Mixed-use developments: A look at what’s driving this trend

Mixed-use developments have become one of the most active development models within the real estate sector. Developers and investors are increasingly looking for opportunities to combine different uses with an eye toward “place-making” and the goal of creating destinations that offer multiple draws. Let’s take a closer look at four reasons why mixed-use development is on the rise.


The days of large-scale single-product building in both urban and suburban areas is on the decline. Of the $1.328 trillion spent on construction in 2017, 80 percent was spent on some version of mixed-use. Depending on the location and scope of the project, the uses can be a combination of office, both traditional and shared as in the “WeWork” model, hotels, medical centers, and single-family and multifamily residential, all enhanced and energized by a well-planned retail and entertainment component. For investors, integrating the different uses provides diversification to risk of any one asset class, which may hit headwinds during a typical real estate cycle. Spreading the risk across various uses allows the developer to invest in expanded upscale amenities, which may otherwise be unaffordable. When designed efficiently, the integration of office, residential, hotels, medical services, entertainment, and retail creates a dynamic vitality which enhances the productivity of each component of the overall project.


Mixed-use developments embrace a challenge in terms of effective land use. This is especially true in dense, supply-constrained urban markets and is not a new phenomenon. Stacking office and residential above street level retail is ages old. Mature, high-profile, urban mixed-use developments include WaterTower Place in Chicago, Illinois; and Trump Tower and Time Warner Center in New York, New York, among others. Today’s urban developments are on a much grander scale with the likes of Hudson Yards and One World Trade Center in New York, New York; Millennium Tower in Boston, Massachusetts; Brickell City Centre in Miami, Florida; CityPoint in Brooklyn, New York; and  District Wharf in Washington,D.C. These multi-billion dollar projects will create small cities within the larger city environment. There are dozens of similar, smaller scale projects underway in cities all over the country. In Philadelphia, several mixed-use projects are under development including the new Comcast Innovation and Technology Center, and the Fashion District on East Market and Lincoln Square located at 1000 S. Broad Street, where Metro Commercial directed retail leasing including Sprouts, Target and PetSmart, which are efficiently integrated on the lower levels with residential above.

Suburban mixed-use developments also effectively utilize land by creating urban environments in suburban locations. Not only does this encourage more compact stacking and conserve open space but they create walkable environments that infuse new life into communities. For a mixed-use project to thrive, the site must be in a good trade area with strong demographics already in place. It is also important to consider the grading of the land, easy access off major roadways and the ability to provide convenient parking. The Village at Valley Forge in King of PrussiaPennsylvania is a prime example of mixed-use organic growth based on demand. What was originally planned as a retail town center, currently consists of more than 3,000 residential units, Class A office spaces, two major medical facilities, a vibrant town center anchored by Wegmans, LA FitnessREI Co-opNordstrom Rack, and a variety of full-service and fast-casual restaurants.

Metro Commercial is handling the leasing of the retail portion of two high profile mixed-use developments in suburban Philadelphia – Ellis Preserve in Newtown Square, Pennsylvania for Equus and Promenade at Upper Dublin, Pennsylvania for BET Investments, both of which are anchored by specialty grocers. 


Consumers today demand convenience. Millennials and empty nesters are flocking to live in mixed-use developments that offer maintenance-free living in an upscale environment. They want to step outside their homes and be within walking distance to coffee shops, restaurants, fitness facilities, grocery and spa options, as well as daycare for their dogs. They have no interest in shoveling snow, mowing the lawn or blowing the leaves. They will pay a premium in rent for an apartment with luxury amenities either within the building or within the immediate neighborhood.

According to Markets Insider, 50 percent of American workers will work remotely by 2020. This staggering projection is fueling the rapid expansion of WeWork and shared office hybrids, which are growing into important anchors within mixed-use centers. WeWork is under contract to acquire 424 Fifth Avenue in New York, City, the iconic building which housed Lord & Taylor for the past 104 years. WeWork plans to convert a large portion of the building into their flagship location. Lord & Taylor will be closing the store. Such is the power of the remote/shared office space going forward.


Retail merchandising is dictated by the layout and scope of a project but is critical to its soul and vitality. The goal is to provide a walkable village with all the ingredients for a convenient and healthy lifestyle. A variety of full-service and fast-casual restaurants with open storefronts and outdoor seating, grocery, in-depth fitness, spa, and beauty, as well as other convenience uses that provide lifestyle amenities. Whole Foods Market started anchoring mixed-use developments 10years ago and Sprouts is now in the game. MOM’s Organic Market opened in East Market while Sprouts just opened in Liberty Square at Broad andWashington Streets – both in Center City Philadelphia.

Target has become a master at developing smaller footprints and can occupy one or two levels above a parking garage. The brand is creative and willing to work with the developer to create a store merchandised to the local customer. If the project includes a grocer, they will scale back on their grocery footage and focus more on home furnishings; if the store is urban with few children they will devote more footage to adult apparel. Because of their flexibility and depth of knowledge of their consumer base, Target has become a leader among the traditional retailers who are thriving in mixed-use developments.

Looking ahead, mixed-use developments will continue to thrive. Mixed-use is where people want to live, work and play. It’s where the money is and where investors feel confident in their short or long-term hold. Mixed-use creates new communities and energizes old with renovations and expansions of tired shopping centers where there is room to add apartments, hotels, fitness centers and office – what the industry calls “value add.” Traditional and non-traditional retailers are looking to be included in these dynamic developments which is great for the retail brokerage world.

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