The elevated cost of construction is leaving a mark on Alexandria's housing stock.

Multifamily projects in the city are having to shape-shift — and, in some cases, shrink — to move forward, given the high costs of capital and construction materials, developers said at Bisnow’s Alexandria State of the Market on Thursday.

“There are several projects that are being scaled back intentionally because the cost is too high, and you can't justify — there's no return expectation that'll attract the capital,” Whitaker Investment Corp. President and CEO Ryan Whitaker said onstage at the Hilton Alexandria Mark Center.

And he believes there are more such reductions to come.

“There are other projects that I know that they're going to say, ‘Well, you know what, we could build 300 new units, but we know it's going to take longer. We can't attract equity to do it because the cost is higher, and so you know what, instead we're going to be a lot less ambitious and just do it now and do townhomes,’” Whitaker added.

Whitaker’s firm is one of the partners behind the 234-unit TideLock project along Alexandria’s waterfront. The office-to-residential conversion, which includes 169 rental units, 65 condominiums and 7K SF of commercial space, just delivered, but Whitaker said the cost of construction on that project turned out to be “massively more expensive” than when it was first envisioned in 2019.

Even so, the condos and apartments are selling and renting at a “pretty brisk pace,” he said. Its saving grace: prime waterfront property.

Less than half a mile down the waterfront, another project that has been in the works since 2020 ended up requiring city financing to proceed. 

The Alexandria City Council approved a tax increment financing package in June for HRP’s plan to turn a 19-acre former coal plant into 2.5M SF of residential and commercial development. 

Public financing wasn’t part of the original development plan, Alexandria Economic Development Partnership President and CEO Stephanie Landrum said at the event, but it turned out to be necessary.  

“When the small area plan was passed for Old Town North, there was not a contemplation of city participation, but the world has changed,” she said. “And that project, as it started to come to fruition and the plans were finalized, the costs are enormous to clean up a dirty site like that.”

There are other ways the city is stepping up to help developers reduce costs and push projects forward, panelists said. 

“The city is taking a leadership stance on the cost piece,” JBG Smith co-Head of Development Taylor Lawch said. 

The rent the REIT charges for new leases in its 6,500-unit portfolio has fallen by 9%, according to its most recent earnings report, challenging the math problem of development with construction prices up 7.4% in the past year.

Lawch said that on one of the REIT's projects, the city worked with it to rethink the amount of parking and the shape of the building.

“And that changed dramatically the cost,” he added. “And so all of a sudden, we're pulling that lever in a really, really big way.” 

Various panelists said they are seeing progress on the time it takes to get permits from the city, which reduces carrying costs. 

That is due to an intentional effort from the city through its One Start program, which it started developing in 2025.

“Some early indications we heard from developers that they were penciling things like 32 months to get under construction. Well, that's too long,” Alexandria Department of Planning and Zoning Director Paul Stoddard said.

“And so, in the first year of One Start, we said, ‘Wait a second, we're going to back that up and say the goal is now 24 months, so one year to entitlement, one year to start construction,’” he said. “We met that successfully for most projects that we saw in that first year, and this year we're moving that to 18 months.”

Developers onstage also said the city could be more flexible with energy codes for office-to-residential conversions, public benefits and inspection costs. 

“I think we need to realize now that those pies, at least right now, have shrunk, right?” Foulger Pratt Senior Vice President of Development Jay Kelly said. “The projects can support less if we believe housing production is critical.”