Washington REIT and Crimson Partners Ink Apartment Development JV
- Jun 24, 2011
Arlington, Va.–Washington Real Estate Investment Trust (WRIT) and Crimson Partners have formed a joint venture to develop a six-story, 150-unit mid-rise apartment complex in the suburban Washington, D.C., city of Arlington. The first order of business for the JV was to buy the proposed development site, which measures about 37,000 square feet and is near Ballston Common Mall.
WRIT will be a 90 percent owner of the JV, while Crimson Partners will take 10 percent and be responsible for the construction and lease-up of the property; WRIT will have management and leasing responsibilities. Work is slated to begin during the second quarter of 2012 and may take as long as 18 months. According to the partners, the total cost of the project will be about $43.5 million, with a projected stabilized return of between 7 percent and 8 percent.
Few would disagree that metro Washington is currently a strong market for multifamily rental housing. According to the U.S. Census Bureau, local employers added 33,100 workers during 2010, a year when not too many other places were seeing that much job growth. For 2011, projected employment growth will be considerably more: 85,300 positions.
Investment specialist Marcus & Millichap is predicting that by the end of 2011, apartment vacancies in the DC metro area will have dropped 90 basis points, to 4.2 percent. The company also predicts that asking rents for the area will rise 4.6 percent for the year, and that effective rents will increase 5.5 percent.
As a REIT, WRIT specializes in income-producing properties in the greater D.C. area, currently owning a portfolio of 86 properties totaling 11 million square feet of commercial space and 2,540 residential units, along with land held for development. Eleven of its properties are multifamily. Crimson Partners is a real estate development and investment firm, specializing in land, adaptive reuse, speculative and build-to-suit projects.