Mixed-use properties represent one of the most dynamic and growing segments of Virginia Beach's commercial real estate market. The city's $700 million Town Center investment, $335 million Atlantic Park development at the Oceanfront, and $200 million Pembroke Mall redevelopment collectively demonstrate that mixed-use development is the preferred format for Virginia Beach's most ambitious projects. For investors and developers seeking to finance mixed-use properties, Virginia Beach offers designated growth areas with favorable zoning, strong demand from both residents and tourists, and a financing landscape that accommodates the complexity of multi-component properties.
Whether you are acquiring an existing mixed-use building, converting a single-use property to mixed-use, or developing a ground-up project in one of Virginia Beach's Strategic Growth Areas, this guide covers everything you need to know about mixed-use lending in the Hampton Roads market.
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Why Is Mixed-Use Development Thriving in Virginia Beach?
Virginia Beach's mixed-use market is driven by a convergence of public policy, market demand, and investor capital that has made multi-component development the dominant format for new commercial construction in the city's most desirable corridors.
Town Center stands as the signature example. The 17-block, pedestrian-friendly district developed through a public-private partnership between the city (approximately $200 million in public investment) and Armada Hoffler (approximately $500 million in private investment) integrates Class A office, luxury apartments, upscale retail, dining, cultural venues, and public spaces into a true urban center. Recent phases include 39,000 square feet of retail and 131 luxury apartment homes at Premier Apartments, along with a 17,000 square foot performing arts theater.
The $335 million Atlantic Park project at the Oceanfront represents the next generation of Virginia Beach mixed-use development. Phase I combines restaurants, shops, experiential attractions, more than 300 multifamily homes, office space, a 70,000 square foot entertainment venue, and a 2.67-acre surf park into a single integrated development. This project is transforming the Oceanfront from a seasonal beach strip into a year-round mixed-use entertainment destination.
The $200 million Pembroke Mall redevelopment, directly across Virginia Beach Boulevard from Town Center, adds a seven-story hotel, 272 apartments, and public parking garages. This project extends the Town Center mixed-use ecosystem and creates a continuous corridor of integrated development along the Pembroke Strategic Growth Area.
Virginia Beach's Strategic Growth Areas use form-based zoning codes that actively encourage mixed-use development by allowing higher densities (up to 100 units per acre in the Pembroke SGA), requiring ground-floor commercial activation, and reducing parking requirements for integrated developments. These policy frameworks reduce entitlement risk and accelerate project timelines, making mixed-use development more attractive to both developers and lenders.
For additional market context, visit our Virginia Beach commercial loans overview.
What Types of Mixed-Use Loans Are Available in Virginia Beach?
Mixed-use properties present unique financing challenges because they combine multiple property types, each with its own income profile, tenant dynamics, and market risks. Virginia Beach lenders have adapted their programs to address these complexities.
Conventional Commercial Mortgages serve stabilized mixed-use properties with established residential occupancy and commercial tenant rosters. Rates range from approximately 5.50% to 7.50%, with LTVs of 70% to 75% and terms of 5 to 25 years. The key underwriting consideration is the income split between residential and commercial components. Properties where more than 50% of income comes from residential units often qualify for more favorable terms, as lenders view multifamily income as more stable than commercial income.
SBA 504 Loans provide up to 90% financing for owner-occupants of mixed-use properties. This is an exceptionally powerful tool for Virginia Beach businesses that want to own their commercial space while collecting rental income from residential units above or adjacent. The program is ideal for restaurant owners, professional firms, and retail businesses operating in mixed-use buildings.
Bridge Loans fund the acquisition and repositioning of mixed-use properties that need renovation, lease-up, or component reconfiguration. Rates range from approximately 7% to 14% with 12 to 36 month terms. Bridge financing is particularly relevant for Virginia Beach investors converting single-use properties to mixed-use or repositioning older mixed-use buildings to capture the premium rents that the Town Center and Oceanfront corridors command.
DSCR Loans qualify based on the property's combined income from all components, making them accessible to investors whose personal income may not support conventional qualification. Mixed-use properties need a minimum blended DSCR of 1.25x with LTVs up to 75%. The diversified income from both residential and commercial sources can actually strengthen DSCR calculations compared to single-use properties.
Construction Loans finance ground-up mixed-use development at 7% to 10%, with leverage up to 70% to 75% of total project cost. Virginia Beach's SGAs offer streamlined entitlement processes that lenders view favorably, as reduced permitting risk improves the overall project risk profile.
Use our commercial mortgage calculator to model financing scenarios for your Virginia Beach mixed-use acquisition or development.
How Do Lenders Underwrite Mixed-Use Properties in Virginia Beach?
Mixed-use underwriting is inherently more complex than single-property-type financing because lenders must evaluate multiple income streams, each with its own risk profile and market dynamics.
The fundamental approach is component-level analysis aggregated into a property-level evaluation. Lenders break the property into its residential and commercial components, evaluate each independently, and then assess the blended performance. The weakest component typically determines the overall lending terms, so a mixed-use building with strong apartments but weak retail may receive terms closer to what a standalone retail property would command.
Residential Component Evaluation follows multifamily underwriting standards. Lenders assess rents relative to Virginia Beach market comparables, vacancy rates, operating expenses, and tenant demand drivers. The military housing demand in Virginia Beach, supported by BAH payments from NAS Oceana and Little Creek personnel, provides a strong backstop for residential income.
Commercial Component Evaluation examines tenant creditworthiness, lease terms, NNN versus gross lease structure, and the competitive position of the ground-floor space within its Virginia Beach submarket. Retail tenants in Town Center and Lynnhaven command higher lender confidence than tourism-dependent Oceanfront tenants with seasonal revenue patterns.
Income Split Classification determines which lending programs are available. Properties with more than 50% of income from residential units may qualify for agency-style multifamily financing terms, which offer lower rates and higher leverage. Properties with more than 50% commercial income are underwritten as commercial properties, typically with lower LTVs and modestly higher rates.
Virginia Beach mixed-use properties in the Town Center corridor benefit from the institutional quality of the submarket, which gives lenders confidence in both residential and commercial income stability. Oceanfront mixed-use properties require more nuanced underwriting to address seasonal commercial income patterns.
What Are the Best Mixed-Use Investment Opportunities in Virginia Beach?
Virginia Beach offers mixed-use investment opportunities across a spectrum of risk-return profiles, from stabilized Town Center properties to value-add projects in emerging corridors.
Existing Town Center Properties represent the lowest-risk mixed-use investment in Virginia Beach. Stabilized buildings with luxury apartments, established retail tenants, and Class A office space in the 17-block pedestrian district offer predictable income streams and institutional-quality tenancy. Cap rates are compressed (5.5% to 6.5%) reflecting the premium market position, but financing terms are among the most favorable available.
Pembroke Corridor Value-Add opportunities exist in older properties adjacent to the expanding Town Center ecosystem. The $200 million Pembroke Mall redevelopment is catalyzing transformation of the surrounding area, and properties that can be repositioned to capture spillover demand from Town Center's expansion offer attractive risk-adjusted returns.
Oceanfront Mixed-Use presents higher risk but potentially higher returns. The Atlantic Park development is creating a new center of gravity for mixed-use investment along the resort strip. Properties that can capture both tourist and year-round resident demand benefit from the diversified income, but the seasonal dynamics require careful underwriting and financial planning.
Neighborhood Mixed-Use buildings throughout Virginia Beach, typically featuring ground-floor retail with apartments above, offer accessible entry points for investors. Properties near military installations benefit from BAH-supported residential demand, while ground-floor commercial captures spending from the surrounding residential population.
Conversion Opportunities from single-use to mixed-use are growing as the market evolves. Older office buildings in the I-264 corridor and Virginia Beach Boulevard can potentially be converted to mixed-use with ground-floor commercial and upper-floor residential. Virginia Beach's zoning codes in Strategic Growth Areas facilitate these conversions.
How Do You Analyze a Virginia Beach Mixed-Use Deal?
Mixed-use deal analysis requires evaluating each component independently before assessing the blended property performance.
The sample investment illustrates a Virginia Beach suburban mixed-use property with 32 apartments and 8,000 square feet of ground-floor retail. The residential component generates $614,400 annually at $1,600 average rent, while the retail component contributes $176,000 at $22 per square foot NNN. After accounting for blended vacancy of 6% and a 38% operating expense ratio, the property produces approximately $460,645 in annual NOI, a 7.09% cap rate, and a 1.40x DSCR at 70% LTV with 6.00% financing.
Key factors specific to Virginia Beach mixed-use analysis include the following.
Commercial-to-Residential Income Ratio affects financing options. Track this ratio carefully, as crossing the 50% threshold in either direction changes which loan programs are available and optimal.
Parking Requirements in Virginia Beach vary by location. Properties within SGAs benefit from reduced parking ratios, which improves land efficiency and reduces development costs. Properties outside SGAs face standard suburban parking requirements that may limit density.
Flood Zone Impact affects both construction costs and operating expenses for coastal and low-lying mixed-use properties. Ground-floor commercial in flood zones may require flood-proofing or elevated construction that adds to development costs. Factor these requirements into both acquisition and development analysis.
Military and Tourism Demand Overlap creates a unique dynamic for Virginia Beach mixed-use properties. Buildings that serve both military families (residential) and tourist/local spending (commercial) benefit from two largely independent demand drivers, reducing overall vacancy risk compared to single-demand-driver markets.
What Should You Know About Virginia Beach Mixed-Use Zoning?
Virginia Beach's zoning framework for mixed-use development varies significantly by location, and understanding these regulations is essential for both acquisition and development financing.
The Pembroke/Town Center SGA uses a form-based code that specifies building form, streetscape, and design standards rather than traditional use-based restrictions. This code allows mixed-use development by right, with residential densities up to 100 units per acre and required ground-floor commercial activation along primary streets. The form-based code significantly reduces entitlement risk because conforming projects do not require special use permits or rezoning.
The Oceanfront Resort SGA has its own set of development regulations that prioritize tourism-oriented mixed-use. Ground-floor uses must contribute to the resort character of the area, with entertainment, dining, and retail preferred. Upper floors can include residential, hotel, and office uses. The height and density allowances have been calibrated to support projects like Atlantic Park.
Outside the SGAs, Virginia Beach's standard zoning classifications are more restrictive regarding mixed-use development. Converting a single-use property to mixed-use in a standard zoning district may require a conditional use permit or rezoning, adding time and uncertainty to the process. Lenders prefer properties within SGAs for this reason.
Contact Clearhouse Lending to discuss financing for your Virginia Beach mixed-use acquisition or development project.
Frequently Asked Questions About Mixed-Use Loans in Virginia Beach
What are current mixed-use loan rates in Virginia Beach?
Mixed-use loan rates in Virginia Beach range from approximately 5.50% to 7.50% for conventional financing on stabilized properties. SBA 504 loans offer rates from roughly 5.50% to 6.50% for owner-occupants. Bridge loans range from 7% to 14%. DSCR loans start around 6.50%. Rates depend on the income split between residential and commercial components, tenant quality, overall occupancy, and property location within Virginia Beach.
How do lenders classify mixed-use properties for financing?
Lenders classify mixed-use properties based on the income split between residential and commercial components. Properties where more than 50% of income comes from residential units may qualify for multifamily-style financing with higher LTVs (up to 75-80%) and lower rates. Properties with more than 50% commercial income are underwritten as commercial properties with lower LTVs (65-70%) and modestly higher rates. The classification directly affects available loan programs and terms.
Can I use an SBA loan for a Virginia Beach mixed-use property?
Yes, SBA 504 loans are available for owner-occupied mixed-use properties in Virginia Beach. The owner must occupy at least 51% of the total square footage. This is ideal for business owners who want to operate from the commercial space while renting residential units for additional income. The program provides up to 90% financing with as little as 10% down, making it the most leveraged mixed-use financing option available.
What are the advantages of mixed-use over single-use properties?
Mixed-use properties offer several advantages in the Virginia Beach market. Income diversification from multiple tenant types reduces vacancy risk. Ground-floor commercial enhances property value and street-level activity. Residential units provide stable baseline income supported by military BAH demand. Mixed-use zoning in SGAs allows higher density than single-use residential or commercial zoning. And the live-work-play trend favors integrated developments, particularly in the Town Center and Oceanfront corridors.
How does Virginia Beach's form-based zoning affect mixed-use financing?
Form-based zoning in Virginia Beach's Strategic Growth Areas provides several advantages for mixed-use financing. The by-right development framework reduces entitlement risk, which lenders value when underwriting construction and acquisition loans. Higher permitted densities improve project economics. And the required ground-floor commercial activation ensures that mixed-use buildings in SGAs contribute to a vibrant street environment that supports both retail tenancy and residential demand.
What is the minimum down payment for a Virginia Beach mixed-use property?
Minimum down payments range from 10% to 35% depending on the loan program. SBA 504 requires as little as 10% for owner-occupied properties. Conventional mixed-use loans typically require 25% to 30% down. DSCR loans require 25% down. Bridge loans require 20% to 30% of as-is value. Construction loans for ground-up mixed-use require 25% to 35% equity. Contact Clearhouse Lending for personalized rate quotes.