In studying mixed-used housing, a little understanding of its history is in order. Mixed-use property is a term generally used for a building that has shops and retail below and housing above. You can see examples of historic mixed-use buildings in many of the oldest cities in the world, including Paris, Rome, and New York.
The reasons for this were the absence of cars, an influx of new city dwellers, and a shortage of buildable real estate. Mixed-use gave developers maximum value for a minimum amount of land while walkable shopping districts added value for the residents.
Of course, many things have changed over the centuries but mixed-use developments have had a recent resurgence in popularity for many of the same reasons.
What is different about today’s mixed-use housing?
The way we plan mixed-use housing has changed with the times. A modern mixed-use development often has an ‘anchor store’, usually a grocery, and other shops and businesses are added carefully to fit the community’s needs. Coffee shops, restaurants, and bars are important additions.
Mixed-use can attract people to areas that are ‘bedroom communities”, improve blighted neighborhoods, and even make somewhat rural areas much more attractive.
1. Mixed-use brings the developer more profit for square foot:
Attractive stores bring in prospective clients and also bring in business from residents and locals. Combined with the reduced amount of land needed to build a mixed-use development, the extra income indirectly lends financial stability to the project. It should be noted that mixed-use properties can be more expensive to build.
2. A broad demographic of clients are interested in mixed-use housing:
Generation X left the suburbs and into urban areas, leading to an urban boom. While millennials are showing a slight preference for the suburbs, they are outnumbered by aging Gen Ex’rs and seniors who have many reasons to want urban living that is walkable.
Seniors, in particular, have expressed that mixed-use areas also help them feel independent and lessen their loneliness, and the senior population is growing faster than any other demographic.
Mixed-use developments are also popular among millennial, although they are currently showing a preference for leasing.
3. This lends a long-term stability to the income flow of mixed-use developments that purely residential projects aren’t guaranteed.
Although they are costly to develop, stores pay more rent than residents (in leased buildings) while serving as an amenity.
4. Mixed-use developments work well in a wide variety of areas.
Today’s mixed-use developments can enhance a neighborhood with its shops or make a somewhat remote area or bedroom community more desirable.
6. Cities like mixed-use developments:
This can make permits, zoning, and financial leverage more readily available. Municipalities see the shops and similar amenities as added attractions. Some municipalities may offer incentives for mixed-use development.
7. Banks generally like mixed-use developments.
Banks understand that mixed-use developments are stable investments with a good ROI. That being said, mixed-use developments can be more difficult and time-consuming to develop, which can present financial obstacles in the planning phase.
Developers, realtors, and investors like the advantages of mixed-use developments because of their stability, versatility, and ability to please a wide variety of clients. Whatever your role is in the real estate community, mixed-use properties promise to do well in your portfolio.
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