Is Mixed Use Worth The Complexity?

On today’s show we are talking about whether mixed use projects are worth the complexity. 

This is one of those cases where the product design is designed for specific customers. A mixed use project has the benefit of animating a property and bringing additional amenities to the property at a community level. 

When we’re talking about mixed use, we’re talking about a residential building with a ground floor commercial. Whether this is a plus or a minus depends on your perspective. The goals of the resident and the goals of the building owner might not be perfectly aligned. 

A mixed use building is rarely the product of choice for a building owner. It adds complexity. The lender looks at the building like two distinct properties. There is a residential property that follows one set of underwriting guidelines and a second property that follows a different set of financial metrics. The property management for a NNN commercial space is going to be different from residential property management. 

So why would you do it? In many cases, it’s a requirement of the zoning which requires ground floor commercial on arterial main streets. Cities need to maintain a balance between commercial and residential and there is a growing desire to return to the old world walkable city living that you find in virtually every European city or town. In Europe, very few people drive to a big box store to get their groceries.

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