Arlington is meeting its housing goal, but affordability concerns aren’t going away

Arlington, Virginia is in high demand. According to a survey by RentCafe, the county held the title of America’s most desirable “city” for three months in a row last summer.

The growing demand is a boon for the province, in terms of measures such as tax revenue, development potential and job growth. But it also exacerbates the supply-demand imbalance that Arlington has long struggled with: housing.

Bisnow/Emily Wishingrad

Andrew Painter of Walsh, Colucci, Lubeley & Walsh, Mark Carroll of Skanska USA, Mae Klinger of Insight Property Group, Arlington County Board Member Matt de Ferranti and Jennifer Burns of Monday Properties.

Even though housing has been a consistent priority for county leaders in recent years, the problem is only getting worse, panelists said Bisnow‘s Future of Arlington event earlier this month, threatening its continued growth.

“There’s so much demand for housing because people want to be in our space, so that’s a challenge we’re facing,” Arlington County Board Member Matt de Ferranti said onstage at the Hyatt Regency Crystal City last week.

The housing shortage, particularly a shortage of housing affordable to service workers and middle-income earners, is an issue the province will need to address in the coming years as it continues to attract a diverse tenant base, panelists said.

According to Zumper’s April National Rent Report, Arlington is the eighth most expensive urban market for a one-bedroom apartment, ahead of Los Angeles and Washington, DC. A one-bedroom apartment in Arlington costs an average of $2,340 per month.

“We can’t grow if people can’t afford to live here and create growth. People create growth,” said JBG Smith Senior Vice President of Development Taylor Lawch. “It is one of the most important issues before us.”

JBG Smith is the developer of Amazon HQ2 and much of the surrounding National Landing neighborhood. The technology giant is an important demand driver in the region. The first phase employed 8,000 employees in 2.1 million SF of offices. This number was expected to grow to 25,000 by 2038, with the development of the 3.2 million SF second phase, but construction has been suspended.

Amazon isn’t the only major company locating in Arlington, which is often seen as more business-friendly than DC. CoStar is moving from DC to Rosslyn, moving 500 employees from its downtown headquarters and adding 150 more to a 31-story Central Place tower. bought in the fall.

Arlington County accounted for half of Northern Virginia’s largest office leases in the first quarter, according to CBRE’s Q1 report.

Sufficient high-quality homes are being delivered for those in the higher reaches of the income group.

JBG Smith delivered two 30-storey towers this winter, both at the top of the market. Rents at The Grace and Reva, which total 808 units, start at $2,100 and $1,950, respectively.

Mill Creek Residential’s 270-unit Modera Clarendon, which was completed about a year ago, has just stabilized at a 95% occupancy rate, according to general manager Joe Muffler, one of Mill Creek’s fastest leases in history. Similarly, Greystar’s 423-unit The Commodore, which was completed in October, is already 65% ​​leased, according to John Beinert, Greystar’s senior director of development.

“The demand for that product in this market is just fantastic,” he said.

Bisnow/Emily Wishingrad

Matthew Weinstein of McGuire Woods, Christopher Michael of Industrious, John Beinert of Greystar, Joe Muffler of Mill Creek Residential, Paula Sorrell of George Mason University and Brian Naumick of Edgemoor Infrastructure & Real Estate

But companies are looking for more than just housing for their CEOs and highest-paid employees, says Jennifer Burns, executive vice president of Monday Properties.

“Affordability and access to housing are critical for employers recruiting students from internships and graduate programs,” she said. “They’re looking at what the needs of today are and what the needs of tomorrow are, and that may mean looking at Alexandria and other places in the area, maybe Falls Church and Loudoun (County).”

While de Ferranti said the county may be meeting its goals for the total number of homes under construction, there is a lack of new housing at prices that places like restaurants and retail can afford.

Housing at lower prices is especially important given the increase in the number of service sector workers needed to maintain neighborhood amenities for office workers and residents.

“If you ever wonder why your neighborhood, wherever that is, doesn’t have great bistros, great restaurants and great shopping, there’s a lot to it, and one of the biggest things is the affordability of restaurants and shopping per o’clock. employees,” said George Banks, partner at retail consultancy Revel.

Revel was behind JBG Smith’s new 1.6-acre water park, a few blocks from Amazon HQ2, which has nine local kiosks and two restaurants. County Board Vice Chairman Takis Karantonis echoed Banks’ sentiments, pointing to the thousands of workers at Reagan National Airport who are being priced out of Arlington’s market-rate housing.

Universities growing in the area contribute to that need. Virginia Tech is building a $1 billion innovation campus at Potomac Yard, while George Mason University’s graduate campus in Virginia Square plans to add undergraduate programs.

“They need a place to live,” said GMU Associate Vice President of Innovation and Economic Development Paula Sorrell.

Bisnow/Emily Wishingrad

Jamie Bobotek of Pillsbury Winthrop Shaw Pittman, Brian Earle of ZGF Architects, Tracy Sayegh Gabriel of National Landing BID, Takis Karantonis of Arlington County Board, Taylor Lawch of JBG Smith, Andy Vanhorn of Dweck Properties and George Banks of Revel.

Creating affordable housing in today’s market requires creative solutions, says Mae Klinger, partner at Insight Property Group.

“With construction costs where they are and interest rates where they are, it’s hard to have a lot of affordable housing in brand new developments,” she said.

Insight is developing 553 units on the site of the former Macy’s department store in Ballston, but Klinger said the project didn’t make financial sense if it included affordable housing. Instead, the county is allowing the company to maintain affordable housing on an older site in Arlington and make improvements there to meet its inclusionary housing obligations.

Another creative solution came from the Arlington Partnership for Affordable Housing with the redevelopment of a former church site, also in Ballston. For Unity Homes, which opened last week, the local affordable developer combined 144 new affordable units with community space, a daycare center and a commercial kitchen.

“I think there has been a lot of coordination from different sectors and at policy level to achieve the common goals around housing affordability.said National Landing BID President Tracy Sayegh Gabriel.

Impact funds like JBG Smith’s, which just met their goal of preserving and creating 3,000 affordable units, and Amazon’s Housing Equity Fund, add fuel to the mission.

The province is also taking steps to increase affordability. Last March, the country passed a ban on single-family zoning to try to increase production of missing middle housing.

But even though there was still a lot of work to be done, the panelists hoped Arlington is in a good place to take on the challenge.

“We have one of the best housing agencies in the country in Virginia,” said Andy Vanhorn, president and chief development officer of Dweck Properties, who sits on the APAH board. “We also have some of the most innovative affordable housing developers in the world.”