Convenience is an important factor driving the commercial real estate market. Modern consumers want everything on demand, contributing to the rise of multi-use developments and smart buildings. As per Joe Cianciotto, while multi-use properties have existed for a long time, the trend of investing in properties that combine two or more asset classes into one building or development has become particularly prominent in recent years.
Joe Cianciotto discusses reasons to invest in multi-use developments
Mixed-use property is a type of commercial real estate (CRE) that features residential and commercial spaces in a single building or land development. These properties are particularly popular in large urban hubs where the high population density requires efficient use of space. Vertical mixed-used properties combine varied spaces in a single structure. On the other hand, horizontal mixed-use properties utilize separate parcels on a single property for uses that may require distinctive regulatory and safety requirements. In both scenarios, mixed-use properties optimize land use and engage the surrounding community.
Mixed-use developments are known to contribute to a thriving economy by making a wide range of attractive services accessible to the residents. For investors, investing in a real estate asset where commercial and residential spaces coexist within a single property can help enhance the investment portfolio.
There are many reasons to invest in multi-use developments, including:
- Diversification within a single property: The built-in diversification provided by them is among the most significant advantages of mixed-use properties. These properties combine multiple types of spaces, such as apartments, retail stores, and office spaces, allowing investors to spread their risk. In case one segment, like residential real estate, experiences a downturn, the office or retail segment may still perform well. The diversity in the type of tenants also helps lower vacancy risks and helps investors to balance out income. Mixed-use properties can be a more stable investment choice than most of the other property types.
- Superior tenant demand and retention: Mixed-use properties effectively cater to contemporary consumer preferences for improved accessibility and convenience. Both residential and commercial tenants often get attracted to such properties where they can live and work in close proximity. Residents enjoy the benefit of having entertainment, shopping and dining options within walking distance, and businesses benefit from getting access to a built-in customer base. This proximity also plays an important role in fostering stronger community ties, ultimately leading to better tenant satisfaction and longer leases. This enables investors to enjoy lower turnover and vacancy rates.
- Resilience in an evolving market: Mixed-use properties show impressive resilience during economic shifts, particularly with the growing popularity of remote work. As an increasing number of people choose to work from home, mixed-use developments provide a blend of spaces that can accommodate this shift. For instance, they may have co-working spaces integrated within residential areas.
As Joe Cianciotto mentions, mixed-use developments consolidate resources and space, which adds to their overall appeal. These properties improve walk-ability and reduce reliance on cars, which can help lower the overall population levels in the area. Many of these properties are also equipped with energy efficiency technology and design features. With sustainable real estate emerging as a significant trend among investors, developers, and homebuyers of today, the popularity of mixed-use developments gets a further boost.
