The International Council of Shopping Centers defines mixed-use properties as follows:
“A mixed-use development is a real estate project with planned integration or some combination of retail, office, residential, hotel, recreation, or other functions. It is pedestrian oriented and contains elements of a live-work-play environment. It maximizes space usage, has amenities and architectural expression, and tends to mitigate traffic and sprawl.”
The growing trend of mixed-use
Three of the main reasons mixed-use developments are thriving are:
- Office space within a mixed-use property can command higher rents – 22 to 33% higher than rents at stand-alone office buildings
- Demand for mixed-use property is growing among prospective tenants and residents, as target audiences among all generations seek vibrant, walkable communities
- Mixed-use developments have a built-in customer base, making them attractive to owners and developers
But managing a mixed-use development requires a broad set of property management skills. Consider the complexities that can result from combining a hotel, private residences, parking, restaurants, offices and quite possibly even a theater, all in one property. So, there are several different approaches to the management structure of mixed-use developments:
- A small mixed-use development is likely to have one manager responsible for the entire development.
- A large mixed-use development with a single owner may have a general manager responsible for the entire development and separate managers with property-specific skills, experience, and knowledge for each use.
- If a hotel is a component of the property, a separate management team is required for the hotel component, as hotel management is a unique discipline.
Management and operational issues that may differ among the property types, including:
- Hours of operation
- Trash removal
- Promotional events
- Security issues
- HVAC & utility operations
The real estate manager for each component of the mixed-use development must recognize and appreciate the unique needs of each property type. Each component should have a coordinated management plan that maximizes the benefits of the development, and minimizes potential conflicts. Effective mixed-use property managers:
- Understand how commercial uses intersect with residential uses
- Think holistically and grasp the big picture
- Develop a business plan that meets the owner’s goals and objectives
- Can adapt, be proactive, and anticipate problems and opportunities
- Hold strong leadership, communication, negotiation, and relationship skills
Above all, it’s critical to attract the right mix of tenants and residents – the key to managing a profitable asset. Each property type must be able to succeed on its own in order for the mixed-use development to be successful.
Mixed-use developments are truly unique, as they present opportunities not typically found in other types of developments. With every opportunity, there are challenges. But, when the mixed-use property is thoughtfully planned and managed, the development can meet or exceed the expectations of owners and occupants.
Source: “Managing a successful mixed-use property – what real estate managers need to know”