Eisenhower Valley and the Victory Center: in an otherwise prosperous area, a vacant office building finds a new lease. Or two.

If the name “ Eisenhower Valley ” in Alexandria, Virginia sounds silly to you, you’re not the only one.  Why would a natural feature in one of the nation’s original thirteen colonies share a name with a man whose presidency ended in 1961?  Was there a little known colonial Eisenhower family who bumped shoulders with surveyor George Washington?  Was it renamed in the last fifty years?  Is it even really a valley?  The Eisenhower Valley references a loose district in southwestern Alexandria, less characterized by geography or topography than by manmade impediments.

If the map above doesn’t make it clear, the district gets its name from Eisenhower Avenue, an approximately four-mile-long collector street that primarily runs sandwiched between heavy rail lines (WMATA and Amtrak) to the north and a massive limited access highway (Interstate 495, the Capital Beltway, typically eight lanes around these parts) to the south.  Yes, there’s also a minor river channel that flows through the area—Cameron Run and its tributaries, Blacklick Run and Holmes Run—which probably gives the area its “valley” association since elevation extends steeply just to the south of I-495.  But no one likely to look at the area would consider it a valley.  It’s really just a corridor and the land that flanks it, wedged in between these almost impenetrable walls (the rail and the highway), turning Eisenhower Avenue into a sort of chute: one a motorist enters from the eastern or western end, he or she can only disembark at a few places.  It’s a strip four miles across the east-west axis and about one-eighth of a mile across the north-south.  Given its comparative isolation and obscurity except for the strong linkages to I-495, the Eisenhower Valley corridor has turned into a sort of no-man’s land of important but not exactly coveted land uses.  Specifically, it’s the epicenter of light industrial, logistics, and warehouse storage, peppered lightly with office parks and even more lightly with apartments.  No single family homes or conventional shopping centers to be seen.

While every major city has a similar light industrial no-man’s land, most are as tawdry and disreputable as one would expect, given their isolation.  Typically proximal to heavy industry or airports (nuisance-generating land uses), these forgotten zones often harbor impound lots, car rental backlots, junkyards, truck stops, and adult video stores.  Eisenhower Valley has none of these; though not exactly the most charming part of town, it is comparatively polished and wholesome, thanks in part to the absence of heavy industry, and no doubt abetted by the unusually high median incomes in Alexandria.  It may be some of the cheapest, least disable real estate in the city, but it’s such a posh city that it’s still a pretty nice area, and the economic health of corridor generally looks strong.

Light industrial and warehousing in  Eisenhower Valley
Standard uses in the Eisenhower Valley

Lots of warehouses and showrooms in the Eisenhower Valley.  And the industry is consistently light: specialized parts manufacturing rather than complete fabrication or materials processing.

As I indicated earlier, the corridor is not replete with dwellings, but not completely deserted either.  After hours, it’s easy to find pedestrians along the sidewalks, most likely residents in one of the apartment complexes nearby.

And those creeks have encouraged the City of Alexandria to develop greenways that link urban parks.

But the Eisenhower Valley offers one glaring building vacancy, which is likely noticeable even to people not usually attuned to the thing.

Long-vacant Victory Center in Eisenhower Valley

That eleven-story edifice in the background stands basically unused.

Long-vacant Victory Center in Eisenhower Valley

The handful of vehicles out front do in fact represent a use, but the ten upper levels remain completely vacant, and the use on the lower level is atypical.

Victory Center in Eisenhower Valley

It’s hard to say exactly what went wrong with 5001 Eisenhower Avenue, but it’s a notoriously snake-bit space within the commercial real estate landscape of Alexandria.  The last full-scale tenancy was in 2003, when Army Materiel Command relocated to nearby Fort Belvoir.  The structure looked quite different in the 2000s, but owners attempted a reinvention through a top-to-bottom renovation and rebranding as the Victory Center.

It hasn’t worked.  The Victory Center has continued to remain empty over the years, its owners valiantly attempting to secure big-name tenants.  Initially, in 2009, the building hoped to secure Department of Defense sub-agencies as part of a phase in the Base Realignment and Closure (BRAC) process, but they chose another office building nearby.  In 2015, a long-term lease with Transportation Security Administration (TSA) seemed to promise the relocation of this large personnel-heavy federal agency, but the deal—priced 25% below projected market rents—still fell through, as another property manager based in nearby Springfield protested the bid award and a federal judge voided the lease.  Shortly thereafter, the Drug Enforcement Agency (DEA) considered the building but ultimately decided to remain in Pentagon City.

For whatever reason, 5001 Eisenhower Avenue’s rebrand as Victory Center has consistently proven ironic.  An unmitigated failure.  Why would a fortuitously located Class A office building struggle to find tenants?  It certainly isn’t from the lack of parking.

Parking lots of Victory Center in Eisenhower Valley

Just one side of the building offers acres of spaces.  And the other side is equally vast.

Does the building have subtle structural deficiencies?  Is the water table unusually high?  Poor wastewater drainage?  Unusually energy inefficient?  These all seem like issues that a property owner would seek to address with the help of good engineers.  I can only conclude that it’s the combination of multiple minor deficiencies in tandem with recent owner PGIM’s persistent effort to recruit lucrative mega-tenants to the 625,000-square-foot facility through strict long-term leases, rather than orienting the building to attract numerous smaller companies.  The Eisenhower Valley is still desirable, yet this generally well-maintained site (the parking lots aren’t bad, for nearly 20 years of vacancy) has constituted up to 18% of Alexandria’s overall portfolio of vacant office space.  Victory Center offers the aging paradigm of exclusive office space, with the possibility of an onsite cafeteria but a paucity of restaurant or retail options nearby—a configuration one leasing expert called “antiquated” by today’s standards.  Office workers today prefer stepping outside the facility during lunch for a variety of restaurant options in close walking or driving distance.  Such options are infrequent in the Eisenhower Valley.  This format is what prompted the Alexandria City Council in 2019 to vote on a rezoning of Victory Center to allow mixed use, commensurate with the sale of the property to Stonebridge, who hopes to develop the seven-acre eastern parking lot into townhomes and condos with some restaurant offerings.

Then, of course, COVID-19 hit, throwing a wrench in this sort of redevelopment, as the long-term demands for office space remain shrouded in uncertainty.  As a result, Victory Center has the closest it has come to a tenancy in almost two decades:

It’s a site for Inova to accommodate the mass vaccination of neighbors.

Peering through the window, one witnesses a barely finished first-floor space filled with vaccination cubicles and queueing corridors, which just opened these last few weeks.

Outside, the western parking lot still accommodates drive-thru COVID testing.

Inova represents a fraction of the Victory Center’s overall leasable space, but at least the building is getting put to use.

And that’s not all: additional research led me to discover that Stonebridge has found a use for at least one of the two parking lots at the Victory Center.

Last fall, the leasing company secured a partnership with two office co-working companies to deliver the Alexandria Drive-In, which hosted a fall series of movies bringing the look and feel of conventional drive-in movies to that enormous lot, all benefiting local nonprofits.  Now the spring/summer series is getting underway.  It’s a brilliant strategy for this underutilized space, given that the majority of conventional, enclosed movie theaters have remained non-operative due to social distancing restrictions.  COVID-19 has, in fact, revitalized interest in drive-in movies nationwide.  And, though the pandemic threw a wrench into the initial plans, it does appear now that the housing element of the mixed-use proposal for Victory’s Center’s east parking lot will soon come into fruition.

In the meantime, the two pop-ups have breathed life into Victory Center—and this entire stretch of Eisenhower Valley—for the first time in, well, decades.  The two uses harmonize nicely: COVID testing and vaccination takes place during business hours, giving way to the drive-in on weekend nights.  As I’ve reported before, pop-ups are an optimal strategy for creatively tenanting long-vacant space under more relaxed leasing terms than usual.  They don’t last that long—usually less than a year—but they help inject capital and trigger overall interest/curiosity in spaces that otherwise often continue to languish. And they offer good deals to fledgling tenants that may not be able to justify a multi-year lease, especially if demand for their product is ephemeral.  While pop-ups usually align with merchandise or goods-oriented tenants, clearly we now witness a protocol for office space getting used in an unconventional fashion.  Desperate times call for desperate measures, but at least the Victory Center can finally put a trophy on its dusty shelf.

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4 thoughts on “Eisenhower Valley and the Victory Center: in an otherwise prosperous area, a vacant office building finds a new lease. Or two.

  1. AvatarChris B

    Boy, does that 2007 street view ever scream “government”. It probably started out as a “build to suit” for a government agency. I suspect it probably was part of a portfolio of such properties.

    The nice thing is that with a single government tenant the owner can offload the maintenance to GSA (and probably get a property tax exemption because it’s a government tenant) and just collect rent checks. It’s not really a puzzle why a landlord would hold out for that kind of gold-plated lease arrangement.

    Reply
    1. AmericanDirtAmericanDirt Post author

      Yes, you’re probably on the money, regarding the Build to Suit from the early 70s, when its original tenant (Army Materiel Command) located there. Its one and only tenant, if you don’t count occasional pop-ups like these. And while you’re probably right that a gold-plated lease is more appealing, this long-vacant condition probably echoes the curse of New York, where property owners deliberately keep their commercial/retail sites vacant, pay significantly lower taxes for a property that is assessed at a much lower rate because of the vacancy and end up devaluing the entire neighborhood because it actually looks and feels vacant. But in New York (or Manhattan at least) this is a real problem–it doesn’t likel cause such a ripple effect in devaluation in a more sparse area like Eisenhower Valley.

      The new structures getting proposed on the east lot do NOT appear to have restaurant/retail space, which I know many argue is a deal-breaker. Maybe a later phase will have them, but without restaurants, it may be hard to lure a long-term gold-plated lease to the Victory Center–furthermore, developers may be chary to build for retail/commercial in their new condo complex with a giant vacant office building right next door.

      Reply
      1. AvatarChris B

        Yes to all that.

        And add that the collective “we” don’t really have a clear understanding of future/post-pandemic office space needs and uses.

        Reply
        1. AmericanDirtAmericanDirt Post author

          Yep, I can imagine trying to build a pro forma under these conditions. The new normal may be 30% vacancy for commercial (even worse for retail), which doesn’t allow for a capitalization rate remotely at a level that’s likely to excite many lenders or equity partners.

          The saving graces of the Eisenhower Valley are that it’s a lot more attractive than similar no-man’s-land corridors in other cities–more walkable, plenty of parks, generally feels safe (safe enough to attract residential projects), and not the sort of area that will ever generate much demand for gentlemen’s clubs or routine vice squad visits. I think it helps that the area’s zoning overwhelmingly encourages light industrial (low nuisance) rather than heavy, so it isn’t really the dumping ground for unwanted uses the way it would be if it had businesses that create lots of pollution, noise, glare, etc.

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