While The Little City enjoys a boom of commercial and residential development projects, the surrounding region is seeing many commercial areas stagnate, prompting multiple office building repurposing projects, which are open or coming soon.
According to a Fairfax County report earlier this year, office space in the Bailey’s Crossroads region of greater Falls Church has been particularly burdened, with a 38.4 percent office vacancy rate — double the 2023 county average of 17.2 percent (which, it should be mentioned, is the highest rate in decades).
In neighboring Arlington County, the average office vacancy remains extremely high — a whopping 22.1 percent in 2023. At the same time, our region’s red-hot real estate market has created a major affordable housing shortage — the National Low Income Housing Coalition (NLIHC) estimates a 148,945 unit deficit of affordable and available housing in the DMV alone.
Seeking to use one problem to solve another, many vacant office buildings have become rezoned for residential or mixed-use, with multiple repurposing projects currently under construction, and likely more to come, with home ownership out of reach for many until interest rates (or prices) come down.
Though the concept may sound simple enough, the requirements of office and residential buildings are quite different. All residential units must have their own plumbing, windows, bathrooms, and a kitchen. Large residential buildings will always have courtyards, or be designed with narrow segments, to ensure every unit has window access of some kind. Many office buildings, not burdened by the same requirements, are designed as big blocks, with central “core” space that can’t be easily converted into an apartment. Even if the building design is compatible with a conversion, doing so requires just about the entire interior of the building to be replaced: completely new HVAC systems, electrical, plumbing, floors, walls, ceilings, etc.
Despite the challenges, it is often far cheaper to convert existing office space into residential than to build something new — and Bailey’s Crossroads in particular is seeing multiple office building repurposing projects popping up as a result, in particular in the Skyline area.
Beginning in 1945, Bailey’s Crossroads was the home of Washington-Virginia Airport (originally Crossroads Airport), a two-runway private airport. Seen as a public nuisance as development continued to expand into the suburbs — in particular a number of non-fatal crashes and low-flying planes over cars on Leesburg Pike — the airport was eventually shut down, and in 1977 the massive Skyline Center complex opened, consisting of commercial and residential space. The once booming area, though still densely populated, is now second only to the Springfield area in office vacancies for the region.
Highland Square Holdings (2HSQ) is has completed several office-to-residential buildings in the Bailey’s and surrounding area, with another in development — which it says are well worth the initial investment. The buildings that comprise its converted residential communities began as top-tier Class A office space (with premium underground parking), allowing for over-the-top amenities and expansive community space. 2HSQ says it purchased one property (now e-Lofts Alexandria, 4501 Ford Ave., Alexandria, VA) for “a fraction of what the underground parking would have cost to build alone.” Similarly, 2HSQ purchased the nearby Mission Lofts building (5600 Columbia Pike, Falls Church) for the cost of the parking garage alone.
2HSQ has also begun leasing at 3Collective — the single largest live/work project in the country — comprised of three 1980s office buildings in the Skyline Center. These buildings have been transformed into 720 “live-work” spaces, with residential parking below ground, and much of the previous surface parking replaced with expanded outdoor amenity spaces. 2HSQ purchased and completed the 3Collective complex for less than the cost of a new surface-parked wood-frame apartment community.
This fall, just two doors down from 3Collective, 2HSQ will begin construction on an additional office-to-residential conversion, the future home of Spolia Lofts (5111 Leesburg Pike, Falls Church).
The effect of upscale residential offerings replacing largely vacant office space around Bailey’s Crossroads is yet to be determined — but with extensive projects delivered or underway, it is clear that hopes are high for a revitalizing effect for the surrounding community.
