Are you an investor looking for your next big opportunity? Mixed-use developments are on the rise. This strategy combines residential, commercial, and sometimes industrial units within a single development, allowing investors to take advantage of different property types in one location. To learn more about different types of mixed-use developments, their benefits, and challenges, keep reading.
Contents of This Article:
- What Are Mixed-Use Developments?
- Types of Mixed-Use Development
- Benefits of Mixed-Use Development
- Challenges of Mixed-Use Developments
- Find Professional Management for Your Properties
What Are Mixed-Use Developments?
Northern Virginia property management companies know how important it is for investors to diversify their portfolios. Mixed-use properties might be a great way to do so!
Mixed-use developments are real estate projects that combine different types of uses within a single property or development area. Usually, these developments combine residential, commercial, and sometimes industrial spaces all in one environment. For example, a mixed-use development might have residential apartments, offices, retail stores, or restaurants all in one complex or neighborhood.
These developments are popular as they create convenient, walkable communities where people can live, work, shop, and socialize without having to go far. Ultimately, the goal is to enhance people’s quality of life, reduce travel times, and create a sense of community. That said, mixed-use developments are becoming more popular in urban planning as they help maximize land use, support local economies, and contribute to sustainable growth.
Types of Mixed-Use Development
There are two main types of mixed-use development. Typically, these properties are built horizontally or vertically. Here’s the difference between the two.
Vertical Mixed-Use Development
Vertical mixed-use properties blend multiple uses within one building, all stacked vertically. Building up is sometimes the only option in busy areas where space is limited. Lower floors usually accommodate public functions, like restaurants or shops, and upper levels are usually dedicated to more private purposes. For instance, you could have retail or commercial spaces on the ground floor, offices above, and residential units on the top floors.
Horizontal Mixed-Use Development
Horizontal mixed-use developments combine different uses in separate buildings within the same complex or area, like a strip mall. Instead of building up, these buildings are spread across an area horizontally, as the name suggests. These buildings combine different recreational, commercial, retail, and residential components to maximize traffic flow and create a more open atmosphere.
Benefits of Mixed-Use Development
Mixed-use properties are great for several reasons. They increase convenience for residents and workers and create connections between people from diverse backgrounds. Some of the main reasons why this investment type is so popular include the following.
- Enhanced Walkability– With residential, commercial, and recreational spaces all put together, there’s no need to walk far. The design of mixed-use buildings reduces the need for cars, encouraging people to walk instead. Not only is this great for people’s health, but it’s great for the environment, too!
Community Engagement- Mixed-use developments help create a stronger sense of community. After all, with everything you need in one area, tenants and community members are bound to interact and engage with each other.- Consistent Cash Flow– With a variety of different rental types, investors are able to receive consistent cash flow. For instance, if one part of the building, like an office space, is temporarily vacant, you’re still getting income from another unit, like a residential space.
- Diverse Market of Renters- With a mix of residential, commercial, and office spaces, mixed-use developments attract a wide range of tenants. You could be renting to families, young professionals, or businesses. In turn, having a larger tenant pool can reduce the risk of vacancies.
- Resilience to Market Fluctuations- The variety of uses in mixed-use properties helps them be more resilient to economic downturns. For instance, if retail is suffering, other parts of the building, like residential units, may be thriving. This ensures you’re not completely losing out on income opportunities.
Challenges of Mixed-Use Developments
No property type is perfect. While mixed-use developments have several benefits, there are also a few downsides. Some of the challenges for investors to consider include the following.
- Zoning and Regulatory Issues- Mixed-use developments can be tricky due to zoning and regulatory issues. For instance, building these types of properties can be difficult, as some local laws require separating residential, commercial, and industrial units.
- Parking and Traffic Management- Investing in a mixed-use development without a solid parking strategy can result in chaos. After all, you must account for parking and traffic for different types of occupants–residents, businesses, and visitors.
- Affordability Concerns- Mixed-use developments can sometimes drive up property values, leading to higher costs for residential and commercial spaces. Unfortunately, these rising costs may push out lower-income residents or small businesses.
- More Maintenance- Mixed-use buildings require a lot of maintenance compared to other investment properties. After all, you’re responsible for maintaining several different areas, like residential units, retail stores, offices, and public areas. As you can imagine–this type of maintenance can be expensive and much more demanding.
Find Professional Management For Your Properties
Are you an investor looking for your next big opportunity? You may want to consider investing in mixed-use developments. Mixed-use properties are a great way for investors to diversify their portfolios, work with different types of tenants, and ensure consistent cash flow. However, they can be a lot of work–especially maintenance-wise.
Need More Advice? contact us today!
So, if you want to elevate your business by investing in a mixed-use building, it may be time to hire professional property management. Companies like Bay Property Management Group can help you market your residential properties, screen prospective tenants, perform maintenance, collect payments, and more. Contact BMG today to learn how we can help with your properties throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC.
