Wegmans, NSF Driving New Wave Of Development On Alexandria's Eisenhower Avenue
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Alexandria's Eisenhower Avenue corridor has grown significantly since the U.S. Patent and Trademark Office moved nearly 10,000 employees there in 2005. Now, with the National Science Foundation bringing 4,000 more workers and popular grocer Wegmans signing on, the corridor is poised for another major wave of development.
The NSF in August began its move from Ballston to its new headquarters at 2415 Eisenhower Ave., a 660K SF build-to-suit project at Alexandria's Hoffman Town Center. The deal was the first big win the corridor's office market has had in recent years, and it is also helping to spur its multifamily market.
LCOR principal Bill Hard, whose company developed the PTO headquarters, said that office drove the area's multifamily growth over the last decade-plus as employees looked to live near where they worked, and he expects NSF to have a similar effect.
"PTO was a major driver for the residential piece," said Hard, who will speak Aug. 9 at Bisnow's Future of Alexandria event. "We all know commute times are not getting any shorter, so the fact that you've got a major employer there and NSF coming in is also going to help that."
Paradigm Cos., which built two apartment buildings on Eisenhower Avenue in 2007 and completed the 505-unit Parc Meridian on the corridor in 2016, has already seen strong leasing activity coming from NSF employees.
"NSF has been very good for us down there," Paradigm President Stanley Sloter said. "It creates demand in the sense of people who live in our buildings during the week and go other places during the weekend."
Near the Parc Meridian building, Paradigm is planning a mixed-use development with a 25-story, 404-unit apartment tower and a 10-story, 184-room hotel. The developer is still going through the design process and hopes to break ground by late 2019.
The development would then deliver around the same time Wegmans plans to open a few blocks away at StonebridgeCarras' Hoffman Town Center project, another potential demand driver for the area.
"Wegmans is a really quality grocer, and a lifestyle grocer that we think our residents will really like; we think it's good for all of the projects down there," Sloter said. "We've done well at Eisenhower for many years and feel like the whole plan is starting to come together. I think the synergy will make this much more attractive competing against other residential in the region."
The Wegmans-anchored development, on which StonebridgeCarras plans to break ground early next year, will include 750 multifamily units and 130K SF of additional retail. The residential component will consist of 160 condos and roughly 580 apartments, of which 140 will be larger units with higher-end finishes.
StonebridgeCarras Founding Principal Doug Firstenberg believes Wegmans will help drive residential demand once leasing and sales begin, and he is already seeing the grocer drive activity on the remaining retail space.
"People understand the type of customer and the amount of customers they have," Firstenberg said of Wegmans. "The response we're getting from retailers is 'when are you opening? Make sure we're on the list.' The Q4 2021-Q1 2022 delivery is outside the range of most retailers to commit that far out, but the response we've gotten has been tremendous."
About a half-mile east, JM Zell hopes to break ground later this year on its 34-story luxury residential tower at Carlyle Plaza Two, a 6-acre development ultimately planned to include four buildings. JM Zell CEO Jeff Zell said he is optimistic about the corridor's apartment market given the lease-up pace he has seen at other projects.
"It's the hottest rental apartment market in the Washington Metro area," Zell said. "The demand is phenomenal."
Zell expects demand for the project, which will command some of the highest rents in Alexandria, to come from empty nesters looking for second homes and high-paid employees moving to the D.C. area looking for a quality new apartment.
He hopes those employees might work for tech giants Amazon and Apple, both of which are looking at Eisenhower Avenue and the future phases of Carlyle Plaza Two for their massive new campuses. Zell is optimistic about the area's chances of landing at least one, but if it loses out on both competitions, he is less confident about Eisenhower Avenue's office market.
The developer has plans for a 368K SF office building at 765 John Carlyle St. that has been approved for at least two years, but its groundbreaking is predicated on pre-leasing, which has not yet happened. He said NSF was supposed to draw hundreds of thousands of square feet of associated demand from entities that work with the agency, but that has not yet materialized.
"Other than [NSF], you cannot point to another deal in 10 years that has occurred in that market of any significance," Zell said. "All office projects have been dead in the water."
If Amazon and Apple do not choose to come to Eisenhower Avenue, Zell said he will likely pivot future phases of Carlyle Plaza Two to multifamily. He remains bullish on the area's future apartment market and believes it is poised to draw exciting new retail concepts following the Wegmans deal that will make it an attractive place to live.
"It's an exciting time for the corridor," Zell said. "It's the last bastion of inside-the-Beltway new city, and it's going to be done right. It's already halfway done and it's damn beautiful. Now we need to bring the balance home."
Hard, Sloter, Firstenberg and Zell will discuss the Eisenhower Avenue corridor at Bisnow's Future of Alexandria event Aug. 9 at the George Washington Masonic National Memorial.