Through its deal with Metro, Mill Creek will build a 2,000-space parking garage and keep 1,300 parking spaces and all of the site’s six bus routes operating during four years building the first phase. In exchange, the transit agency is transferring ownership rights of five of the site’s 15 acres to the developer and leasing the rest.
Along with the parking garage, Mill Creek is beginning construction on just over 250 new apartments. Founded in 2010 with the development portfolio and staff of Trammell Crow Residential, the company ultimately plans a total of 628 apartments in three buildings and 65,000 square feet of retail including a 50,000-square-foot Harris Teeter grocery store. The developer has an option to build another 60,000 square feet of retail.
As with other projects begun before the financial crisis, Chad DuBeau, managing director in Mill Creek’s Rockville office, said that much of the work planning the Dunn Loring project was done before the recession but that it took a return of the financial markets to finally get it started. JP Morgan is Mill Creek’s financial partner on the project and DuBeau said the development team secured a construction loan for the first phase from Pacific Life Insurance Co. on Aug. 8.
DuBeau said lenders are emerging from the recession more choosy about which projects they will back, picking through opportunities, “for the right property and the right partnership.”
Mill Creek is among a host of firms hustling to take advantage of the Washington area’s relatively stable job market and low vacancy rates. In NoMa, the neighborhood north of Massachusetts Avenue and Union Station, Mill Creek is building some 600 units. According to Delta Associates, the Alexandria research firm, the vacancy rate for Washington apartments is 3.1 percent, well below the national rate of 6.5 percent and third lowest among all markets nationally.
But DuBeau’s Dunn Loring project will not be without competitors. Edens & Avant, developer of the 1.9 million-square-foot mixed-use Mosaic District nearby, has brought in housing builder AvalonBay to develop 531 apartments, and other projects are getting under way nearby.
DuBeau said that with employers like Northrop Grumman expanding in the area, there would likely be a need for apartments at multiple properties. “I know there is obviously a good amount of jobs that are present within the submarket and I think we have a great project,” he said.