Why Is Mixed-Use Development Gaining Momentum in Arlington?
Arlington, Texas is experiencing a significant shift toward mixed-use development, driven by the convergence of several forces: the Entertainment District's evolution from a game-day destination into a year-round live-work-play neighborhood, Downtown Arlington's revitalization around the UTA campus, and the broader national trend toward walkable, amenity-rich urban environments. For a city of approximately 394,000 residents positioned directly between Dallas and Fort Worth along the I-30 and I-20 corridors, mixed-use development represents the next stage of Arlington's maturation as a commercial real estate market.
The most prominent example of this shift is the Entertainment District itself, where over $4 billion in investment since 2020 has transformed the area around AT&T Stadium and Globe Life Field from a collection of parking lots and single-use venues into an integrated district combining residential, retail, restaurant, hotel, and entertainment uses. One Rangers Way, the $70 million luxury apartment community near Globe Life Field, represents the residential component of this transformation, creating a resident population within walking distance of the district's entertainment and dining options.
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Downtown Arlington is undergoing its own mixed-use renaissance. The Nehemiah Company's Front Street project will deliver a minimum of 150 multifamily units above 14,500 square feet of ground-floor commercial space. The Main/Abram Street redevelopment plans at least 160 residential units with 40,000 square feet of commercial, office, retail, and restaurant space. The Caravan Court hotel (145 rooms) adds a hospitality component to the downtown mixed-use ecosystem. These projects reflect a development pattern where different uses complement and support each other, creating more resilient income streams than any single use would provide.
For borrowers seeking commercial loans in Arlington, mixed-use properties offer diversified income streams but require specialized financing approaches that account for the complexity of multiple property types within a single asset.
What Mixed-Use Loan Programs Are Available in Arlington?
Mixed-use properties in Arlington can be financed through several programs, though the specific structure depends on the property's component mix, size, and the borrower's profile.
Conventional Bank Loans provide the most straightforward financing for mixed-use properties with proven operating histories. Rates range from approximately 6.50% to 8.00% with 5 to 10 year terms and up to 70% to 75% LTV. Banks evaluate mixed-use properties based on the blended income from all components, with the residential portion often receiving more favorable underwriting than the commercial components.
SBA 504 Loans serve owner-occupants of mixed-use properties where the business occupies at least 51% of the building. Up to 90% financing at fixed rates between roughly 5.75% and 6.75% for 20 to 25 year terms makes this program exceptionally attractive for small business owners who want to live above or adjacent to their commercial space. Downtown Arlington and the UTA campus area offer particular opportunities for SBA-financed mixed-use properties.
CMBS and Conduit Loans provide non-recourse financing for larger mixed-use assets with strong occupancy and diverse income streams. Rates range from approximately 6.00% to 7.75% with 5 to 10 year terms. These loans work well for stabilized mixed-use properties above $3 million where the residential and commercial components both demonstrate strong performance.
Bridge Loans finance mixed-use properties in transition, including lease-up of newly constructed projects, renovation of existing buildings, and repositioning of single-use properties into mixed-use. Rates range from around 8.5% to 11.5% with 12 to 36 month terms. Downtown Arlington's revitalization creates bridge loan opportunities for developers converting single-use properties into mixed-use formats.
DSCR Loans allow mixed-use investors to qualify based on the property's blended income without personal income documentation. Rates range from roughly 7.5% to 9.0% with 30-year terms. Smaller mixed-use properties with strong residential occupancy and stable commercial tenants are well-suited to DSCR financing.
Construction Loans finance ground-up mixed-use development. Rates range from approximately 7.5% to 10.0% with 18 to 36 month terms. Mixed-use construction loans are more complex than single-use projects because lenders must evaluate the feasibility of each component and the synergies between them.
How Do Lenders Evaluate Mixed-Use Properties in Arlington?
Mixed-use property underwriting requires lenders to evaluate multiple income streams and the relationships between different property components.
Lenders begin by identifying the dominant use. A property that is 70% residential and 30% commercial will primarily be evaluated as a residential asset with a commercial component, while a 60% commercial and 40% residential property will be evaluated more as a commercial asset. The dominant use classification affects the loan program, underwriting criteria, and available terms.
Income from each component is evaluated separately before being blended into a total property NOI. Residential income is typically valued at market rent with vacancy assumptions of 5% to 10%. Commercial income is evaluated based on tenant quality, lease terms, and market comparables. The blended DSCR must meet the lender's minimum threshold, typically 1.20x to 1.30x for conventional loans.
Lenders assess the synergies between components. Ground-floor retail that serves the residential tenants above, such as coffee shops, restaurants, fitness studios, and convenience services, is viewed positively because the residential population creates a built-in customer base. Retail tenants that are unrelated to the residential component receive standard retail underwriting without synergy credit.
Expense allocation between components must be clear and supportable. Mixed-use properties require careful separation of operating expenses between residential and commercial tenants, including utilities, insurance, property taxes, and common area maintenance. Lenders scrutinize the expense allocation methodology and may require audited financial statements for larger properties.
Which Arlington Locations Are Best for Mixed-Use Investment?
Arlington's mixed-use opportunities are concentrated in areas where residential density, commercial demand, and walkability converge.
Downtown Arlington and UTA Campus Area represents the primary mixed-use investment zone. The ongoing revitalization, with projects like Front Street (150+ units with 14,500 SF commercial), Main/Abram (160+ units with 40,000 SF commercial), and the Caravan Court hotel, is creating an urban village atmosphere around the university. UTA's approximately 40,000 students provide the resident and consumer base that mixed-use developments require. Lenders view downtown mixed-use favorably because the university provides institutional demand stability.
Entertainment District Perimeter is evolving from single-use entertainment venues into a mixed-use neighborhood. One Rangers Way's luxury apartments near Globe Life Field represent the residential component, while Texas Live! and surrounding retail and restaurant spaces provide the commercial component. The district's roughly 15.6 million annual visitors supplement the growing resident population's spending. Mixed-use development in this area benefits from the proven demand drivers of AT&T Stadium and Globe Life Field.
Cooper Street Corridor supports mixed-use development along Arlington's primary north-south commercial spine. Properties combining ground-floor retail or restaurant space with upper-floor residential or office serve both the UTA student population and the broader central Arlington community. The corridor's high traffic counts and established commercial activity support the commercial components of mixed-use projects.
Division Street is seeing renewed interest for mixed-use development as the downtown revitalization extends along this historic commercial corridor. The Caravan Court hotel project on Division Street demonstrates the corridor's potential for hospitality-integrated mixed-use development.
What Are the Current Mixed-Use Loan Rates and Terms in Arlington?
Mixed-use loan rates in Arlington reflect the property's complexity and the blended risk profile of its components.
Mixed-use properties typically price 25 to 75 basis points above comparable single-use properties due to the additional underwriting complexity and the blended risk profile. A mixed-use property with 70% residential and 30% retail will price closer to multifamily rates, while a property with 60% retail and 40% residential will price closer to commercial retail rates.
Cap rates for Arlington mixed-use properties range from approximately 5.5% to 7.5%, depending on the component mix, location, and tenant quality. Properties in Downtown Arlington and near the Entertainment District with strong residential occupancy and quality commercial tenants trade at the lower end, while properties in secondary locations with weaker commercial components trade at the higher end.
Lenders may require separate appraisals for the residential and commercial components or a single appraisal that clearly values each component. The total property value is the sum of the component values, and the maximum loan amount is based on the blended value and LTV limit.
Borrowers should model mixed-use financing scenarios using both a commercial mortgage calculator and a DSCR calculator to understand how different income and expense assumptions affect the property's financing capacity.
What Value-Add Strategies Work for Mixed-Use Properties in Arlington?
Mixed-use properties offer unique value-add opportunities that single-use assets cannot match, and Arlington's market dynamics create favorable conditions for several strategies.
Commercial Tenant Curation is one of the most impactful value-add strategies for mixed-use properties. Replacing generic commercial tenants with businesses that directly serve the residential population, such as coffee shops, fitness studios, coworking spaces, and personal service businesses, increases both commercial rents and residential tenant satisfaction, reducing turnover across the entire property.
Residential Unit Upgrades in existing mixed-use buildings can increase residential rents by $100 to $250 per month through kitchen renovations, modern finishes, and smart home features. This strategy works well in Downtown Arlington's older mixed-use inventory, where the building infrastructure is sound but the residential units need updating.
Activation of Common Areas transforms underutilized spaces into amenity areas that benefit both residential and commercial tenants. Rooftop terraces, courtyard gardens, and shared gathering spaces create community within the building and support premium rents for both components.
Adaptive Reuse converts existing single-use buildings into mixed-use properties. Downtown Arlington's older commercial buildings offer opportunities for conversion into ground-floor retail with upper-floor residential. This strategy requires bridge financing during the conversion period, with permanent financing replacing the bridge once the property stabilizes.
What Financing Challenges Are Unique to Mixed-Use Properties in Arlington?
Mixed-use properties present specific financing challenges that borrowers must navigate carefully.
Component Risk Mismatch occurs when one component performs well while another struggles. A mixed-use property with strong residential occupancy but weak commercial leasing may face overall DSCR challenges even though half the property is performing. Lenders evaluate each component separately and may require the weaker component to meet minimum performance thresholds independently.
Zoning and Use Restrictions can limit the flexibility of mixed-use development in Arlington. Not all commercial zones allow residential uses, and some residential zones restrict the types of commercial activity permitted. Confirming that the property's current or planned mixed-use configuration complies with Arlington's zoning ordinances is essential before pursuing financing.
Insurance Complexity arises from the different risk profiles of residential and commercial uses within a single building. Mixed-use properties may require separate or blended insurance policies that account for the distinct hazards associated with each use. Insurance costs in Texas have risen by approximately 20% to 40% over the past two years, and mixed-use properties may face higher-than-average premiums.
Expense Allocation Disputes between residential and commercial tenants can arise when shared building systems (HVAC, elevators, parking) serve both components. Clear lease language defining expense allocation and responsibility is essential for both property management and lender underwriting.
Appraisal Complexity can affect loan sizing. Mixed-use properties with limited comparable sales may produce conservative appraisals that do not reflect the property's true value. Working with an appraiser experienced in DFW mixed-use properties mitigates this risk.
How Does Arlington's Downtown Revitalization Support Mixed-Use Investment?
Arlington's downtown revitalization is creating a mixed-use investment environment that did not exist a decade ago.
The Nehemiah Company's two major downtown projects, Front Street and Main/Abram, will collectively deliver more than 310 residential units and 54,500 square feet of commercial space. These projects establish the density and walkability that support additional mixed-use investment in the surrounding blocks.
UTA's campus expansion continues to add students, faculty, and staff to the downtown area, creating the resident population base that mixed-use developments require. The university's roughly 40,000 students represent a captive market for the ground-floor retail and restaurant spaces in downtown mixed-use buildings.
The Caravan Court hotel adds a hospitality component to the downtown mixed-use ecosystem, bringing hotel guests who patronize local restaurants, coffee shops, and retail businesses. The convergence of residents, students, and visitors creates the foot traffic that commercial tenants need to thrive.
Improved infrastructure, including streetscape enhancements, parking improvements, and pedestrian connectivity, makes downtown more attractive for both residents and businesses. These public investments support private mixed-use development by creating the walkable, amenity-rich environment that today's tenants demand.
How Should Arlington Borrowers Structure Mixed-Use Loan Applications?
Mixed-use loan applications require more detailed documentation than single-use property loans.
Present each component's income and expenses separately before providing the blended property-level financials. Lenders want to understand the performance of each use independently and how the components contribute to total property NOI.
Document the synergies between components. If the ground-floor coffee shop derives 40% of its revenue from building residents, or if the residential units command a rent premium because of the ground-floor fitness studio, present this data to support the mixed-use value proposition.
Provide market comparables for each component separately. Residential rent comparisons should reference nearby apartment communities, while commercial rent comparisons should reference comparable retail or office spaces. Mixed-use property sales comparisons are ideal but may be limited in Arlington's market.
Address expense allocation methodology clearly. Show how property taxes, insurance, utilities, and common area costs are divided between residential and commercial tenants, and demonstrate that the allocation is consistent with the lease terms.
Contact Clearhouse Lending to discuss your Arlington mixed-use financing needs and receive a customized rate quote for your combined residential-commercial property.
Frequently Asked Questions About Mixed-Use Loans in Arlington
What percentage of commercial space qualifies a property as mixed-use in Arlington?
A property is generally classified as mixed-use when it combines two or more distinct uses (residential, retail, office, industrial) within a single building or development. There is no fixed percentage threshold, but most lenders consider a property mixed-use when the secondary use represents at least 20% to 30% of the total building area or income. Properties with a small amount of ancillary commercial space (under 15%) may still qualify for pure residential lending programs.
Can I use an SBA loan for a mixed-use property in Arlington?
SBA 504 loans can finance mixed-use properties in Arlington when the business owner occupies at least 51% of the building space. This program provides up to 90% financing at fixed rates for 20 to 25 year terms. The 51% occupancy requirement can include both the commercial and residential space occupied by the owner. SBA mixed-use financing is particularly popular for small business owners in Downtown Arlington who want to operate a ground-floor business while living upstairs.
How do lenders calculate DSCR for mixed-use properties in Arlington?
Lenders calculate mixed-use DSCR by combining the net operating income from all components (residential and commercial) and dividing by the total annual debt service. However, they typically evaluate each component's contribution separately before blending. If the commercial portion has a DSCR of 0.80x and the residential portion has a DSCR of 1.50x, the blended DSCR might meet the minimum threshold, but some lenders may still require the weaker component to meet a minimum floor. Use a DSCR calculator to model different scenarios.
Are there mixed-use investment opportunities near the Entertainment District?
Yes, the Entertainment District's evolution into a live-work-play neighborhood creates mixed-use opportunities. One Rangers Way demonstrates the demand for residential living near the district, while Texas Live! and surrounding venues provide the commercial component. The district's approximately 15.6 million annual visitors create a consumer base that supports ground-floor retail and restaurant in mixed-use buildings. Properties combining residential units with entertainment-adjacent commercial uses can access competitive financing terms.
How long does it take to close a mixed-use loan in Arlington?
Mixed-use loan closings typically take 45 to 90 days from application, slightly longer than single-use property loans due to the additional underwriting complexity. Appraisals for mixed-use properties may take longer if comparable sales are limited. Bridge loans for mixed-use properties can close in 14 to 30 days, while SBA loans require 60 to 90 days. Having complete documentation for all property components at application accelerates the timeline.
What zoning considerations affect mixed-use properties in Arlington?
Arlington's zoning ordinances designate specific districts where mixed-use development is permitted. The Downtown Mixed-Use district and certain commercial zones along major corridors allow mixed residential and commercial uses. Properties in purely residential or purely commercial zones may require rezoning or special use permits for mixed-use development. Confirming zoning compliance before pursuing financing is essential, as lenders will not fund properties with unresolved zoning issues.
Moving Forward With Arlington Mixed-Use Financing
Mixed-use development represents the future of Arlington's commercial real estate market, particularly in Downtown and the Entertainment District where the convergence of residential demand, commercial activity, and institutional anchors like UTA creates ideal conditions for integrated live-work-play properties.
Whether you are acquiring an existing mixed-use building, developing a new project in Downtown Arlington, or converting a single-use property into a mixed-use format, the right financing structure is essential to capturing the value that mixed-use development offers.
Contact Clearhouse Lending to discuss your Arlington mixed-use financing needs and connect with lenders who specialize in combined residential-commercial property lending in the DFW Metroplex.