Commercial real estate pros have a constant requirement to monitor commercial real estate trends. One they currently wouldn’t be able to escape addressing is mixed-use development.
As it is with any investment into any asset class, there are strategic decisions to be made on where you spend your time and money. As it pertains to mixed-use development, are you prepared for the zoning and regulatory challenges and managing parking limitations for this trending infrastructure that favors walkability? As you look to continue to balance and modernize your portfolio, it’s important to ask yourself: does mixed-use development make sense in your CRE portfolio?
Key Benefits of Mixed-Use Development
Diversification and risk mitigation tops the list of pros. When commercial real estate investors come across an opportunity to combine diverse businesses in an area that acts as its own attraction, it allows for the possibility of multiple revenue sources from a single project or location. This also helps to provide a little more balance if, by chance, one of those sectors experiences a downturn.
Next up on this list of wins is the matter of “future-proofing.” Mixed-use development allows investors to be more available to evolving market demands and trends. With a mixed-use space an investor can quickly convert office space to residential space or the other way around. It never hurts to have a touch of flexibility in your commercial real estate portfolio.
In close-knit urban areas that feature a lot of foot traffic, mixed-use development is often a familiar and desirable choice. Not only do they prove to be popular with tenants, but you might find that some cities encourage these developments through various incentive programs. If you’re able to secure a mixed-use development with the support of local government then the benefit of long-term growth and support from the city is an added benefit.
A mixed-used development also helps to create a more sustainable ecosystem in the immediate area of your investment. Once the conveniences of shared retail and residential spaces are realized, this could lead to higher occupancy rates and longer lease terms.
Mixed-Use Development Challenges to Consider
Keep in mind that a mixed-use development can be difficult to design and implement and may clash with modern car culture typically associated with suburbs. There could be a number of challenges when it comes to financing and then managing these particular spaces. You might come across difficult zoning issues and management timelines might be challenged in the planning and execution phases.
This also leads to potential long-term management issues. Mixed-use development in commercial real estate requires specialized management skills for different asset classes. This approach calls for a more advanced managerial touch. It might also call for a larger upfront investment and longer timelines when it comes to getting a proper return on that investment.
Our reliance on cars doesn’t seem to be waning and mixed-use development offers good walkability that can sacrifice parking availability. While public transportation should be in your broader planning, parking will be required for both residents and visitors to your mixed-use property. This also hints at the added complexity and also initial cost of mixed-use development.
Whatever You Decide, Quorum Can Help
If your portfolio needs a little more diversity and you’re looking to grab hold of an opportunity that could allow for more income streams, then mixed-use developments could be the opportunity you’re looking for. One of the most effective ways to determine the health of your commercial real estate investment portfolio is to have a reliable, multi-platform application that will help you manage and understand the true value of your current and future investments.
That’s where Quarem is happy to step in. If you’re in the market for a reliable, industry-leading CRE software platform then you’re right where you need to be. Schedule your free demo of our powerful and popular lease management software today.
