Capital Markets Professionals Put Mixed-Use Dynamics Under the Microscope During InterFace Panel
ATLANTA — One of the central themes of the first annual InterFace Mixed-Use Southeast conference was the interplay between the various uses present within mixed-use projects around the region. Whether it’s Avalon in Alpharetta, Georgia, or the American Tobacco Campus redevelopment in downtown Durham, North Carolina, the success of these projects hinges on whether the different uses can support one another. Can the apartment residents help patronize the retail and restaurants? Can the office component drive overnight stays at the project’s hotel?
But before these dynamics can play out, a vital piece to having these projects come to fruition is financing. During the conference’s capital markets discussion, panelists tackled topics including equity requirements for mixed-use projects, a pending recession, the historically low interest rate environment and the strong competition among capital providers. For mixed-use specifically, the capital markets panelists discussed the challenges and opportunities in trying to underwrite the various uses all under one transaction.
Lenders have to be careful not to overlook or make assumptions about a property type when financing mixed-use deals, warned Bryan Joyner, managing director of Bank of America Merrill Lynch.
“They have to look at the separate uses both separately and together and then underwrite the individual uses differently market to market based on strengths and weaknesses and supply and demand,” said Joyner.
“You can’t say one component is more attractive than another,” added Will James, vice president of NorthMarq. “Every deal is unique.”
Held on Aug. 22 at the Westin Buckhead in Atlanta, InterFace Mixed-Use Southeast attracted more than 200 attendees from multiple disciplines related to mixed-use real estate. Todd Robinson of Robinson LLP moderated the capital markets panel.
— Staff reports