Live, work, play: the case for mixed-use development
Today’s developers and investors are increasingly seeking opportunities to diversify their portfolios and meet shifting societal needs. With a global construction industry expected to expand by an average 3.7% per year until 2022 according to the Construction Intelligence Center (CIC), developers need to ensure that they are providing products that meet broader work and lifestyle demands, as well as investor expectations.
Mixed-use developments – which combine different land uses such as residential, commercial and leisure in one area in a single building or larger neighbourhood development – provide an obvious opportunity to meet these needs and are quickly becoming a staple product in cities and suburban communities globally.
Redefining mixed-use development
Changing social and work habits are forcing the definition of mixed-use to evolve. Mixed-use is no longer a residential block with an afterthought addition of a basic retail offer. Instead, forward-thinking businesses and developers are realising not only the need to provide a comprehensive mixed-use offer but the financial, social and practical benefits of doing so.
For example, Google’s Sidewalk Labs’ proposed 12-acre smart city waterfront mixed-use development in Toronto, Canada will comprise at least 3.3 million sq ft of residential, office and commercial space, as well as a new HQ for Google Canada. It’s a futuristic development that includes the use of autonomous vehicles and robots and in which the city is driven by data. More importantly, it sets the stage for residents to live, work and play all within their immediate surroundings.
Mixed-use is no longer a residential block with an after-thought of a basic retail offer.
Similarly, the £9 billion Battersea Power Station redevelopment in the UK includes residential, leisure, hotels, retail and business. Once again, a tech giant – this time Apple – has chosen to take advantage of the value of an inspiring mixed-use offer. It will be the largest tenant at the old power station when it opens its new London HQ in 2021.
The evolution of consumer needs
So, what is driving the change? It’s largely an evolving consumer demand, particularly evident over the last five years or so, as people re-evaluate lifestyles and what is important to them. This revaluation of traditional lifestyles is driving a desire for a more convenient way to live – local amenities and the ability to walk to home, to work, to shop or to social activities. Convenience and walkability are highly desirable.
This shift is evident across generations. Whether it is the time-poor, experience-hungry millennial generation who aren’t content with the lifestyle models their parents had before them – such as commuting long distances to work or working nine to five – or the aging Baby Boomers, who increasingly require and enjoy the conveniences of having their home in close proximity to stores, healthcare facilities, and other daily needs. In addition to convenience, mixed-use also satisfies the need for greater sustainability in both urban and suburban communities, including less travelling and making the best use of land.
A strategic investment that makes sense
From an investment point of view, mixed-use development just makes sense. For developers and investors, it spreads financial risk across a number of markets and allows a diversification of portfolios. Get the mix right and developers are able to drive a natural demand between the uses (residential, commercial, retail, etc.) and protect themselves against vacancies and single market risks.
From an economic perspective, the social benefits of a mixed-use community translate into areas of concentrated spend. A restaurant that’s a favourite for a worker for a quick work lunch may become a favourite for a more leisurely dinner and wind-down with friends in the evening. As a result, the circle of mixed-use can drive a thriving local economy and job creation.
From an investment point of view, mixed-use development just makes sense.
True mixed-use should be a no-brainer. It delivers financial, social, and practical benefits for all involved – whether a developer or investor looking for a way to diversify and “future-proof” their investment, a consumer looking for a more convenient and sustainable lifestyle, or a business seeking environments that will help attract and retain employees.