Live.Work.Play: The Continued Evolution of the Retail Landscape
Sustainability, e-commerce, COVID-19, and so much more have impacted the retail landscape over the past few years. Massive indoor malls that once were shoppers’ havens are now seen as outdated, with mixed-use properties becoming the new go-to spot for shopping, socializing, living, and working. As consumers continue to focus more on healthy lifestyles, convenience, and quality experiences, retail tenants are finding their new groove, planting storefronts in live.work.play communities that offer consumers everything they need in one place. With a wide range of commercial real estate sectors all in one, mixed-use provides residential units, office spaces, and retail properties in a single complex so consumers can work and shop where they live. So, which tenants best fit these properties? And what benefits do tenants receive from leasing a mixed-use space?
A mixed-use commercial property generally falls into one of three categories:
- Horizontal developments consist of single-use buildings offering complementary functions such as business, retail, and residential, all within easy walking distance.
- Vertical developments contain public service retail spaces on the lower floors, offices on the middle floors, and residential or hotel units on the upper floors.
- Walkable mixed-use developments contain a combination of horizontal and vertical design, surrounded by a core asset such as an outdoor plaza, market, or event space.
The New Age Renter & Consumer
Consumer preferences are changing. The younger generations are focused on health, connectivity, and sustainability more than any generation that’s come before them. They are comfortable with technology, incorporating it into every part of their lives. This shift in priorities triggered the integration of healthy practices into their living standards and everyday experiences like eating out, shopping, or going to the gym. Consumers don’t want stuffy apartments that are secluded, but instead, want to be able to walk to necessities and have a place to socialize close to home. Mixed-use properties give consumers an opportunity to do just that. The majority of mixed-use properties are open-air complexes that have a wide range of tenants on the bottom portion of the apartment building. Some mixed-use assets also offer office spaces, providing a work-and-live combination.
These investments are growing in demand as housing prices skyrocket and renting remains the top choice for housing. In some cases, residents of live.work.play communities are renters by choice, liking the mobility and freedom the community offers. Plus connecting with others is extremely important to the new age renter and consumer, something that mixed-use complexes can provide more than a traditional apartment complex that cuts you off from your neighbors and is more secluded from neighborhood centers.
Why Retail Thrives in Mixed-Use
Beyond catering to shifting shopper demographics, mixed-use presents plenty of other benefits to tenants looking for the perfect place to lease. First, retailers have a built-in customer base with the residents that live or work within the complex. The success of a retail business depends on being where the customers, residents, or workers are daily and the live.work.play concept is built off of consumers being able to fulfill all daily tasks within one area, meaning customers won’t be tempted to travel to competitors or stop at other retailers while commuting.
Second, the retailers can cater services to fit the demographics of a mixed-use renter. Often, similar tenants will be in mixed-use communities, as they can feed off one another’s success. For example, a boutique gym may rent out a space next to a health-conscious grocer or eatery, attracting the same type of shopper. Lastly, live.work.play properties are in high demand and are expected to keep growing as sustainability and community continue to be prioritized.
Mixed-use assets focus on promoting nature and green spaces within an urban environment. As climate change and ecofriendly living continue to make headlines, mixed-use development and redevelopment will thrive, as the communities provide an efficient use of space and lessen the need for consumers to drive to several properties. A large project, The Highlight at Houston Center, was recently completed after redesign of what was formerly The Shops at Houston Center. This property offers dining, shopping, wellness, and coworking spaces all in one building – a prime example of creating a sustainable community within a shopping center.
Top Performing Mixed-Use Tenants
Boutique Gyms: Health and wellness are ingrained into the routine of today’s modern consumer, so walking to a fitness facility is a perk for those living in co-op communities. Large big-box gym memberships are waning, and small-footprint class-based gyms are gaining memberships. Boutique gyms offer a quick, seamless workout in a less-intimidating environment for those looking to stay fit.
Café/Eateries: Mixed-use renters are often on the go, whether they are meeting up with friends or heading to work, so it’s important for them to have great food and drink options close by. Local eateries and coffee shops have constant foot traffic and can profit on pick up and delivery to residents in the building.
Co-Working Spaces: As remote work grows in popularity many employees crave the experience of networking and collaboration. Co-working spaces allow remote workers and freelancers to connect with one another and get out of the house to enter an office-like setting when needed. Consumers that use these types of services prioritize community, similar to mixed-use clients.
Personal Care: Those living in mixed-use residential units often pay more for rent and have the means to pay extra when it comes to personal care. Hair salons, nail spas, and esthetician clinics all perform well in a live.work.play environment as they cater to those with a higher disposable income and to consumers who value their appearance.
What’s Next for Mixed-Use?
Major players are investing billions into the mixed-use retail sector across the nation. As consumers continue to shift lifestyles and shopping habits, mixed-use development will grow in demand. Technology, sustainability, and community-focused tenants will fit right into the growing demand as they match consumer needs and wants. Today’s generations are more active than ever and willing to pay more for convenience so that they live.work.play all within walking distance.