Washington REIT to JV with Trammell Crow on $95M Virginia Apartment Community
- Dec 05, 2011
December 5, 2011
By Barbra Murray, Contributing Editor
Capitalizing on the growing demand for residential rentals in metropolitan Washington, D.C., Washington Real Estate Investment Trust has entered into a joint venture with Trammell Crow Co. to build an apartment high-rise in Alexandria, Va. The 270-unit project carries a development price tag of $95 million.
The partners will erect the 15-story tower on a one-acre site approximately seven miles outside of Washington, D.C., which will be easily accessible by a nearby Metro station. WRIT will provide 95 percent of the funds necessary for making the project a reality, and partner and sponsor developer Trammell Crow will throw in the remaining 5 percent.
It’s a timely endeavor. The cry for more multifamily product in Northern Virginia and throughout the greater Washington, D.C., is loud and growing louder. The source: jobs. “Local employers are no longer cutting jobs as they did during the recession and many have resumed hiring in sufficient numbers to ignite greater household creation,” a fourth-quarter report by Marcus & Millichap Real Estate Investment Services stated. “These new households have filled more than 16,000 rentals in the district, Maryland and Virginia since vacancy peaked two years ago, reducing the rate to less than 5 percent.” The vacancy rate in the Alexandria submarket has dropped to just 3.5 percent.
With a limited number of projects having come online recently, WRIT and Trammell Crow are primed to capitalize on an increasingly tight market. By the close of 2011, apartment production in Northern Virginia will total roughly 900 units for the year, one of the lowest totals on record, according to the report.
Even beyond the Alexandria project, WRIT is doing its part to help fill the gap between supply and demand in the area. In June, the REIT formed a joint venture with Crimson partners for the development of a 150-unit apartment building in neighboring Arlington, Va., at a cost of $43.5 million.
Construction in Alexandria is scheduled to get underway during the fourth quarter of 2012. WRIT anticipates completion in late 2014 and stabilization by the first quarter of 2016.
The project dovetails with WRIT’s decision to exit the industrial real estate sector and focus on premier apartment and office properties in areas with solid and growing demographics, within the Beltway. In November, the REIT wrapped up the final phase of the $350 million disposition of its 3.1 million-square-foot, metropolitan Washington, D.C., industrial portfolio to a joint venture between AREA Property Partners and the Adler Group.
WRIT’s recent efforts in repositioning its portfolio include the $73.5 million acquisition of the 223,000-square-foot John Marshall II office building in Tysons Corner, Va., and the $101 million purchase of the 345,000-square-foot Braddock Place office campus in Alexandria.
“While real-estate fundamentals in Washington remain choppy, we will continue to build a portfolio that will remain more stable in this environment with better prospects for future growth as the economic climate improves,” George F. “Skip” McKenzie, WRIT president and CEO, said during the company’s third quarter earnings conference call at the end of October.