of the eastern part of city along the Potomac River. Parks, town houses and office complexes were erected along the waterfront.

The future

The city's future hinges in large measure on the Carlyle development and Potomac Yard, toward the north, says Mr. Donley, who predicts moderate residential growth of 10 percent to 15 percent over the next decade.

According to the last census, Alexandria's population went from 95,000 to 128,500 in just over a decade.

With increased development comes another source of revenue for the city. The PTO alone is expected to generate $6.5 million in tax revenue annually, according to Mark Jinks, the assistant city manager in charge of all financial matters. The rest of the Carlyle project and the development along the Potomac Yard is expected to generate $20.9 million and $13 million in tax revenue, respectively.

While not a windfall, that $40.4 million in tax revenue will certainly help to pay for more public services, Mr. Jinks says.

The city council has earmarked $250,000 annually for additional emergency medical services for the west end of Old Town. The area's merchants applaud the growth, particularly those in the west end of Old Town, an area once considered a dead zone at night.

"With each building that goes up, our business spikes a bit," declares Vernon Grandgeorge, co-owner of Joe Theismann's restaurant, located across from the King Street Metro.

Mike Chouri, general manager of the 241-room Hilton Hotel across the street, has noticed a definite increase in the number of business groups at the hotel. In the summer, the occupancy rate for leisure travelers rose to 60 percent, 40 percent for business. The percentages are reversed for the rest of the year, Mr. Chouri says.

The Hilton will soon have company. A Hampton Inn is scheduled to open this summer, bringing to three the number of hotels within walking distance of the King Street Metro. The Embassy Suites, next door to Joe Theisman's, was built 10 years ago.

While most welcome the growth, several area businesses expressed concern over the ever-increasing rental rates in Old Town. According to the city, average full-service rental rates climbed to $26.14 per square foot, a $4 increase in five years.

In the west end of Old Town, where many of the new properties are located, rental rates for office space range between $30 and $32 per square foot. On lower King Street, retail rents at some businesses have skyrocketed to $40 to $50 per square foot.

"That's what happens when you get successful. Landlords raise the rent," says Barbara Brecher, president of the King Street Metro Enterprise Team, which represents businesses along King Street. "Years ago, you probably couldn't have given these retail stores away."

Joe Egerton, owner of Arts of Fire and Egerton Gardens, sees good and bad news for lower Old Town.

"There has been some turnover of businesses due to the increase in rents," says Mr. Egerton. High-end retail businesses have been replaced by T-shirt and ice-cream shops, he says.

And yet some national chains like Old Town Restoration Hardware and Xando, a trendy coffee shop chain, have opened stores in lower Old Town.

At Potomac Yard, Crescent Resources, the real estate division of Duke Power, plans to build 1,977 residential units, as well as 1.9 million square feet of office space and a 625-room hotel on a 300-acre site that includes a portion of Alexandria and Arlington County.

Retail outlets occupying 135,000 square feet also will be part of the project. This will be the second phase of development of the former rail yard. Potomac Yard already has a three-year-old, 587,907 square foot shopping complex and a multi-screen cinema that is teeming with activity on most days.

While the PTO and Carlyle projects factor heavily into Alexandria's future, officials continue to look forward. Over the next 20 years, the city will be looking at redevelopment of land not used currently, such as empty warehouses and abandoned buildings, says Alexandria's Mayor, Mr. Donley.

But the immediate challenge remains: how to balance Alexandria's growth and residents' concerns that the quality of life be maintained.

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