Atlantic Realty to Invest $317 Million in Downtown Falls Church

The conventional housing market may be going all to hell, but Atlantic Realty Companies has won unanimous approval from the Falls Church City Council to proceed with a $317 million redevelopment project downtown. Phase I of the mixed-use development, which should start construction this summer, includes an office building, a conference hotel, age-restricted condos, structured parking and a relocated bowling alley. A second phase will include an apartment building, townhouses and a Harris Teeter grocery store.

Preliminary designs, to be refined in a charrette involving the public, emphasize the street-level pedestrian experience. The major buildings will have retail on the ground floor. The grocery store will follow the model pioneered in neighboring Arlington County to fit a smaller footprint and require fewer parking spaces. Although there will be street parking, most parking spaces will be located in decks. The concept art (see illustration above) suggests that the developer will invest in attractive streetscapes.

The devil is always in the details, of course, and the details are sparse in the accounts provided by the Falls Church News-Press and Atlantic Realty here and here, so I reserve the right to change my mind. But it looks like Atlantic Realty plans to do thing right.

Over and above the nitty gritty details, this is a case of growth occurring where it should — on under-utilized property close to the urban core. (Falls Church adjoins Arlington County.) The area is already well served by roads and other public infrastructure. Falls Church officials apparently regard this development as growth that will pay for itself. Indeed, according to the News-Press, City Council is counting on the influx of tax revenues to ease the fiscal pressure that all municipal governments are experiencing.

Currently, the downtown property is underutilized. Press reports refer to construction taking place on a post office parking lot and a drive-through coffee shop, among other properties. The new development is projected to yield $2.8 million in additional property tax revenue, not including revenues from sales taxes or BPOL taxes. The grocery store by itself could generate $250,000 a year in tax revenues.

Atlantic Realty also will provide the city proffers worth more than $16 million in cash or cash equivalents, including money to city schools to offset the enrollment growth, and $4.2 million to the city or its equivalent in dedicated housing for affordable housing. The city will invest $9 million as well.

What we don’t know from the press reports or Atlantic Realty press releases is how much ongoing obligation the city will incur to serve the new businesses and residents who move into the area. Presumably, though, the city has crunched those numbers and found them to work in their favor

Bacon’s bottom line: Mid-sized projects like this, replicated dozens of times over, will slowly make the human settlement patterns of Northern Virginia more more livable and more fiscally efficient. Not everyone wants to live in urban places like downtown Falls Church, but big developers like Atlantic Realty believe there is a huge, unmet demand for housing located close to the urban core in walkable settings. Mixed use, pedestrian-friendly development is the future.

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  1. E M Risse Avatar
    E M Risse

    Good post and great bottom line!

    Two brief notes:

    If you look at the map on the jump page of the story in WaPo 25 Feb the building at the corner of VA Route 29 and VA Route 7 (George Mason Square) was years (decades) ahead of its time. Too bad it has taken so long to do this backfill.

    Just down VA Route 7 toward the Zentrum is a townhouse project that we used in the “$100,000 difference” work for Loudoun County in the late 90s. A townhouse fronting on VA Route 7 was worth $100,000 more than the same unit by the same builder in one of Loudoun County’s best Village-scale projects at the time.

    As you note, everyone does not want to live within walking distace of “downtown” Falls Church but for a long time the market has valued this area much more that being within driving distance of Eastern Loudoun County.


  2. Anonymous Avatar

    I cost $100,000 more, but was it really worth $100,000 more?

    Come back in ten years and see which one provided a better ROI.

    A price at one point in time doesn’t mean much. It is how the relative prices change over time, that generates value – and profit.


  3. Anonymous Avatar

    This is about 10 years later:

    Town houses in eastern Loudoun built in the late 90s went up for a while and now are down and headed further down.

    Twon houses built in the late 90s in Falls Church went way up and are holding their value.

    I guess you have your answer.

    Home owner who moved from Falls Church to Loudoun and regrets it big time.

  4. Anonymous Avatar

    Good answer. Thank you.

    When I moved from Fairfax to Fauquier, I kept my Alexandria house for just that reason. Now I’m not so sure. With increased ethnicity and falling prices, maybe I held on too long. But, when the ft Belvoir BRAC comes on board I will be equidistant from the pentagon and Ft. Belvoir. It could still work out much better.

    I wouldn’t ggive up on Loudoun just yet. The board just turned down a development of 499 homes with proffers of $40k each. With that kind of help, home prices will soon be on the rise.

    I’ll look up the value of that condo in Georgetown I sold in 1972.

    I assume you moved from a town house to something larger. Even if you did better financially in a Falls Church town home – would you be happy?


  5. Anonymous Avatar


    I went back and looked up condos in Glover Park, where I once lived. I sold that condo in 1975 for $38,000 and I was glad to see it go. I made 21%, per year. Minus condo fees that works out to just about zero. Less taxes.

    If I had kept it it would sell today for $269,000, but after condo fees it still works out to close to zero, or a little less. Less taxes.

    But, I made out because I had a zero % down loan. Basically, the gain I made was free. The return on my actual investment ws much higher than the return on the purchase price vs the sales price. And, in those days, I was a “bad risk”. I guess that makes me one of those nasty speculators.

    The property I bought in Alexandria
    has returned about 9% per year. Less taxes. Plus rental income.

    The property my wife inherited in Fauquier has gained around 6%, per year.

    The raw land my brother bought on Martha’s Vineyard has returned 22% per year assuming he sank a million in it.

    Location, location, location. On the other hand, my brother basically digs ditches for a living.

    I guess I don’t think that a generalization about Loudoun vs Falls Church is sufficient.


  6. Anonymous Avatar

    Oh, yeah. Plus I built a couple of boats in the yard in Alexandria. Plus other stuff.

    Try that in a condo.


  7. Anonymous Avatar

    “For example, the price of the median owner occupied home in Seattle was $137,000 in 1989. In 2006, the US Census reports this price to be $447000. The total price increase from 1989 to 2006 was therefore $310,000. We have to keep in mind, however, the increase in the general price level from 1989 to 2006. Adjusting the data for inflation, housing prices in Seattle rose about $226000, which represents the increase in housing prices above and beyond the rise in the general price level. It is this increase in the “inflation adjusted” housing prices that I examine. The interpretation is not that 80 percent of Seattle’s housing price is due to regulations; instead, I estimate that 44 percent of the 2006 price of a median owner occupied home in Seattle (or $200,000) is due to a price change since 1989 that can be associated with land use regulations.”

    44% of the cost of a median priced home is associated with land use regulations.

    Think about that.


  8. Larry Gross Avatar
    Larry Gross

    hmmm.. why does this sound suspicious?

    Oh.. because RH is posting it…


    “There is a wonderful debunking of Eicher’s article at the sightline institute’s blog: (in 3 parts)

    Parts 2 and 3 do the actual number crunching, so they may be more interesting. Here are some quotes:

    Okay, let’s dig in. The third paragraph is the first place that really caught my eye.

    Between 1989 and 2006, the median inflation-adjusted price of a Seattle house rose from $221,000 to $447,800. Fully $200,000 of that increase was the result of land-use regulations, says Theo Eicher [a University of Washington economics professor].

    Really? That would mean that nearly all — 88 percent to be exact — of the inflation-adjusted price increase in Seattle was due to regulation. That would be pretty surprising during a time when Seattle’s population increased by 66,000, the region’s wealth exploded, and a national housing bubble sent prices skyrocketing.”

    naughty naughty RH

  9. Larry Gross Avatar
    Larry Gross

    I thought I would offer this to EMR:

    The announcement back in 2006 that all new homes in the UK will be zero cabon by 2016 caused a wave of optimism in green circles. It has also no doubt spurred architects and developers to start exploring what such houses may look like – the Lighthouse being one of the striking early examples, but it was a one-off. Now delegates at the EcoBuild exhibition have had a chance to see what is being billed as “the UK’s first commercially viable, affordable and ready to purchase zero-carbon home.”

    I thought EMR would like the name:


    but I also wondered how he would feel about a housing concept that(if you believe it) that involves a house being fairly self-contained and not really requiring much in the way of variable location costs.

    The article makes a point of claiming that these RuralZED homes can be single family detailed or combined into multi-family pods but their power and water and sewer requirements are minimal and mostly self-contained.

    These things claim to be real.. but I suspect they are truly “bleeding edge” technologies at best – but what is intriguing is that the CONCEPT .. is.. conceivable technologically at this point in time..

    In other words, there could come a time when homes could be sited just about anywhere without much difference in location variable costs

    and .. ironically and especially so if we build/improve/expand high speed rail that can whisk people a hundred miles in an hour.

    These RuralZED could be plopped down 10 miles from a rural high-speed rail station.


  10. Anonymous Avatar

    “hmmm.. why does this sound suspicious?

    Oh.. because RH is posting it…”

    Some professor’s work is suspicious, just because I shared it?

    Go back and read it again, Larry. He carefuly explains how he adjusted for normal inflation first, (That is the inflation adjusted part) and after that, 44% of the cost increase is due to regulations.

    The quote I have above is a response to the alleged “debunking” which is actually based on a common misunderstanding.

    And he explains how he checked the variance by comparing diffent localities with different regulations. Furthermore, his results correspond well with two other previous (and well respected) authors, Glaeser and Gyourko.

    You choose not to believe how much regulations cost us, (when they are applied needlessly). Some regulationas are good and necessarey, but the vast majority are eather meaningless, or they are nothing more than disuised taxes, or they are deliberately promoted by business interest, because they provide an advantage (higher prices).


  11. Anonymous Avatar

    My argument is not that some regulations are not necessary. It is that we should examine them for waste and inefficiency just as much as we should search for conservation in any other resources.


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