Alexandria City Manager Jim Parajon delivered the inaugural monthly economic briefing to the city council on September 9, outlining a landscape marked by contrasting trends and growing economic uncertainty that may affect future budget decisions. The report, initiated at the request of Mayor Alyia Gaskins, revealed that commercial office vacancy rates have increased to 23% in 2025, up from 15% in 2023. In contrast, the retail sector continues to perform well, with Old Town recording a low vacancy rate of 5.8%.
Parajon emphasized the broader national climate of unpredictability, noting that such conditions often lead businesses and individuals to delay major financial decisions.
A significant contributor to the rise in office vacancies is the re-entry of two buildings from the Patent and Trademark Office campus into the market, adding over 600,000 square feet of available space. Stephanie Landrum, head of the Alexandria Economic Development Partnership, confirmed this shift as a key factor.
The city’s unemployment rate climbed from 2.5% in 2024 to 3.6% in 2025, although it remains lower than both state and national averages. First-quarter employment held steady at just over 80,000 jobs, indicating labor market stability despite the uptick in joblessness.
The residential real estate market demonstrated resilience, with median home sale prices rising approximately 5% compared to the previous year. Homes spent an average of 23 days on the market. However, active listings surged by 44%, reaching 308 properties. Vice Mayor Sarah Bagley raised concerns that this increase might reflect anxiety among federal employees due to potential government downsizing.
Parajon warned that current statistics may not yet capture the full impact of recent federal workforce adjustments, including early retirement incentives and administrative leave, which are not fully reflected in unemployment figures.
On the national front, consumer sentiment declined by 5.7% between July and August, signaling weakening confidence. Inflation stood at 2.7% as of July, slightly above the Federal Reserve’s 2% target. Additionally, construction expenses are climbing as contractors build in larger financial buffers to account for possible tariff-related disruptions.
Retail activity remains a positive indicator, with foot traffic in the Del Ray neighborhood up 6.3% year-over-year. Old Town’s vacancy rate also compares favorably against Washington, DC’s 12%.
Councilman John Chapman stressed the need for strategic action beyond data collection, urging officials to leverage insights for proactive planning.
The city has allocated $18.02 million to infrastructure initiatives between 2022 and the first quarter of 2025, completing 37 projects. An additional $11.3 million is planned for seven more projects scheduled for 2026 and 2027.
Parajon intends to continue the monthly updates, with the October session focusing on tourism and visitor trends. These reports will help shape the city’s November budget retreat and the official budget formulation process starting in February.
— news from ALXnow
— News Original —
Alexandria reports mixed economic signals as office vacancy climbs, retail stays strong
Alexandria City Manager Jim Parajon presented the first in a series of monthly economic updates to the city council on Tuesday, Sept. 9, highlighting mixed economic signals and rising uncertainty that could complicate budget planning. n nThe presentation, requested by Mayor Alyia Gaskins, showed commercial office vacancy rates climbing to 23% in 2025 from 15% in 2023, while retail markets remained strong with Old Town posting a 5.8% vacancy rate. n n“Uncertainty continues at the national level,” Parajon said. “Anytime there’s uncertainty, there’s a question of whether you should invest or not invest, whether you should buy or sell, whether you should move or stay.” n nMuch of the commercial vacancy increase stems from two buildings at the Patent and Trademark Office campus returning to the market, representing at least 600,000 square feet, according to Stephanie Landrum, CEO of the Alexandria Economic Development Partnership. n nAlexandria’s unemployment rate rose from 2.5% in 2024 to 3.6% in 2025, though it remains below state and national averages. Total first-quarter employment of slightly more than 80,000 was similar to 2024 levels. n nThe residential market showed strength with median sales prices up about 5% year-over-year and properties averaging 23 days on the market. However, active listings increased 44% to 308 properties, which Vice Mayor Sarah Bagley suggested could signal federal workforce concerns. n n“That I do worry that might be a sign of the sort of federal government cuts causing people to feel they need to leave the city,” Bagley said. n nParajon cautioned that recent federal workforce reductions may not be fully reflected in current data. n n“These numbers really don’t aren’t indicative of the early buyouts, administrative leave and the federal layoffs that are not fully reflected in the unemployment data,” he said. n nNational indicators showed weakening consumer confidence, with sentiment decreasing 5.7% from July to August. Inflation stood at 2.7% as of July, approaching but exceeding the Federal Reserve’s 2% target. n nParajon noted that construction costs are rising due to uncertainty, with contractors adding larger contingencies for potential tariff impacts. n nThe retail sector provided a bright spot, with Del Ray showing a 6.3% increase in foot traffic year-over-year and Old Town’s vacancy rate significantly below Washington, DC’s 12%. n nCouncilman John Chapman urged the city to move beyond tracking to developing proactive responses. n n“I think that information rings hollow if we are not bringing forward opportunities to shift the information, particularly to our benefit,” Chapman said. n nThe city has invested $18.02 million in infrastructure projects from 2022 through the first quarter of 2025, completing 37 projects. Plans call for an additional $11.3 million across seven projects in 2026 and 2027. n nParajon plans to continue monthly updates, with October focusing on visitor activity and tourism impacts. The economic snapshot will inform the city’s budget retreat in November and the formal budget process beginning in February.