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Office-to-residential building conversion draws raised eyebrows

Civic group in nearby McLean says situation could prove problematic

An issue in neighboring Fairfax County is one that eventually will have to be addressed in Arlington, as well:

Should county leaders be willing to accept more high-intensity residential development rather than insist on previously planned commercial projects?

In a post-COVID world, where it may become more difficult to fill office buildings with tenants and workers, some may see that as an effective response. But others see it as a potential fiscal nightmare.

Among those worriers are members of the board of directors of the McLean Citizens Association (MCA), which in early June voiced concerns that approved and proposed conversions of commercial and office space to mostly residential purposes may affect county revenues and spur the need for more infrastructure, schools and other services.

This trend has been occurring with new rezonings, changes to approved uses and proposals to replace or repurpose existing office buildings with residential uses, said Robert Perito, who chairs MCA’s Planning and Zoning Committee.

“Working from home has left a growing surplus of office space across the United States, and that includes both Tysons and McLean,” he said.

The situation in Tysons is probably the one that most closely mirrors Arlington’s primary commercial corridors, which generally run from Rosslyn west to Ballston and south to Potomac Yard.

(One who has seen the situation from Arlington’s perspective and is soon to be engaged in it from the Fairfax side is County Board member Katie Cristol, who is resigning from office six months early on July 4, and a day later will take up her new post as CEO of the Tysons Community Partnership, a recently formed advocacy group.)

The committee currently is examining nine such proposals and while each likely would be approved on its own merits, their cumulative impact is part of a potentially negative trend, Perito said.

The MCA board at the meeting approved a letter to Fairfax County Board of Supervisors Chairman Jeff McKay (D) that calls on county officials to study impacts of office-to-residential conversions on tax revenue, population density, affordable housing and services such as schools, public safety, transportation, parking, parks and recreational facilities.

Fairfax County staff also should compare the current situation with projections and expectations of the Tysons and McLean comprehensive plans, the letter read.

The conversion trend is receiving more attention now in Washington, D.C., said MCA board member Ron Bleeker, the primary person who drafted the letter.

Office-to-residential conversions are a response to declining office use that has occurred since early 2020 at the start of the pandemic, MCA leaders wrote. From December 2019 to December 2022, the number of people living in Tysons grew 9 percent to 26,374, but county revenue based on assessed value of property there declined 30 percent to $200 million, their letter read.

Office vacancies during this period also rose during that period, both in Fairfax County and Northern Virginia overall, read the letter. Arlington’s continues to be over 20 percent – a scary rate, considering county leaders traditionally have attempted to secure 50 percent of real-estate tax revenues from the commercial sector. Higher vacancies equal lower building assessments, which means the Arlington government either has to (a) restrain its spending or (b) shift more of the tax burden to homeowners.

No surprise: It’s usually (b) that county leaders pick.

MCA’s Planning and Zoning Committee has seen a rise in office-to-residential conversions in recent years and has supported several involving failed or underused office facilities. But MCA leaders have “become concerned about the increasing number of such ‘conversions’ and their cumulative effect on public and community services for Tysons and nearby communities such as McLean,” they wrote.

A rise in the number of residential units in Tysons may mean the arrival of more children at an earlier stage than anticipated and necessitate acceleration of planned school construction in the urban center, Bleeker said.

“Right now, the first elementary school being considered in Tysons would not even go into construction until the end of this decade,” he said.

And it’s not just construction costs to worry about from an educational standpoint. Any household with two children in local public schools would need to live in a home assessed at more than $3 million, in order for tax revenues from the home to equal the cost of educating those children. That doesn’t take into account all the additional costs of local government, from transportation to public safety.

Not all office buildings are capable of being converted for residential use, Bleeker said, citing plumbing requirements as one obstacle.

Also, “you need windows [and] light in an apartment and not every office building provides it,” he said.

Most of the nine proposed applications in the McLean and Tysons areas, which are cited in the letter’s appendix, involve building residential buildings instead of planned commercial ones or tearing down commercial properties in order to build residential units, Perito said.

“The business of converting is actually a minority of these,” he said.

Fairfax County underwent a similar conversion cycle in the 1980s after the commercial office market crashed, said MCA board member Merrily Pierce.

“A lot of builders came in and rezoned previously commercial land to residential and we went through the same evaluations of impact on schools and services,” Pierce said, adding the county officials might be able to glean lessons from how those situations played out.

Scott McCaffrey contributed to this report.