What is Mixed Use Real Estate Development?

Mixed use developments are properties combining multiple uses, such as residential, commercial, retail, or office space, to meet consumer desire for community-oriented neighborhoods, optimizing land-use efficiency, and mitigating risk for investors. Developers can pursue many types of mixed use properties, including retail and residential districts, mixed use hotels, and live-work-play spaces. 

1. Higher Upfront Costs

In comparison with a single-use building, a mixed use development will have higher upfront costs and require a greater capital investment. Mixed use projects are more complex in terms of infrastructure, amenities, and services, resulting in increased construction costs, greater regulatory compliance costs, and operational complexities. As a result, mixed use projects can be more difficult to finance and may require you to pursue alternative funding sources such as Low-Income Housing Tax Credits (LIHTC) funding or Transit-Oriented Community incentives. 

2. Complex Construction + Longer Project Timelines

The second drawback for developers is that the design and construction of a mixed use project is more complex and challenging, increasing the potential for timeline delays and cost overruns. Development teams need to be prepared to manage coordination with stakeholders, an intensive zoning and building code compliance process, and extensive vendor procurement and management. Developers should also be aware that mixed use projects in urban areas will be subject to greater regulatory guidelines than other projects and plan timelines accordingly.

3. Increased Need for Market Research

Developers need to ensure a mixed use development has the correct tenant mix and uses are not in conflict with each other. For example, conflicting expectations between commercial and residential tenants can result in lower occupancy rates, endangering the property’s profitability. You should also conduct due diligence in choosing a market for a mixed use project. Economic uncertainty, shifts in consumer desires, and changes in local demographics can impact the success of a mixed use project. For this reason, investors need to conduct thorough market research and make sure the appropriate demand is available for all the uses combined into a given mixed use property. 



Even with the challenges outlined above, mixed use development projects remain an excellent way to diversify a portfolio, mitigate investment risk even on complex projects, and help to positively shape the future of neighborhoods. 

1. Hudson Yards in New York, New York

Hudson Yards, one of the most complex development projects in the city’s history, is a large-scale mixed use development project combining residential, retail, commercial, office, and cultural spaces. Hudson Yards is a place for the city’s residents to live, work, play and dine, and has been slated for completion in two major parts. The Eastern Yard contains eight new buildings, including residential and commercial skyscrapers, a public garden, a mall, and the Shed Cultural Center. The Western Yard is still underway but will also have residential, office, and retail space, as well as an elementary school. The space is also home to the Edge, the city’s highest observation deck, making it an attractive tourist destination. 

2. The Domain in Austin, Texas

The Domain, sometimes referred to as a second downtown of Austin, Texas, features a mix of places to live, shop, eat, work, and explore. The Domain’s 100+ retail locations and shops are intermingled with open park space and residential housing to serve the North Austin area. The mixed use development has largely been successful due to its strategic offerings in terms of retail – the neighborhood has everything from small boutiques to fitness studios – and its accessibility to the rest of the city via public transportation and bike lanes. The neighborhood also features several hotels, allowing the area to draw both locals and tourists alike. As a result, the mixed use district has positively contributed to Austin’s economy, creating jobs and generating tax revenue, and serves as a model for other Sun Belt communities pursuing revitalization efforts. 

3. Pearl District in Portland, Oregon

The Pearl District in Portland, Oregon is a former industrial area north of downtown Portland transformed by mixed use development efforts. The area – now rich with restaurants, galleries, and trendy boutiques – has revived the city’s cultural scene and helped address ongoing housing shortages. The Portland Design Commission recently greenlit a new mixed use tower, which will include 381 units of housing in addition to amenity decks and ground-floor retail. With input from the Portland Design Commission, a 25-foot wide pedestrian and bike path will be integrated into the project, demonstrating how these projects can complement larger urban planning efforts. 



High-profile mixed use development projects have the added benefit of being a destination spot for tourists and residents alike. However, many mixed use developments are successful on a smaller scale, combining residential, retail, or office space to help shape high-density, well-connected, and sustainable neighborhoods.