Mixed-use Developments Bring the City to the Suburbs
By Stephanie Bell |
Suburban mixed-use projects are on the rise across the United States.
“Every suburban city now wants pedestrian-friendly, transit-oriented,
vertically integrated mixed-use projects,” says John Breitinger, CCIM,
vice president and general manager of real estate investments with
United Properties in Minneapolis. He currently is developing a
mixed-use project in Wayzata, Minn.
Many suburban towns are recognizing
the benefits of mixed-use projects. Developments with office components
add new jobs and increase the customer base for local shops and
services. Multifamily brings new residents to suburban towns, creating
a demand for restaurants, movies theaters, grocery stores, and other
entertainment venues. The retail component adds to the town’s tax base
and the parking helps control traffic and keep the pedestrian friendly
While not without challenges, suburban mixed use developments open
commercial real estate professionals’ opportunities in a number of new
Location, Location, Location
Finding the right site for a suburban mixed-use project is important in
today’s changing real estate market. Some projects are met with
opposition from residents who want to keep the town’s population
density low and retain local character. However, developers and
commercial real estate professionals look for areas where the benefits
outweigh the drawbacks.
“Mixed-use projects are particularly appealing
when located in infill areas where there are barriers to entry and a
highly-educated and affluent population,” says Steve Willimason, CCIM,
senior vice president and director of retail services for Transwestern
Commercial Services in Reno, Nev. To combat opposition, make sure that
the size and range of the project fit the town’s population and
density, he says.
Judy Hatfield, CCIM, president of Equity Realty in
Norman, Okla., says residents as well as the city officials are excited
about Norman’s first mixed-use project, which she has been involved in
since selling the property to country singer Toby Keith. About 17 miles
from Okalahoma City and about a half-mile from the University of
Oklahoma this location will draw people in from both those areas. The
housing component of the project will also help to draw people in. This
development will have town homes, apartments, and two-story lofts,
which will be affordably priced to attract students and their parents.
The Bates Mill office complex (pictured below) in Lewiston, Maine, is a half hour north
of Portland, says Kevin D. Fletcher, CCIM, a broker with Coldwell
Banker Millet Realty in Auburn, Maine. The city’s location on the
Androscoggin River and population spillover from Portland draw a lot of
visitors to the downtown area, says Fletcher.
Blending both the old and
the new, the mill dates back to 1852 and offers Class A space that is
suitable for office, retail, and light manufacturing. Located in the
prime location of the twin cities, Lewiston and Auburn form a business
and cultural center that has good schools and colleges, high-quality
professional and public services, and a wide range of recreational and
cultural opportunities, making the mill a strong location for a
The right tenant mix in suburban mixed-use is challenging. The
Lewiston, Maine, project’s anchor tenant is TD BankNorth, Fletcher
says. The project also includes future plans for housing, a museum, a
food court, and day-care and fitness facilities, he adds.
tenanting strategy includes driving retail traffic by offering
necessary goods and services, such as an upscale grocer, intermixed
with specialty stores and restaurants to keep people in the area
Along the same lines, Williamson finds that retail is the biggest draw
in mixed-use developments. A successful retail mix includes bookstores,
fast-casual dining, bakeries, coffee shops, and boutiques, he says.
“Many of these uses have a certain entertainment component, which is
beneficial to the overall feel of the project,” he adds.
Financing mixed-use projects often can be difficult, Williamson says.
If the project’s mixed-use components include retail, office, and/or
multifamily, lenders may be comfortable with one property type but not
the others. “Managing office space is very different than managing a
multifamily project, and of course, retail management has its own
nuances,” Williamson says. Finding a good sponsor, developer, and
operator is extremely important. A seasoned team with multiple skills
is key to attracting the best equity and debt sources, he says.
Breitinger agrees that obtaining financing is a challenge. In some
cases, “The only way to make projects economically viable is to
dramatically increase their density by adding a mix of uses and
integrating them vertically,” he says. Building parking structures with
entrances through small surface lots is another way to gain support.
Fletcher used strong business relationships to secure funding.
Financially stable private developers he previously worked with were
interested in the redevelopment mixed-use project. While the financing
is not 100 percent secure, he estimates the project’s total cost will
be between $50 and $60 million.
Secrets to Success
Tenant mix and location are key factors in the success of mixed-use
projects. However, before reaping the benefits of the developments,
real estate pros must overcome many challenges. Brietinger’s main
challenge was the site’s poor configuration. Because it is triangular,
the current buildings in the location are enclosed and inwardly
focused. To make the project work, he had to completely reconfigure the
city’s road network, he says.
Breitinger explains that design is
critical as well. People want to live and shop somewhere that is
eye-catching and attracts more visitors and new residents to the town.
“From a design perspective, there is a lot of tension between what
people crave and how they really live,” he says.
In the end, mixed-use
developments’ main benefits seems to be based on the fact that people,
according to Fletcher, can come to work, drop their kids off at day
care, get coffee, and work out, adding that the objective is to create
a multiuse complex consisting of a compatible mix of retail, office,
and cultural uses all in one space.