Courtesy of Boundary Cos. 201 North Union St. in Alexandria, Virginia
When Boundary Cos. purchased the Torpedo Factory Office Building on the Alexandria, Virginia, waterfront in 2019, the developer knew it was a property that checked all the right boxes: desirable submarket, amenity-rich location and differentiated office space.
The building located at 201 North Union St. is known as the Torpedo Factory Office Building because it was one of several structures, including the neighboring Torpedo Factory Art Center, that were built in the neighborhood shortly after World War I to manufacture munitions and house government offices. The buildings were renovated to their current uses in the early 1980s.
When Boundary acquired the boutique office building in the fall of 2019, it was well-leased with an established rent roll of longtime tenants. It offered direct waterfront access, 14-plus-foot ceiling heights and a top-floor terrace providing unmatched views. Boundary’s business plan included retenanting near-term lease maturities, completing minor cosmetic projects and upgrading the building’s HVAC system.
Boundary also signed a lease with ALX Community, Alexandria’s premier coworking space provider, shortly after closing on the property. ALX Community was relocating from its original location on Lee Street to the Torpedo Factory Office Building to increase its office footprint and community offerings while boasting a waterfront location.
ALX, with its uniquely designed workspace, town hall common area and state-of-the-art conferencing facility, would be a significant improvement to the building’s tenant roster and amenity base, said Ryan Fowler, a partner with Boundary Cos.
Fowler recalled that Boundary and the building’s leasing agent, JLL, liked what they saw in the 1920s-built boutique office building at 201 North Union St.
“The building was poised to benefit from growing office demand in northern Virginia on the heels of the Amazon HQ2 and Virginia Tech Innovation Campuswhile providing a differentiated product offering from most competitors in Alexandria,” Fowler said. “Direct access to waterfront amenities and King Street restaurants, coupled with the enhanced building offerings through our partners at ALX Community, were a competitive advantage we were eager to capitalize on.”
He said the Torpedo Factory Office Building’s boutique layout appeals to office users looking for smaller footprints as compared to the majority of buildings located in competing northern Virginia submarkets that offer larger blocks — 20K SF-plus.
What Boundary and its partners couldn’t predict, however, was the pandemic-sized torpedo headed their way in just a few short months.
Fowler recalled that it was an all-hands-on-deck moment when the coronavirus pandemic hit in March 2020. Boundary, working with JLL, Newmark Property Management, its tenants and even local civic leaders, would need to pull together to see the building and its surrounding area through an unprecedented crisis.
“The team at Newmark was instrumental in the first few weeks of the pandemic,” Fowler said. “We worked with our property manager to reach out to each tenant in the building to provide resources where possible.”
Those resources included financial assistance such as rent deferment, providing personal protective equipment to tenants and credits to use the newly constructed ALX Community conferencing center so tenants could meet in person while social distancing. The building was updated with hand sanitizer stations and other protective measures in multiple locations on all five floors of the 106K SF building.
Fowler said Boundary was able to take advantage of the limited tenant activity in the building during the height of the pandemic to complete the majority of the building’s cosmetic upgrades and HVAC system replacement.
All of those efforts served to increase tenants’ comfort levels, he said, and several tenant groups continued to use the building on a limited basis throughout the pandemic.
“We estimate that building utilization was still in the 25% to 30% range on any given day during the worst of Covid, which is much higher than what we were hearing from other landlords in the D.C. market,” Fowler said.
He added that ALX Community worked “incredibly hard” to increase its member base during the pandemic, especially as “people became tired of the work-from-home model and were ready to get back to an office environment.”
Fowler, who was recently recognized as one of the Alexandria Chamber of Commerce’s 40 under 40, praised the city of Alexandria for quickly closing a portion of lower King Street to auto traffic so that local restaurants and retail shops could continue to operate with outdoor seating and curbside pickup during the crisis.
“This created dining and shopping that felt safe to use during the height of the Covid,” he said. “The Old Town Waterfront felt alive during the pandemic, and our office tenants benefited with the ability to utilize these amenities that were right at our doorstep.”
Beyond the surrounding liveliness in the neighborhood, Boundary utilized one of its vacant top-floor suites during the later stages of the pandemic to sponsor multiple nonprofit events, including the Carpenter’s Shelter Annual Cook Off Fundraiser and an Earth Day event featuring a waterfront cleanup and documentary screening.
“At a time where tenancy at 201 North Union dipped below 75%, we made the most of the opportunity to host impactful events and showcase our building to the local community,” Fowler said.
With multiple vacant spaces available, the team focused on completing the building’s HVAC replacement and “targeting new tenants that were downsizing from larger blocks of space in the R-B Corridor, Crystal City and downtown D.C.,” Fowler said.
The building’s boutique layout caters to tenants with requirements of 10K SF or less, and the amenities provided through ALX Community — including a conferencing center, flex offices and event space — allow groups to maximize the efficiency of their lease footprint.
“We also focused on highlighting our proximity to Old Town’s 200-plus restaurants and boutiques and Waterfront Park,” Fowler said. “These neighborhood amenities provide a sense of work-life balance that are difficult to replicate.”
Today the building is 90% leased. Fowler said that Boundary, working with JLL, was able to sign four sizable new leases in a difficult leasing environment.
The new tenants are law firm Bacon & Thomas, family office investor Freedom Capital, architect Hammell, Green and Abrahamson, and Leonardo Helicopters USA, an aerospace manufacturer moving from Crystal City.
Fowler, admitting that he is “a little biased,” added that Leonardo’s fifth-floor suite will be “the nicest office space” on the Old Town Alexandria waterfront.
“Our recent leasing success emphasizes the shift in office users focusing on reducing their lease footprint while providing inspiring space where employees are excited to come to work,” Fowler said. “The new tenants we are welcoming to our building are leasing less space than their prior locations and benefiting from our unique amenity offering on the waterfront.”
Yorke Allen, a JLL managing director who worked closely with Boundary to lease the building over the past 24 months, said that despite 201 North Union’s “challenging journey,” the results speak for themselves.
“201 North Union is a textbook example of how to navigate through a crisis and come out even stronger on the other side for your tenants and investment partners,” Allen said.
The Torpedo Factory Office Building has two office suites listed for lease: a recently completed approximately 3,600 SF spec suite that is move-in-ready and an approximately 6K SF suite with waterfront views available in January.
“We’ve been very pleased with the increased tour demand since Labor Day on the few remaining suites and look forward to having all the space fully subscribed soon,” Allen said.