Alexandria’s Office Vacancy Rate Drops Below 19%—But the Good News Comes With an Asterisk
Federal moves and office-to-housing conversions are helping Alexandria’s vacancy rate fall, even as companies continue to shrink their footprints.
ALEXANDRIA, VA — Alexandria’s office vacancy rate has fallen below 19%—a notable improvement after years of remote-work disruption, federal uncertainty and empty buildings.
But the numbers come with an important caveat: tenants are still giving up more office space than they are taking.
The Alexandria Economic Development Partnership’s 2026 Mid-Year Market Report puts the citywide vacancy rate at 18.8% for buildings larger than 5,000 square feet, down from 21.6% a year earlier. That also puts Alexandria below Northern Virginia’s 20.1% rate.
How Vacancy Fell While Companies Still Shrunk
AEDP reports negative net absorption of 160,400 square feet, meaning more office space was vacated than newly occupied during the first half of 2026.
So how did the vacancy rate improve?
Part of the answer is that Alexandria is removing obsolete office space from the office market entirely. Construction has begun to convert the long-vacant Victory Center at 5001 Eisenhower Ave. into housing, reducing the amount of space counted as office inventory.
Another major factor is the federal government. The National Science Foundation remained in Alexandria, moving in May into former U.S. Patent and Trademark Office space, while the U.S. Department of Housing and Urban Development is moving its headquarters into NSF’s former building in Carlyle.
Those moves help stabilize a commercial market that has spent years adjusting to smaller office footprints.
Old Town Is Moving the Other Way
The improvement is not evenly spread across Alexandria.
AEDP reports the vacancy rate in Old Town and Old Town North at 15.5% and trending upward. Carlyle remains much higher at 27.7%, although its rate is moving down. The West End is at 16.9% and also improving, while Potomac Yard reports no office vacancy in the market data.
The report says businesses across the region are increasingly trading larger spaces for smaller, newer offices with stronger amenities. That “flight to quality” can leave older buildings struggling even when the citywide vacancy number improves.
Alexandria’s strategy has increasingly included finding entirely new uses for buildings that no longer make sense as offices. The latest numbers suggest that strategy is helping the headline vacancy rate—but they also show the office market itself has not returned to simple growth.
