The Rise of Live-Work-Play Communities: Redefining Urban Living

Live-Work-Play communities are on the rise in major markets across the United States, drawing in young professionals and families with affordable and community-driven living options. The asset class - a form of mixed-use development combining residential, office, retail, and leisure space - is considered the future of urban living. Developers will find unique opportunities in the space to build high-density multifamily housing in metropolitan markets with high demand. The asset class is not without challenges - such as higher upfront construction costs and potential zoning restrictions - but developers will ultimately find live-work-play projects to be highly profitable and low-risk investments. 

Here’s why life-work-play communities are redefining urban living, and how you can take advantage of the opportunities created by the unique asset class: 

Key Features of Live-Work-Play Communities 

Live-Work-Play communities include several key features that make them appealing for tenants, while lowering risk and promising high returns for your team. 

Mixed-Use Development. Live-Work-Play communities are a variation of mixed-use development, combining residential, office, commercial, and leisure space for residents and the larger community. Combining use lowers risk for you and investors, allowing the project to diversify revenue streams and weather economic turbulence with ease.  Conducting thorough market research and due diligence can help you determine what assets would benefit the greater community and ensure profitability. For example, if a neighborhood is lacking in places to shop for food, grocery-anchored retail could be an ideal component of your project. 

Diversified Residential Offerings. Housing should also include a range of options to allow for residents with different needs and income levels to live in the property. If your team is willing to incorporate affordable housing, you could potentially expand the market for the building and take advantage of government grants, such as Low-Income Housing Tax-Credits (LIHTC), to offset initial development costs. 

Recreational Facilities are also central to ensuring your live-work-play project meets resident and community needs. Including parks, green space, and other recreational facilities will boost returns and encourage positive community favor. For example, Hudson Yards in New York City, one of the largest mixed-use developments in recent years, was built with a large public square and gardens. Similarly, public transportation access is vital for creating a live-work-play community that delivers on the promise of walkability and reducing commute times for residents. 

Sustainability Features. Investors and residents are both looking for sustainable properties with low carbon footprints and resilience to climate-related disasters. The benefits of  investing in sustainable real estate are numerous - green buildings have lower long-term operating costs that translate to higher returns and contribute positively to communities while staying aligned with carbon emissions policy. Residents are also showing a preference for sustainable properties - 80% of people reported believing that living in a sustainable building would be good for their health, while 61% reported being willing to pay more to live in a sustainable community. 

Live-Work-Play properties with green components have additional benefits for developers, as these projects can also be funded in part with government grants or tax credits. Your team can take advantage of Commercial Property Assessed Clean Energy (C-PACE) financing or green loan products such as Fannie Mae and Freddy Mac’s green lending program. Green financing are loans where lenders offer preferential treatment and lower interest rates to multifamily developers with projects that secure a green building certification. 

Community Engagement. In order to secure stakeholder buy-in and bolster your firm’s reputation in the larger community, you’ll want your live-work-play project to reflect the needs, desires, and aspirations of the broader population. By conducting thorough market research and due diligence, you can ensure the offerings in your live-work-play asset serve residents and the neighborhood. For example, if residents desire more walkable community space, including green areas and parks in your project can make it more appealing to local planning boards. 

What Is Driving the Live-Work-Play Trend? 

A recent study found that the number of live-work-play communities quadrupled over the last 10 years, with the latest boom driven by the desire to blend work and play in a post-pandemic world. The growth of live-work-play mirrors the rise of multifamily mixed-use developments. In 2011 and earlier, mixed-use made up only 2% of new development projects coming to market. Mixed-use jumped in popularity, leaping up to 6% in 2012, and now comprises about 10% of all housing in the past couple of years. 

Several factors are driving the continued rise of live-work-play communities across the United States. Urbanization and the increase in city populations have increased the demand for housing and made the need to use space efficiently more important than ever. At the same time, state and local officials are prioritizing sustainable urban planning, trying to create vibrant and pedestrian-friendly communities. Mixed-use projects promote urban density, walkability, and sustainable land use, preventing urban sprawl. 

Hybrid or remote work, which became more common during the COVID-19 pandemic and remains popular today, is also behind the rise of live-work-play communities. Millennial and Gen Z renters are looking for more flexible work arrangements and better work-life balance, and live-work-play developments can provide co-working space or home offices to allow residents to live and work comfortably. 

Developers also benefit from the way live-work-play communities mitigate economic risk for investors. Since the properties combine assets and provide diversified revenue streams, it’s less urgent if one sector goes into a downturn. For example, many office assets remain imperiled following the rise of remote work, but in a mixed-use development, the property can still generate revenue from other assets, such as retail and residential, reducing the overall financial risk. The combination of commercial and recreational amenities also make neighborhoods more desirable, ensuring tenants will be willing to pay a premium to live there. 

Overcoming Challenges for Live-Work-Play Communities 

Live-Work-Play communities can benefit your portfolio in many ways, but the projects are not without unique challenges. Zoning and building regulations are often created with a single use in mind and can pose obstacles for developers pursuing projects that combine retail, residential, and office space. Engaging stakeholders such as local planning authorities or government officials and developing positive relationships can help facilitate the regulatory process. 

Parking minimums, which mandate a fixed number of off-street parking spots owners must provide for every residential, commercial, or office building, can also be prohibitive. Luckily, government officials in many states are starting to shift policy to promote public transportation and boost housing production. Keeping an eye on markets where policies are becoming more flexible around parking minimums can help you identify opportunities for new projects. 

Finding land and using space efficiently can also be a challenge for live-work-play communities. Developers are increasingly considering adaptive reuse or brownfield redevelopment as sites for live-work-play communities. For example, the Charles River Speedway in Boston Massachusetts used to be a rundown defunct racetrack before developers converted the space into a marketplace for eating, working, and retail. It’s now one of the city’s best examples of adaptive reuse and historic preservation. The development acts as a gateway to residential developments in the neighborhood and was built with walkability and sustainability in mind. 

Another example is Mount Vernon Mill No. 1 in Baltimore, Maryland, an old cotton mill converted into residential spaces, retail, and office space. The developers used historic tax credits to help fund the project by preserving certain character elements of the mill and collaborated with local water groups to clean up nearby streams. Since the project is highly visible from the highway and features significant green and outdoor space, it also became a tourist attraction and calling card for the city. 

Leveraging Technology to Deliver Live-Work-Play Projects 

Live-Work-Play communities are complex projects, and you’ll need to leverage modern strategies and tools to bring development in on time and on budget. In the current market - which is characterized by high interest rates and rising construction costs - it’s more important than ever for you to deliver reliable and successful outcomes on projects. Modern real estate development software is giving teams the edge over those still relying on status quo methods like outdated and error-prone spreadsheets. 

Northspyre is the purpose-built, single software solution made by and for developers to help ensure predictable and profitable outcomes on complex projects. The platform is designed to use automation to reduce manual data entry, increase productivity, and maximize your returns from pre-development to project completion. You’ll be able to enable your teams to build repeatable and scalable project processes, further increasing your efficiency and lowering costs, and providing unmatched visibility on projects and historical data on all your projects in your portfolio. 

Download our guide “How to Cut Real Estate Development Costs by 2-6%” to learn more strategies and tools your team can use to cut costs in a rapidly evolving real estate market.