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The Benefits of Mixed-Use Developments

Posted on January 1, 2023

As the population continues to grow, developers are always looking for ways to get the biggest bang for their buck. Increasingly, they are turning to mixed-used developments to combine residential and commercial spaces, especially in urban settings. The mixed-used development concept is nothing new, but it continues to be a popular choice for developers for many reasons, with many different benefits and relatively few downsides.

If you’re looking to invest in commercial real estate, including multi-use development or flex property, then you may want to gain more knowledge about whether or not this concept is right for you. Read on to get an in-depth look into the benefits of mixed-use development to help you with the decision-making process.

What Is Mixed-Use Development?

Mixed-use developments integrate residential, commercial and industrial real estate into a single, compact site. Here, residents can walk to work, markets, restaurants and entertainment. Mixed-use developments saw their heyday in the U.S. prior to World War II. But then, along came America’s love affair with the automobile and larger, affordable housing in the suburbs.

The automotive industry enjoyed an explosion in sales and production following World War II. With this boom came widespread urban sprawl. Long, comfortable highway commutes to the office in the privacy of your own Ford Fairlane 500 became a reality for many. Indeed, there were countless numbers who traded their small, inner-city dwellings for larger, affordable housing further from the office.

Now, spurred on by population increases and congested roads, some Americans are reversing the nearly century-long trend of settling in suburban neighborhoods far away from the workplace. Some are choosing to move back into inner-city dwellings. Mixed-use developments have seen a steady resurgence since the 1990s, and these modern versions are providing a myriad of benefits—for residents, employers and employees alike.

Examples of Mixed-Used Developments

Mixed-use developments enable residents to walk to work, restaurants and entertainment

Mixed-use developments enable residents to walk to work, restaurants and entertainment

Let’s look at a mixed-used development example to help imagine what one could expect to see in a flex property. Many mixed-use developments follow the same general footprints: a lower level with either retail or industrial space, such as a coffee shop or manufacturing shop, with residential properties in the upper levels. The residential spaces may be apartments or townhomes, depending on the developer, but all have quick and easy access to retail or workspaces nearby, or, often, just downstairs.

In some cases, a company may purchase a mixed-use property to house their manufacturing on the lower level with office spaces above. This allows for a reduction in their leasing needs, as they can keep all of their day-to-day business in one location.

What Are the Benefits of Mixed-Use Developments?

While many in the past may have enjoyed the relative peace and quiet of suburban living, there are many downsides to living far from the workplace or from grocery stores, restaurants and theaters. There are numerous benefits of mixed-use developments, including the following:

Promotes Alternate Forms of Transportation

For residents, the close proximity to shops, restaurants or even their workplace, promotes walking or biking instead of driving. A 2018 study illustrated just how much these developments promote alternative forms of getting around. The study found that residents in well-designed mixed-use developments drive half as much as those in outlying areas.

Better Affordability

Residents in mixed-use developments enjoy more affordable housing than their suburban counterparts. This is because the available housing is often smaller than in the suburbs.

Lower Monetary Risk

Developers can relax knowing the inherent monetary risks are spread out over several markets. If the residential market softens during the development of a mixed-use property, the commercial or industrial markets can buoy the project until the demand for housing returns.

Happier Employees

Employers benefit from the synergy of the various uses. Employees can eat at the nearby restaurants and business travelers can stay in hotels adjacent to the office space. Proximity to recreational activities or gyms can help keep employees healthy, happy and productive.

Higher Property and Sales Taxes for Municipalities

Even local governments can benefit from mixed-use developments. Studies show that mixed-use developments provide significantly higher returns to local governments through property and sales taxes.

Boosts to Public Transportation

Local transportation can also benefit from mixed-use development. Instead of clogged highways filled with commuters, residents can turn to public transportation to not only ease congestion but also improve the environment with decreased emissions.

With these benefits in mind, it makes sense that many interested in commercial property are looking to add flex properties to their portfolios.

Benefits Many; Disadvantages Few

Are there disadvantages to mixed-use developments? Like anything, great benefits don’t come without challenges. Mixed-use properties can be more difficult to build because financiers need to evaluate the uses separately. Zoning and building permits can be tricky, depending on the location. And the marketing for residential, commercial and industrial options can be more difficult than a single-use project for the developer. While finding financing for a mixed-use development may be slightly more difficult, as their popularity increases, more lenders will be willing to finance these types of projects.

It’s easy to see the beneficial aspects of mixed-use developments. Employee-residents save time and stress on long commutes. Don’t forget that long commutes can have detrimental effects on employees. Local governments see higher returns from property and sales taxes in these neighborhoods. And developers disperse risk across several markets when building a mixed-use project.

Interested in Mixed-Use Development?

As more and more municipalities begin to alter their zoning laws to allow for mixed-used development, it makes sense to get in while the getting is good. Commercial real estate, including flex property, is a great investment for those looking to be ahead of the game. Chris Falk has the experience to help with any commercial real estate questions, including those concerning mixed-use properties. Contact him with any of your commercial real estate needs at (801) 416-1024 or