Drive up to Shirlington Gateway, a sleek, 12-story office building fronting on Shirley Highway in South Arlington, and you could swear you were in economically depressed Houston or Denver.
Only six cars sit in the building's 610-space parking garage. The building's lavish lobby is devoid of activity. No shops, no people. A lone maintenance worker watering plants is the only sign of life.
A ride up the elevator finds floor after floor of emptiness. No bustle, no phones ringing, no sound of copying machines. In fact, only a portion of the seventh floor is occupied, and that includes the building's leasing office.
This quiet scene is at a $30 million building that has been on the market for a year. Despite its proud proclamation in sales brochures as the "Gateway to Success," the Shirlington Gateway is the Washington area's best-known and most visible leasing bust.
In more than one year of lease promotions, the Weissberg Corp., the building's owner, has been able to rent only 10 percent of the structure's 214,000 square feet of space. Last week, after struggling to fill space, the firm announced it would move part of its own offices to the building's top floor.
Located in a suburban market that has an office vacancy rate of about 20 percent, Shirlington Gateway is clearly an anomaly. While Shirlington Gateway is well known among commercial real estate brokers as a tough-to-rent building, it is not alone in encountering rough times in filling space.
While the Washington area is still deemed one of the best office leasing markets in the country, in several metropolitan locations, such as at Tysons Corner and Rockville, buildings sit only half full, even after aggressive marketing.
In downtown Washington, where the vacancy rate is about 10 percent, some buildings in the popular central business district have been known to remain nearly empty for more than a year. Industry executives say the hollow halls throughout the area have sometimes been caused by builder snafus, excessive rental rates, an unproven location or a glut of office space.
But the eye-catching, glass-sheathed Shirlington Gateway building, which is passed by more than 150,000 cars each day on Shirley Highway (I-395), has had more than its share of troubles.
"It's been rough, real rough," said Kay Kingery, leasing agent for the building. "But within the next two to three months, we'll have the deals here."
Kingery said part of the problem in leasing space in the building has been that the Shirlington area has not been proven as an office location, nor is there a Metro station nearby. In addition, the building was finished at a time when much of Northern Virginia was experiencing a glut of new office development.
Despite that, the Oliver T. Carr Co. has been successful in completely filling its new five-story office building directly across from the Shirlington Gateway project. The Carr building, a much smaller structure but with similar rental rates, is part of the recently renovated Shirlington Shopping Center, a 40-store complex. In all, Carr plans further construction during the next five years of nearly 2 million square feet of office, hotel, retail and residential space costing $215 million in the immediate Shirlington area.
"We're not nervous. We're anxious," said Richard Gersten, vice president of leasing for Weissberg. Gersten said that his firm, one of the early speculators in the now-booming Rosslyn area, is willing to wait on Shirlington as it did during the mid-1960s with Rosslyn.
When discussing the rental woes of his Shirlington Gateway building last September, Gersten said: "Problem? It's not a problem yet."
Last week, when asked if he thought the Shirlington project had now become a problem, Gersten said: "We're no less optimistic."
As with other developers in the Washington area, Weissberg is offering an impressive array of incentives to get the remaining space at Shirlington Gateway leased. It has wooed such groups as mortgage companies and defense contractors. Would-be tenants have been offered eight months to one year of free rent on a five-year lease, free parking and such interior amenities as upgraded carpeting.
Weissberg has said it will also purchase a prospective tenant's current lease, as well as give a portion of the building's equity to a firm that leases a large chunk of space at Shirlington Gateway. Complimentary shuttle bus service will also take tenants "wherever they want to go," Kingery said.
In addition, outside real estate brokers have been promised slightly greater-than-average commissions for attracting tenants to the building, which has annual rental rates in the range of $19 to $20 a square foot.
Weissberg officials have found on more than one occasion that trouble breeds more trouble. They have watched as three major would-be tenants dropped out of deals. They have seen potential clients pass them up for newer office buildings. And their much-noticed sales pitch -- a large sign draped over the side of the building that declared "Your Name Here" to passing motorists -- fell down earlier this year.
"We go through our periods of psychologically wondering what we did wrong ... but we're still hot on Shirlington. We're going to stay in there," Gersten said.
Shirlington Gateway is by no means the only troubled office complex, although leasing agents are often reluctant to acknowledge that their projects are slow to rent.
"We're cautiously optimistic," said George T. Webb, leasing agent for Cushman & Wakefield, which is trying to fill space at the JTL Tycon Towers project at Tysons Corner. After more than eight months of leasing activity, the 17-story, $100 million building that rises out of the congested office and retail area, is 45 percent rented.
Nonetheless, Webb said his firm is more than satisfied about leasing at a building described by its owners as the most prestigious new office tower in Northern Virginia. He characterized the amount of space already leased as "pretty darned good.
"For being in a market that has perhaps leveled off a little. ... I think we're very encouraged," said Webb, one of five full-time agents trying to push space in the controversial tower.
The 416,000-square-foot Tycon project, designed by noted New York architects Philip Johnson and John Burgee, has been both praised and condemned by area residents, county officials and developers. Some see the building as a welcome addition to the Virginia skyline, while others have described the tower as a cross between an oversized high school, a prison, a shopping bag with handles and a glorified factory.
Webb blamed part of the building's slow leasing on the "flattening out of activity" of office rentals in the Tysons area. In the first six months of this year, 363,000 square feet of new office space was leased in the area, compared to 657,000 feet during a similar period last year, Webb said.
Annual rental rates at Tycon range from $25 to $28 per square foot, and incentives offered to prospective tenants are similar to other suburban office projects.
"We don't view lightly at all that we have over 200,000 feet to lease, but we're very happy with what we've done in eight months," Webb said.
At the Twinbrook Metro building at 12300 Twinbrook Pkwy. in Rockville, tenants have also been slow in coming. Since the building was completed 1 1/2 years ago, only about 30 percent of the 162,000-square foot building has been filled. Last month the building's owner, the Alan I. Kay Co., switched leasing companies. Since then, two tenants have been found, and three other groups are close to taking space in the six-story building, a leasing agent said.
Renting space at the complex has taken three agents on a door-to-door campaign of more than 300 area companies in an effort to lure them to the building, located adjacent to a Red Line Metro station that is also named Twinbrook.
"You've got to create a market," said Janyce Dean, a leasing agent with Julien J. Studley Inc. who described her success in the past month as a mixture of "hard work" and good deals. Those deals have included at least several months of free rent and extra amenities.
"It's been aggressive. A tenant can do quite well in this market," said Dean, who is also trying to fill space in another nearby large Kay building that has been sitting empty since being completed last April.