THE BIG PICTURE
TRENDS & ISSUES
Looking for the Right Mix MIXED-USE DEVELOPMENTS ARE GAINING IN POPULARITY AND INVESTOR INTEREST—BUT PRESENT UNIQUE CHALLENGES.
by Teresa Bitler
ixed-use developments are com- munities within the community, a mix of residential units over retail, including restaurants, convenience stores and medical offices. Residents can social- ize and sometimes work in the building as well as live there, and if they need to venture to other parts of the city, nearby public transportation can get them there. These increasingly popular develop- ments typically demand higher residential and retail rates, making them attractive to investors. But don’t rush in, just yet— mixed-use developments are much more complicated than an apartment complex or even a strictly commercial proper- ty. If you don’t understand what you’re investing in or what it takes to develop a successful project, you stand to lose big. MILLENNIALS, BOOMERS AND BEYOND Understanding what it takes for a successful mixed-use development begins with understanding the demographic that wants to move into one. For the most part, these projects appeal to Millennials, young adults in their 20s and 30s. “They have their first job and want to live near that job, which is probably in the city,” explained architect Scott Johnson, a partner with Johnson Fain, which develops mixed-use projects throughout the world. “They’re working eight or more hours a day and want to be able to get home quick- ly to maximize their social life.” Mixed-use properties, especially those located near public transporta- tion, allow them to do that as well as to M
can serve as its own community, its suc- cess depends on that age-old adage: lo- cation, location, location. These projects usually work best in an urban (versus suburban) setting where there are restau- rants and entertainment options nearby, in addition to those in the building. Also, the local economy needs to be strong for a successful project. Em- ployment, population and disposable income should be growing in the area for a mixed-use development to be successful, according to “Mixed-Use Development and Financial Feasibility,”
meet interesting people and be close to cultural activities like the theater. On the other end of the spectrum, mixed-use properties appeal to Baby Boomers looking to simplify. (Johnson calls this the “dumbbell phenomenon” because there are significantly fewer people belonging to the generations in between who are interested in this lifestyle.) Boomers are tired of mowing the lawn and shoveling snow but want to remain active. According to Richard Munger, vice president of development with North American Properties, interest extends
IF YOU DON’T UNDERSTAND WHAT YOU’RE INVESTING IN OR WHAT IT TAKES TO DEVELOP A SUCCESSFUL PROJECT, YOU STAND TO LOSE BIG.
a report issued by the Counselors of Real Estate (CRE). Proximity to public transportation is another key element, said Colline Hernan- dez-Ayala, a partner with GTM Architects in Bethesda, Md. In fact, it’s so important that mixed-use developments are often referred to as “transit-oriented develop- ments” (TOD) because they are designed with the idea that residents will walk to where they can and use public transporta- tion to wherever they can’t walk. Some cities have embraced this lifestyle
beyond Boomers to seniors who want more than what their retirement com- munities can offer. “We have residents in their 80s and a couple in their 90s,” he said of Avalon, a massive 90-acre project outside of Atlanta. “They were bored, and they wanted to feel alive again.”
LOCATION, LOCATION, LOCATION Even though a mixed-use development
12 | think realty magazine july :: august 2016
Made with FlippingBook Online document