The commercial real estate scene has seen an uptick in the construction of mixed-use developments in recent years. Of the $1.26 trillion spent in construction during the US construction boom in 2017, mixed-use developments accounted for about 80% of the spending. While mixed-use developments aren’t new, what makes them so appealing, especially right now? In today’s blog, we’re going to delve into three reasons for the mixed-use development boom.
Effective land use
Mixed-use developments are seen a lot in metropolitan and coastal areas of the United States for the strategic reason that they make effective use of the land. In following with the trend of urbanization and walkable communities, these developments encourage stacking to conserve open space while creating walkable spaces. This, in turn, infuses life into the community. Projects such as One World Trade Center in New York City and District Wharf create small cities within the larger city environment.
Consumer convenience is one of the biggest driving factors behind mixed-use developments, which provide just that. These developments combine retail, living spaces, offices, and more. It is possible to live, work, and play all in the same community. Part of the draw here is that we are currently in a culture of immediate gratification; convenience apps and delivery services are thriving right now and allow consumers to have items delivered straight to their door without having to leave the house.
Great for Investors
Not only do multi-use developments satisfy consumer demand, but they also provide diversification to an investor’s portfolio. This helps to mitigate risk by spreading it across various uses. Spreading the risk allows for investing in upscale amenities which may otherwise be unaffordable. The variety of uses and tenants helps to protect against large vacancies typically seen in single-use products. The uses often include offices, residential, hotels, or medical centers that are enhanced by a retail and entertainment component.
There are plenty of reasons why multi-use developments have become so popular in recent years. They satisfy consumer demands while mitigating investors’ risk and bring life into their respective communities. In areas with constrained resources, they make effective use of the land. The trend is unlikely to slow down any time soon – mixed-use developments are the wave of the future.