The idea that the “whole is greater than the sum of the parts” is a simple concept that dates back to the days of Aristotle. These days, it’s one of the fundamental drivers behind an explosion of mixed-use development projects.
“There is definitely more attention and interest in mixed-use than I have seen in my nearly 50 years in the business,” says Walter Clements, CCIM, president of Clements Realty Advisors in Highland Park, Ill., and an instructor of a CCIM Institute course on the sector. These developments range from small-scale neighborhood projects to billion-dollar mega-projects that include the likes of Hudson Yards in New York, Orlando’s Creative Village, and the Railhead in Frisco, Texas.
Mixed-use is being fueled by a growing appetite for a live-work-play lifestyle. In the wake of the COVID-19 pandemic, people are hungry for interaction and places where they can connect with others. A greater focus on health, wellness, and sustainability is contributing to a desire to live and work in walkable and bikeable communities. Additionally, significant demographic shifts are at play. In the past, families with children drove housing decisions with a focus on the suburbs and good schools. Now, empty nesters and young professionals are more in the driver’s seat, and they prefer an urban lifestyle where things are close and convenient. “There are a lot of dynamics that are all occurring at the same time in our society that are driving demand for these mixed-use projects,” Clements says.
One major impact of COVID-19 has been growth in mixed-use projects in secondary and tertiary markets, notes Eric J. Davis, CCIM, a principal at Tejas Development in Austin, Texas. People started moving out of downtowns into outer suburbs and rural areas, which brings more development to those markets. For example, Leander is a suburb of Austin that is experiencing a jump in mixed-use assets.
Mixed-use projects are nothing new to Main Street America. The country has a long history of buildings with street-level retail and either restaurants and apartments or office space on the floors above. “Today, many of these small towns have the bones or structure already there for mixed-use projects,” notes Davis. Developers can use the city hall or government center as an anchor and build around it. What you end up with in some of these smaller towns is exactly what developers are trying to create in larger markets, which is town centers, he adds.
Often, mixed-use projects are more complex, and they require a skilled team that can work together from the early stages of analysis through leasing and marketing of the different components. Skilled commercial real estate professionals have an opportunity to bring value to the table for their clients who own, manage, and/or develop mixed-use projects.
Case Study: Springline
Location: Menlo Park, Calif.
Developer: Presidio Bay Ventures
Synopsis: Springline is a 6.5-acre mixed-use development comprised of two 100,000-sf office buildings, 35,000 sf of retail, 183 residential units, and a 900-stall subterranean parking garage. The spaces between the buildings, totaling about 2.5 acres, is programmed as outdoor open space (both public and private).
Presidio Bay Ventures is aiming to define a new generation of the built environment with projects such as Springline in Downtown Menlo Park, Calif. The mixed-use project aims to create a user experience that weaves in innovative technology, health and wellness, and sustainability.
“Springline is a lifestyle and a feeling that we’re evoking amongst all of our employers, employees, visitors, and residential tenants,” says K. Cyrus Sanandaji, CCIM, managing director and founder of Presidio Bay Ventures. The original site was a brownfield that involved a large assemblage of uses including an auto dealership and auto repair.
Although the development was in the works for about six years, Presidio Bay Ventures took it over in early 2020 and reimagined the design. “We truly believe that this is the future of sustainable and responsible development in California and beyond, especially as you look at the impact traffic and commutes have on communities and cities,” says Sanandaji.
The Springline campus hosts a variety of events such as movies in the plaza, TED Talks, and art shows. Residences offer smart-home technology with features such as voice- and app-controlled lighting, window shades, and thermostats. The project also has received LEED Gold, WELL, and Energy Star certifications, as well as being certified by the U.S. Resiliency Council.
The project was built in three phases, with the third and final phase — the residential component — completed in June. Retail is 100 percent leased with restaurants, cafés, shops, and a boutique grocery store. Office is about 85 percent pre-leased, and residential has seen strong interest since it started pre-leasing in May. Springline also is located directly across the street from the city’s main Caltrain station, which is the primary transit system connecting towns along the peninsula to San Francisco and South Bay. “If you start creating these clusters where people can live, work, and play … you can start impacting in a meaningful way traffic and emissions issues and encourage people to create community around the places where they work, live, and socialize,” Sanandaji says.
Presidio Bay’s goal is to anticipate the occupants’ needs and respond accordingly. “That’s how you create a differentiated product. That doesn’t mean that every product must be luxury, but you do have to listen to and cater to the demands of the market,” says Sanandaji. “That’s how you’re going to be successful in terms of lease absorption and driving value.”
Case Study: Jules on 3rd
Location: Boise, Idaho
Developer: River Caddis Development
Synopsis: Jules on 3rd involved a public-private partnership between River Caddis Development and Ada County, Idaho. The eight-story mixed-use development features 174 residential units, 3,000 sf of ground-floor retail, and a 374-stall parking garage.
At the core of any public-private partnership is the need to work together to find solutions, and Jules on 3rd is a project that would not have worked without the collaboration of the developer, River Caddis Development, and Ada County. Michigan-based River Caddis initially came to the Boise market in search of student housing development opportunities near Boise State University. But they found bigger growth being fueled by people moving into the area from higher-cost states such as California, Washington, and Oregon.
Downtown in particular was emerging as a vibrant, walkable area with a growing demand for housing. “When we got downtown, we realized how amazing [it] is. It’s somewhere I would want to live,” says John McGraw, CCIM, director of development at River Caddis Development. However, the numbers didn’t pencil on building a vertical structure that also needed to provide parking for residents. The cost of developing parking structures today is roughly $40,000-$50,000 per stall, notes McGraw. River Caddis realized it needed to come up with a creative solution for the development to move forward.
One of the first steps the development team took was to start listening and forging relationships, which led to Ada County. The site River Caddis was looking at was across the street from the Ada County Courthouse. In conversations about growth, the developer learned that the county was struggling with parking. “From there, conversations started to look at how to solve a couple of problems and create a unique partnership,” says McGraw.
River Caddis put together a condo ownership structure for the project. The county owns the parking structure, while River Caddis owns the apartments that were built above it. There also is shared ownership in some of the structural components, such as the roof, elevator shafts, and main lobby. The county also gains a revenue stream from parking fees.
“Instead of just walking into a community and saying, ‘I want to put a box here with x number of apartments and do my own thing,’ this was very rewarding, because we took a solutions-based approach,” says McGraw. “There is a housing crisis in Boise and there also was a parking need, so we reverse-engineered a solution.” Jules on 3rd was completed in August 2021 and was fully leased within five months.
Case Study: Bell Works Chicagoland
Location: Hoffman Estates, Ill.
Developer: Inspired by Somerset Development
Synopsis: New Jersey-based Inspired by Somerset Development is in the process of redeveloping a former corporate campus in Hoffman Estates into a new mixed-use “metroburb” that will feature office, retail, restaurants, service business, fitness, and public gathering spaces. Plans also call for a new ground-up construction of 550 townhouses and apartments along with a hotel.
Repositioning a vacant corporate campus into a mixed-use destination sounds like a daunting task, but it’s one that Inspired has completed in the past with Bell Works in Holmdel, N.J. The firm is now working to replicate its “metroburb” model in its latest project, Bell Works Chicagoland.
Inspired acquired the former AT&T corporate campus in Hoffman Estates, Ill., in 2019. The 150-acre property includes 1.6 million sf of former office space constructed in the early 1990s. The master plan for Bell Works Chicagoland involves the phased redevelopment of the existing structures to house a mix of office and coworking space, retail, restaurants, service business, fitness, and public gathering spaces, 550 townhouses and apartments, and a hotel.
Work is already underway on repurposing the main structure, a four-story building that spans about 1.2 million sf. Inspired is tackling the project in three phases — East, Center, and West — with a separate phase planned for the repurposing of a second stand-alone, 300,000-sf building that sits along Lakewood Boulevard. The recently completed East phase encompasses 340,000 sf of Class A office, including its own branded CoLab coworking space and turnkey spec suites, 35,000 sf of flex space, 30,000 sf of retail, and a 20,000-sf fitness space.
The Bell Works model is about creating a suburban metropolis that bustles with activity. “What makes Bell Works special is that we create a pedestrian street right down the middle, which we call “On the Block.” It’s a Main Street that runs right through the building, and it is the heart and soul of everything,” says Ralph Zucker, president of Inspired.
“Bell Works’ metroburb model was conceived well before COVID-19,” says Jeff Garibaldi, CCIM, president of the Garibaldi Group, the leasing team marketing office space at Bell Works Holmdel. “Today, more than ever, providing a dynamic employee experience is the No. 1 priority for companies looking to relocate, so these kinds of spaces have more appeal than ever.”
Leasing activity at Bell Works Chicagoland has been strengthening as employees return to the office. As of mid-May, the leasing team had signed 18 office leases for a total of over 120,000 sf. “The metroburb concept is alive in Chicagoland,” says Stephen Kling, principal with Colliers International, who heads up the office leasing effort for the project. “The building is rapidly developing its own demographic that will help define the retail that will fill our retail corridor along the block.”
Inspired is currently working on pre-leasing of its West phase. Once that is complete, the developer will move on to the Center phase, which will consist largely of event space, including a ballroom and an indoor basketball court. Inspired is also in the process of getting site plan approval for the first phase of its residential development, which is expected to include 175 townhomes.
In addition to the design, which was led by NPZ Style & Décor, one of the keys to success for Bell Works has been its management, programming, and an open-door policy that helps to create a community. “It’s not just about building the space — it’s about how it’s managed,” notes Zucker. Having security on site is important, too. That means people can walk with their kids or their pets. Inspired also brought in a hospitality concierge trainer to train its security personnel on how they can better engage with people. “The ultimate amenity in any mixed-use environment is people,” he says.
Case Study: Nashville Yards
Location: Nashville, Tenn.
Developer: Southwest Value Partner
Synopsis: Nashville Yards is a $2 billion development that sits on an 18-acre site in the heart of downtown Nashville. When complete, the project will be a walkable, urban community that features 3.5 million sf of Class A office space, 1,000 residential units, 400,000 sf of retail and entertainment space, and 1,100 hotel rooms.
Nashville is seeing a surge in mixed-use development activity that is helping to position the city as a major live-work-play destination.
“We definitely see a lot of traction as it relates to these mixed-use projects, particularly in the core of the city along Broadway,” says Courtney Pogue, CCIM, Nashville’s economic and community development director. Broadway is the main thoroughfare for the city’s entertainment district, a hub that attracts millions of visitors each year. One major project that is reshaping Upper Broadway is the $2 billion Nashville Yards. The mixed-use project sits on an 18-acre site in the heart of downtown.
Nashville Yards includes the 591-room luxury Grand Hyatt Nashville, which opened in 2020; the newly renovated Union Station Nashville Yards; Amazon Nashville’s two Class A office towers comprising more than one million sf; a 650,00-sf, multi-tenant Class A office tower, which will include the future headquarters of Pinnacle Financial Partners; a 1.3-acre park; multiple green spaces and plazas; and additional retail, restaurant, and residential buildings. The project also features an entertainment district with a 4,000-person live music venue and eight-screen cinema. The entertainment district is being jointly developed by Southwest Value Partners (SWVP) and Anschutz Entertainment Group, with construction beginning early this year.
Roughly 100 people per day are moving to the Nashville metro, and the live-work-play lifestyle is one of the things attracting people to the area, Pogue says. The city also offers more affordability than what people can find in other urban centers, he adds.
One of the challenges from a city’s perspective is making sure its infrastructure keeps up with development. In response to its rapid growth, the city introduced a new transportation plan in 2020 followed by the creation of a Department of Transportation in 2021. “Right now, we are in the throes of doing the city’s first economic development strategy along with working on a comprehensive housing policy for Nashville to address the growth that is taking place in the core of the city,” says Pogue. “We’re definitely looking at ways to still have a mixture of uses for mixed-use developments, but also providing housing at different income bands so that housing is attainable for all residents of Nashville.”