Developer Lands Construction Loan For $100M Clarendon Apartment Project
Amid a nationwide apartment construction slowdown, Orr Partners now has two projects underway in Arlington, Virginia, after closing a financing deal.
The developer secured a $60M loan from Pacific Life and started construction this month on a 231-unit building on the former Joyce Motors site in Clarendon, Orr Partners CEO David Orr told Bisnow. He said the project has a total cost of around $100M.
Located at 1020 N. Irving St., the project sits about a quarter-mile from the Clarendon Metro station. It is retaining the facade of Joyce Motors, an auto shop that operated on the site for 85 years before closing in October to make way for the redevelopment.
The construction financing was first announced on LinkedIn by CBRE Vice Chair Maxi Leachman, whose team brokered the deal and who noted that "construction financing isn't easy these days."
The deal is a joint venture with the landowner, P&H Investments, and Orr said it includes other equity partners who didn't want to be named. He said raising equity for new construction has been harder than debt in today's market.
"The debt side of real estate is OK right now, the insurance companies are active players and so they seem to be stepping up on debt," he said. "It’s the equity side that’s difficult. It’s just hard raising capital right now for ground-up development, there’s a general reticence in the capital markets."
But Orr Partners has now raised money for two projects in Arlington, including a 441-unit building at 1501 Arlington Blvd. that began construction last year. Orr attributed the ability to close these deals to his firm's track record and to the strength of the Arlington market.
Many multifamily investors have pulled back from D.C. and suburban Maryland due to local regulatory issues and negative perceptions around the federal government's spending cuts, but Orr said investor sentiment in Northern Virginia is stronger.
"There’s a genuine lack of supply, there’s tremendous job generators like Amazon HQ2, and you have a generally pro-business climate in Arlington that’s receptive to increasing its tax base through job growth and real estate growth," Orr said.
Still, Orr Partners had to make some adjustments to the Clarendon development to make the financial math work. Arlington County in July 2024 approved the developer's request to amend its site plan to reduce the unit count from 241 to 231 and to cut the number of parking garage spaces from 155 to 119.
The changes were in response to high construction costs and interest rates that "have forced the applicant to explore cost savings," the county said in a report on the change.
Orr told Bisnow that below-grade parking spaces are "prohibitively expensive" and Arlington officials are receptive to reducing parking when a project is near a Metro station. He also said that in exchange for reducing the number of parking spaces, the building's garage will include two or three Tesla electric vehicles that residents will be able to rent.
"So they don't have to have their own car, they have cars on demand," he said. "This is a differentiator we have chosen to employ, and the county likes these novel ideas that minimize cars on the road."
