Development trends in commercial real estate are beholden to the whims of consumer behavior. When it comes to mixed-use in the 21st century, successful projects deliver a high-quality experience that centers on a sense of social belonging and connection — for living, working and playing alike.
“In today’s experiential economy, demographic changes and shifts in consumer values and preferences across generations are converging on the desire for social connection,” says Brian Cramer, senior vice president and head of the Dallas office of mixed-use developer Newland Communities. “People crave experiences and connections, which is why mixed-use environments will become even more important in community development.”
Bob Schultz, the developer of Mid Main, a mixed-use destination in Houston’s Midtown neighborhood, echoes Cramer’s position on man’s inherently social nature as a driver of growth in the mixed-use space.
“Our experience is that these various populations are willing to live with each other as never before,” says Schultz. “Demographics of those who live in urban areas cross over in terms of age and economic differences in ways that are either comfortable or virtually unnoticed by the different populations. In other words, people who like to live, work and play in areas with density value a diverse environment.”
True mixed-use developments that incorporate three or more distinct uses are typically found in urban settings, where land shortages and natural population densities dictate the need for features that allow the different uses to complement one another. Efficient use of open green spaces, vertical construction and shared parking all allow individual uses play off each other.
Open Spaces
Open green spaces in particular are becoming more important components of mixed-use projects due to their natural ability to facilitate conversation and engagement among residents, shoppers and employees.
Newland recently unveiled plans for Phase II of its 735-acre Grove Frisco project, which will feature a 424-unit apartment community by local developer JPI, plus 129 townhomes and retail and restaurant space. The initial phase delivered single-family homes and 25 acres of communal space with a fishing pond, city park and several miles of walking trails, all designed to bring people closer together.
The capacity of open spaces to deliver this kind of social interaction lies at the heart of placemaking, or the concept of offering spaces that contribute to people’s health, happiness and general well-being through welcoming and inviting atmospheres.
With the first phase of The Grove Frisco, a 735-acre mixed-use project, Newland Communities delivered a number of communal spaces, including parks, playgrounds, a fishing pond and several miles of hiking and biking trails.
“The role of the public park, when paired with intelligent programming, has proven to be a recognized necessity for adult and family mental and physical wellness and happiness,” says Schultz. “In that sense, these amenities have become a necessary value driver for the built environment.”
In addition, open spaces that feature engaging social activities can be boons to the local retail scene, says Chris Bright, CEO of metro Dallas-based development firm Bright Realty.
“Open spaces should be designed in ways that complement the retail rather than take from it,” says Bright. “With the right mix of participatory activities, people will really engage within these spaces, and the more you can draw people into public spaces, the more easily you can make the retail component work.”
Bright Realty’s flagship project, The Realm at Castle Hills in Lewisville, spans 324 acres north of Dallas and features office, residential, retail and restaurant uses. The company recently celebrated the completion of a 235,000-square-foot office building with 16,000 square feet of ground-floor retail space. The next phase centers on construction of a 260-unit apartment community, also housing ground-floor retail space, which is expected to be complete by year’s end.
Going Vertical
As land becomes increasingly scarce within urban cores, pushing prices ever-upward, developers are engaging in more vertical integration of different uses.
From simple solutions like adding a coffee shop to an office building to more complex designs like stacking hotel rooms and multifamily units within a single structure, land is simply too valuable to waste with poor planning.
“More efficient use of land, coupled with the goal of attainability, drives more density applications in community development,” says Cramer of Newland. “Communities of today and the future will have a more integrated mix of uses, which provides solutions for how people want to live, work, shop and socialize — all within one community
setting.”
In addition, a heightened focus on vertical development creates a more compact environment in which walkability — a critical component of any mixed-use project — is elevated.
“We’re seeing more vertical integration of uses throughout DFW,” says Peter Yates, vice president of development at KDC, the firm behind large-scale mixed-use projects like Legacy West in Plano and CityLine in Richardson. “Adding shared podium parking structures, utilizing ground-floor areas for retail and going vertical all maximize the impact on land and help create a walkable, dense environment.”
i3 Interests is developing Telge Crossing, a 24-acre mixed-use development in the Houston metro of Cypress that will feature residential, retail and medical office uses.
Yates sees the office component of mixed-use projects as the central mechanism that helps developers achieve densities and complementary uses, particularly in major Texas markets where job growth has been especially robust. With companies engaged in a perpetual war for talent, the presence of top-notch, walkable shopping, dining and entertainment options to an office building can be a key deciding factor.
“Users of large corporate space that we’ve worked with are increasingly looking for ways to enhance the employee experience,” he says. “Providing employees with a place to live via apartments, a place to stay via hotels and places to mingle via restaurants, bars and coffee shops can make a big difference in workforce attraction and retention. So as developers, we look to incorporate as many of those uses as possible into our projects.”
Shared Parking
The parking needs of different users within a mixed-use destination can create headaches for developers, not to mention drive up construction costs. Whereas office users need more parking during the day, multifamily, retail and hotel users require more parking beyond the nine-to-five window.
“Parking is our biggest logistical issue in mixed-use — if I can’t park it, I can’t build it,” says Bright. “If people have trouble accessing parking, it adversely impacts the consumer experience. But the economics of parking, which can run $10,000 per space or higher if it’s architecturally appealing, can really restrict the size of your project. So you have to be able to create those densities to justify parking costs.”
But part of the appeal of mixed-use developments is their insulation from heavy traffic and logjam — in other words, their walkability. Consequently, devising shared parking solutions is often well worth the expense. Such solutions may involve hiring third-party parking operators to manage flow or offering complimentary parking for certain uses at select times.
In addition, some developers note that the growth of ridesharing apps like Uber and Lyft should translate to lower parking requirements in the future, as mandated by local governments. The gradual advancement of driverless cars should achieve the same effect.
While shared parking can help mitigate these costs and enhance the consumer or resident experience, these arrangements must be carefully and clearly articulated in lease agreements, says Yates of KDC. The same applies to costs of maintaining common areas or other expenses that are shared among users, as the precision of the language in these clauses can potentially disrupt a developer’s exit strategy.
“As long as these arrangements are thoughtfully and fully defined, one use can be sold or recapitalized without impacting the other uses,” he says.
— By Taylor Williams. This article first appeared in the March 2020 issue of Texas Real Estate Business magazine.