The Rising Popularity of Mixed-Use Development

Mixed-use development has gained popularity as a transformative approach to urban planning and design. By combining residential, commercial, and often cultural or recreational elements within a single development, mixed-use projects create dynamic, livable, and sustainable urban spaces. The integration of functions aims to enhance the live-work-play experience, offering residents and visitors a well-rounded experience. According to a study done by RentCafe, the popularity of live-work-play apartments is soaring, with their numbers quadrupling in the past decade, from 10,000 to an impressive 43,000 apartments. Manhattan, New York, takes the lead as the epicenter of these developments, housing one-fifth of all mixed-use apartments in the United States. Meanwhile, Washington, D.C., has emerged as the frontrunner in the last 10 years.

Mixed-use development has also become a highly sought-after investment opportunity, capturing the attention of a diverse range of investors. In the words of Forbes, “all types of investors including private equity players and publicly traded REITs—are enthusiastically embracing mixed-use properties.” These billion-dollar projects are brought to life through strategic partnerships between developers and a multitude of investors, such as high-net-worth individuals, institutional players, sovereign wealth funds, and pension funds, all joining forces to realize the immense potential of mixed-use developments.

Types of Mixed-Use Development

Vertical Mixed-Use Development

Vertical mixed-use developments seamlessly blend multiple uses within a single building. Numerous floors or levels can be dedicated to specific functions. The lower floors typically accommodate public functions, including restaurants, shops, and commercial establishments, while the upper levels are dedicated to private purposes, such as office spaces, residential housing, and hotel accommodations.

Horizontal Mixed-Use Development

Horizontal mixed-use developments comprise many buildings, each with its own assigned use. Unlike the traditional mixed-use layouts, horizontal mixed-use developments spread the various property elements across a larger area instead of stacking them within a single building. Different recreational, commercial, retail, and residential components are strategically placed within a mixed-use zone to maximize traffic flow and create an open and diverse atmosphere.

What are the Benefits of Mixed-Use Development

Enhanced Walkability and Reduced Reliance on Cars

Mixed-use development seamlessly integrates commercial and retail components, offering residents convenient access to shopping, dining, and various services within close proximity, eliminating the need for extensive travel to fulfill their daily needs. A recent survey by the National Association of Realtors (NAR) surveyed over 3,000 adults residing in the 50 biggest urban markets to get a closer look at their transportation preferences. The study showed that the vast majority of Americans prefer walkable communities. Research also shows that more than 50 percent of Americans would either walk or bike instead of driving if they had the choice.

The Environmental Protection Agency (EPA) reports that an average passenger vehicle emits approximately 4.6 metric tons of carbon dioxide annually. Fortunately, studies have shown that specific urban design strategies can help mitigate this environmental impact. Areas characterized by high-density, mixed land use, and walkability have been identified as key factors in reducing vehicle miles traveled (VMT) by individual residents. Therefore, by promoting alternative modes of transportation such as walking, biking, and public transit, these neighborhoods can foster sustainable cities that reduce reliance on personal vehicles and contribute to a greener and more environmentally conscious future.

Increased Social Interaction and Community Engagement

The physical proximity that mixed-use developments comprise encourages workers, residents, and visitors to interact with one another and engage in social activities. Whether meeting friends at a nearby restaurant or getting together for a cup of coffee, the convenience of having amenities within walking distance fosters social interaction. Additionally, mixed-use developments often embody well-designed public spaces, such as plazas, parks, or community centers, which provide opportunities for spontaneous interactions and casual conversations. Shared spaces can also host community festivals, events, and activities that promote a sense of belonging and cohesion among residents and visitors.

Greater Cultural and Intellectual Diversity

The blend of spaces in mixed-use developments attracts many tenants, such as families, entrepreneurs, and professionals. This diversity generates a rich blend of people from various backgrounds and interests. A diverse tenant mix sparks spontaneous conversations, promotes a sense of inclusivity, and encourages collaboration. Research indicates that individuals residing in inclusive communities also demonstrate higher levels of innovation, entrepreneurship, and economic competitiveness. These qualities play a crucial role in driving economic development and enhancing productivity.

Increased Market Demand

Mixed-use developments attract a wider market segment by offering a multitude of retail, residential, and commercial spaces in one location. This increases the potential pool of buyers and tenants, improving market demand for the development. By offering a diverse range of offerings, these projects can appeal to individuals seeking accessibility, convenience, and a vibrant community.

Improved Resilience to Market Fluctuations

The combination of multiple income streams in a mixed-use development enhances resilience to market fluctuations. For example, if the demand for commercial spaces decreases during an economic downturn, the stable income from residential rentals can aid in offsetting the impact. This diversity of revenue sources reduces the reliance on one specific market sector, enabling the investment to be more adaptable and resilient to ever-changing market conditions.

Challenges and Considerations in Mixed-Use Development

Managing Parking and Transportation Infrastructure

Effective parking planning in mixed-use developments is vital in order to meet the demands of residents, businesses, and visitors. Developers must conduct thorough studies to identify the optimal number of parking spaces required based on the specific characteristics of each project. Many factors are in play, including projected traffic volumes and the availability of public transportation options. According to property development standards, mixed-use developments with two or more bedrooms must typically provide two parking spaces per residential unit, and developments with one-bedroom units or studios require one parking space per unit, with half a space for guest parking per residential unit as well. For non-residential components, one parking space is required per two hundred square feet, and there is potential for valet and/or on-street parking allowances.

Additionally, implementing efficient parking pricing strategies can aid in parking regulation while encouraging the use of other modes of transportation. For example, closer and more convenient parking spaces can be priced at a premium, while spaces farther away or less convenient can be offered at lower rates. Or, offering discounted or free parking for individuals using sustainable transportation modes, such as bicycles, electric vehicles, or carpooling, can encourage environmentally friendly transportation choices as well.

Balancing the Needs of Different Stakeholders

One of the significant challenges that mixed-use developments may face is the competing interests among stakeholders. Particular residents may desire quiet and residential ambiance, while businesses seek vibrant commercial spaces. With diverse interests, priorities, and expectations, finding common ground that satisfies multiple stakeholders can be a delicate process. Moreover, stakeholder needs can evolve over time. For example, residents may desire additional amenities or a new business blend once the mixed-use community matures. Navigating these challenges may require proactive planning and adaptive strategies.

Navigating Zoning and Regulatory Requirements

Zoning and regulatory environments often involve additional costs, such as hiring experts, conducting studies, or making design modifications. These costs may be significant and affect the overall financial feasibility of the project. Furthermore, coordination among the various stakeholders, including architects, developers, local authorities, and community groups, can be challenging, leading to delays or misunderstandings. Zoning and regulatory requirements are also susceptible to change over time, so developers must stay informed about any updates or new policies that might impact the project. Establishing effective lines of communication can allow developers to maneuver their projects successfully.

Finding the Right Tenant Mix

It is crucial to find a balance between attracting popular and high-demand tenants while ensuring diversity and avoiding the overconcentration of similar businesses. When selecting tenants, developers are challenged with considering the needs of both residents and visitors. Curating the right balance requires careful evaluation of tenant sizes, types, and complementary offerings to create a vibrant and harmonious environment. Additionally, the needs and preferences of the target market may evolve over time. Developers must anticipate these changes and ensure the tenant mix remains relevant and adaptable.

Examples of Major Mixed-Use Development Projects in the United States

• Riverwalk in San Diego

Riverwalk San Diego is a significant mixed-use development project led by Hines and USAA Real Estate in San Diego’s Mission Valley neighborhood. The $4 billion project will feature 4,300 residential units, over 150,000 square feet of retail space, 1 million square feet of office space, and extensive parkland. With plans for diverse housing options, a retail center, office spaces, improved infrastructure, and a new transit stop, Riverwalk San Diego aims to create a vibrant and sustainable community in Mission Valley.

• Waterline in Austin

Waterline, a forthcoming mixed-use development in downtown Austin, Texas, is poised to become the tallest tower in the state upon its completion in late 2026. Developed by Lincoln Property Company and Kairoi Residential, the 74-story tower will feature 352 apartment homes, 700,000 square feet of office space, a 251-room hotel, and ground-floor retail and restaurant space. The building, designed by Kohn Pedersen Fox, will offer luxurious amenities including pools, a lounge, fitness studio, and co-working spaces.

• Lincoln yards

Sterling Bay’s Lincoln Yards in Chicago is a $6 billion mixed-use development project along the Chicago River. The expansive site will include a biotech lab, residential and commercial spaces, roadways, a Riverwalk, and a natural river wall. Lincoln Yards strives to establish a dynamic and diverse community by offering 6,000 residential units, with 20% dedicated to affordable housing.

• Buzzard Point

Construction is underway at Buzzard Point in Washington, D.C. for The Stacks, a residential mixed-use development. Developed by Akridge and National Real Estate Development, The Stacks will feature 1,100 apartments, 35,000 square feet of retail space, and a pedestrian-friendly environment that fosters community interaction. The buildings will be connected by a pedestrian-only road, promoting community interaction and creating a vibrant neighborhood atmosphere.

The Exciting Prospects of Mixed-Use Development

Mixed-use development represents a holistic and innovative approach to urban planning and design, creating vibrant and sustainable urban spaces. By prioritizing careful planning, thoughtful design, and a focus on community well-being, mixed-use developments can shape our cities’ future, enhancing livability and fostering economic vitality.

The future of mixed-use developments also holds promising trends that align with evolving societal needs and preferences. Sustainability and green design will take center stage as developers strive to create environmentally responsible communities. Smart and connected spaces will leverage technology to enhance convenience and resource management. Wellness-focused amenities will promote physical and mental well-being. These trends will shape vibrant and inclusive environments that prioritize residents’ comfort and communities’ sustainable development.