Jan 30, 2024 - Real Estate

Proposed Potomac Yard arena already making ripples in local real estate

The Virginia governor stands in a suit and a tie in front of a construction site.

Virginia Gov. Glenn Youngkin at Potomac Yard during last month's arena announcement. Photo: John McDonnell/The Washington Post via Getty Images

The brouhaha surrounding the proposed relocation of the Wizards and Caps arena to Alexandria is already affecting the decisions of some area homeowners.

Why it matters: It's not a done deal, but the prospect of a Potomac Yard arena development has set off a ripple effect since last month's announcement — with some eager to capitalize on the opportunity and others wanting to get out of the neighborhood, real estate agents tell Axios.

Driving the news: Residents and protesters aired concerns about the contentious news at an Alexandria public town hall on Saturday, with some sharing worries that arena plans will drive up housing costs and cause traffic nightmares.

What they're saying: McEnearney Associates agent Adrianna Vallario has clients selling their Potomac Yard townhomes years earlier than expected due to the arena news.

  • They don't want to live through the construction and are unsure how its arrival would impact their homes' values down the road.

Yes, but: Some of Vallario's team members have clients who've decided not to sell their Del Ray homes because of the buzz, instead holding on to them as investment properties, she tells Axios.

  • Vallario also has a client looking for a walkable, Metro-accessible house in Alexandria who opted to expand their search to include Potomac Yard because of the announcement.
  • And Compass agent Allison Goodhart DuShuttle has received an inquiry from a potential client looking to secure a Potomac Yard investment property walkable to the proposed arena site. (She also heard from a client who owns an investment property near the downtown arena and wants to offload it ASAP in case values drop there.)

Meanwhile, Compass agent Joy Deevy has multiple listings in Potomac Yard that were struggling to sell, but all went under contract after the arena announcement.

  • While she believes a drop in interest rates contributed to these sales, she says the buzz around the arena was also a driving factor.

The intrigue: While all the agents Axios spoke with say they believe an arena would have an overall positive impact on home values, they're uncertain how significant of an effect its arrival would have on an already highly sought-after area.

  • However, most agree that an arena won't ease the pressure in an area that's already too competitive and pricey for many. Neighborhoods like Potomac Yard, Del Ray, and Lynhaven are highly desirable thanks to their proximity to D.C., walkability, and Metro access.
  • "What we were already seeing is going to be just compounded," says DuShuttle.

Some say it could be a similar situation to Amazon's HQ2 — the announcement initially resulted in increased interest but hasn't yet been the driver of significant price changes.

By the numbers: Last month's median sales price in ZIP codes 22301, 22305, and 22314 — which incorporate the areas closest to Alexandria's proposed arena site — were $890,000, $690,000 and $778,500, respectively, according to Redfin data.

  • Five years ago, they were $723,750, $598,000, and $646,100.
  • For reference, the Dec. 2023 median sale price for Alexandria at large was $595,000.

Of note: Monumental says proposed housing developments surrounding the arena will include workforce affordable housing.

  • Arena developer JBG Smith also recently announced it will partner with Alexandria to preserve at least 500 units of affordable workforce housing, specifically focusing on the Arlandria-Chirilagua neighborhood. The area, located near the proposed site, is home to many Salvadoran immigrants and has long struggled to avoid gentrification.

What we're watching: Alexandria also recently voted to end single-family zoning in an attempt to increase housing supply and affordability.

The bottom line: If the Virginia legislature and Alexandria vote yes on the arena, the initial real estate inklings that agents are seeing could snowball in either direction — or die off altogether.

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