Arlington Office Building to Become Residential Complex

Carr Properties plans to convert a Ballston office building into a 392-unit multifamily residential community by 2028.

Updated on Oct. 21, 2026 in Commercial

Arlington Office Building to Become Residential Complex

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Carr Properties intends to redevelop the office building at 4040 N. Fairfax Drive in Arlington into a 392-unit multifamily residential community. Construction is expected to begin in the summer of 2028.

Why it matters

This project represents a significant shift in land use for the Ballston neighborhood as developers continue to target aging office assets for residential conversion. The redevelopment seeks to modernize a site that was originally completed in 1966.

The property at 4040 N. Fairfax Drive spans 186,000 square feet of office space and was previously purchased by Penzance for $89 million in 2014. The building underwent a renovation in 2012 prior to the recent acquisition by Carr Properties.

The players

Carr Properties

This real estate investment and management company focuses on acquiring, developing, and operating commercial properties in the Washington, D.C. area.

Penzance

This Washington, D.C.-based real estate firm specializes in investment and development across the Mid-Atlantic region.

The details

The transformation of the 186,000-square-foot office site involves stripping the structure to accommodate 392 residential units. Carr Properties acquired the property for approximately $12.3 million as part of its ongoing expansion into multifamily development.

The original office building at 4040 N. Fairfax Drive was completed in 1966.
Penzance acquired the property for $89 million in December 2014.
Penzance secured a $47.9 million loan for the site in June 2019.
Carr Properties acquired the 2121 Virginia Ave. NW site in 2025.
Demolition work began at 2121 Virginia Ave. NW in March 2026.

Culture Shift

This development follows a pattern of office-to-residential conversions that aim to revitalize urban corridors by replacing legacy commercial inventory. Developers are increasingly moving away from traditional office models in favor of mixed-use or high-density residential layouts.

Residents in the Ballston area can expect changes to local land use as an established office site transitions into a high-density residential complex. The project will eventually increase the local housing supply, potentially affecting regional rental availability once the units are delivered.

The takeaway

Large-scale redevelopments like this reflect the shifting needs of urban neighborhoods that once relied heavily on office tenants. Residents should prepare for years of construction activity as the site transitions from commercial use to a large-scale residential community.