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McLean group casts eye on office-to-residential conversions

McLean Citizens Association has come concerns about consequences

As post-pandemic office vacancies continue to run high and the need for housing increases, the McLean Citizens Association (MCA) board of directors is keeping an eye on both trends and their impacts.

Vacant office space is posing revenue problems for localities, but also providing an option for alleviating housing challenges.   

Office vacancies nationwide reached a 30-year high in the second quarter of this year, but the problem is not just national, said Robert Perito, who chairs MCA’s Planning and Zoning Committee, at the association’s Nov. 1 meeting. According to the trade association Virginia Realtors, office vacancies in Northern Virginia stood at 16.6 percent for the second quarter, he said.

Northern Virginia’s office-vacancy rate for Class A properties hit 19.7 percent, as workers did not return to the office completely following the pandemic, Perito said. The value of office properties has declined and the resulting tax-revenue loss has affected local governments, he said.

“In Northern Virginia, it appears that cities and counties may have to either shift the tax burden to homeowners or cut services or do both,” Perito said.

Developers have responded to the situation by shifting some office space to multi-family residential uses. Several times recently in Northern Virginia, developers have repurposed office buildings for residential, educational or other uses, which maintained building values and revenue streams and helped preserve neighborhoods, he said.

The Biden administration supports repurposing efforts and will provide financing and technical assistance to localities seeking to convert empty office buildings into apartments, Perito said. Those federal efforts, which will draw on more than 20 federal programs, will be led by the U.S. Department of Housing and Urban Development and U.S. Department of Transportation, he said.

Repurposing has some downsides, however, Perito said. Comparatively few buildings are available for conversion and most of those that meet regulatory requirements were built in the 1990s or before, he said.

Fairfax County staff estimate that as few as 40 buildings within the county would qualify for repurposing, given their inadequate natural lighting and inappropriate plumbing and location, as well as other issues.

A couple of other options exist for the office-vacancy conundrum. Some developers are replacing dated and unoccupied office buildings with residential units, while others are applying to the county to change uses approved in rezonings from office to residential, Perito said.

A recent county staff report found that no new residential units have been built in McLean’s Community Business District’s Central and General zones in the last 15 months, Perito said. When the Astoria at McLean and the McLean Professional Park Buildings are developed, there will be 992 more residential units available – far below the 1,660 units identified as desired in the McLean comprehensive plan, he said.

According to developers, more residential units are needed in McLean and Tysons to support the vibrant, mixed-use commercial development sought in the county’s comprehensive plan, Perito said.

MCA in July sent a letter to Board of Supervisors Chairman Jeff McKay (D) asking the county to study the effects of office-to-residential conversions on property values, school, public services and county tax revenues. MCA’s leaders plan to seek a meeting with county officials regarding those topics.

“Obviously, this is something that we’re trying to keep in front of,” said MCA president Linda Walsh. “We’re looking at the total impact on the community.”