How is the social media generation influencing mixed-use development?
The Madison Avenue corner office is a thing of the past, living spaces have shrunk, and shopping is more convenient and entertaining than ever - all on one city block. The term mixed-use has shifted toward an integrated model of shared uses that complement and leverage each other to create a cohesive and communal ecosystem. Driving the trend is the social media generation's need for a more collaborative and communal lifestyle with live-work-play amenities.
Integrated, Not Separated
Traditionally, mixed-use developments have been the norm in urban locations, where density, intensity, and use types needed to be vertically commingled to justify land prices. For example, the developments were a mix of retail on the ground level with other uses above, such as hotel, office, or residential, all distinctly separate. What's more, the floor plans within the separated uses were sectioned further.
In suburban locations, mixed-use typically meant two or more different uses with no homogeny located within one larger property parcel - for example, an apartment building and a grocery store.
Now, the shift of developments to integrated rather than separated uses is not so much a trend as it is the new reality. The paradigm shift of the like-and-share generation's desire for community and experiences can be recognized across all commercial real estate sectors.
Social Over Everything
In today's business world, people actually want to be around other people. For the modern worker, coworking provides a means to produce in an innovative environment, subsuming the creative energy of those around. Prior generations were taught to conform to work in silos during the conventional 9-to-5 job, whereas recent generations have evolved to embrace the freedom and team collaboration found in open offices with access to live-and-play amenities just a few steps away.
This movement is vibrant in shared workspace concepts such as Roam, WeWork, Regus, Venture X, and hundreds of others; it's a sector that is expanding exponentially. More and more, corporations also are embracing the open office layout or adopting a variety of workspace options under one roof to meet the varying needs of employees.
As the retail landscape evolves with brick-and-mortar closings, the only retailers truly succeeding and showing growth are those that offer elements of experience and a place of gathering, such as Whole Foods Market, Starbucks, and Apple. Stores embracing an omnichannel strategy like Walmart or the stores-within-a-store experience like Target are leading the market as well.
The social-over-everything lifestyle has even influenced residential and hospitality. Urby in New Jersey and X Miami Tower are examples of in-demand apartment projects with smaller apartment sizes and larger common areas. Additionally, global hotel brands such as Pod and Ace are veering toward micro-units with expansive shared spaces.
For the modern worker, coworking provides a means to produce in an innovative environment.
Capitalizing on Contemporary
To serve all uses within the property, mixed-use developments increasingly feature unified architecture and design, shared entrances, lobbies and common areas, driveways and ride-sharing lines, elevators, and on-site amenities (such as cafes and gyms available to office and hotel guests). The components within also strategically align, such as lifestyle retail and coworking space, to serve the property's residents, guests, and professional tenants.
While construction and operational costs of multiuse assets may cause pause for some investors, as developing and maintaining the various uses and shared common spaces carry higher costs than single-use buildings comparable in size, the return for real estate lies in the stronger together, recession-resistant formula. More investors and landlords are realizing that contemporary mixed-use projects will be the catalysts for the rise in joint ventures, development, property repurposing, capital improvements, sales, and leasing. To maximize commercial projects, the needs of shared space users often are considered foremost.
Millennials and Generation Z will only continue to dominate as real estate consumers, and shared concepts across the board are here to stay.