Maybe you’ve never heard of the term mixed-use property, but we can guarantee you’ve been in one. Mixed-use properties exist all over the place – these properties are real estate developments that have different uses (retail, residential, offices, hotel, etc.). In a mixed-use property, the separate uses all compliment each other.
Mixed-use properties come in all shapes and sizes: they can be a single building or take up an entire neighborhood. Right now, there is an increasing number of real estate investors looking to invest in this type of property, and you can be one of them!
Investing in these has several distinct benefits, but it’s best these types of investments are aided by professionals like ourselves. Although many retail businesses have gone out of business in the past few years due to online stores, mixed-use properties are still a great investment (and will be for the next 5 years minimum), because they attract many market segments and they can give you, the investor, a greater return on investment.
Reasons to Invest in Mixed-Use Properties
- Buyers and renters are attracted to these properties because they offer a closeness to neighborhoods and living spaces. The Delaware State Housing Authority showed research that stated more than 50 percent of Americans would walk and bike more if given the opportunity, and mixed-use properties do that.
- The different uses can work together. Office workers and hotel guests can go to the restaurants and retail shops on their breaks and meal times. Shoppers can grab a bite to eat or see a movie. You’re giving people more of what they want so they stay in your property and invest in your property.
- Studies show there is a connection between walkable areas and economic viability of a town.
- Mixed-use properties promote a sense of community.
- Even if retail stores are closing due to the success of online retail stores, there are always businesses that can fill a mixed-use property and attract business such as: hair salons, movie theaters, clothing stores, dentist offices, doctors’ offices, coffee shops, shoe stores, and more.
- You get a greater return on investment. You can charge more rent on the commercial properties and on the mixed-use development property overall. Commercial leases’ rent is 6 to 12 percent of the property’s purchase prices, while residential leases are 1 to 4 percent of the purchase price.
- The younger Millennial generation (who is a big buyer group) like mixed-use developments for their environmental sustainability. Many mixed-use developments repurpose old buildings and avoid overbuilding, which is promoting sustainability. Millennials like this type of property, because they can walk to work, stores, or their favorite shops and restaurants.
- Senior citizens also like mixed-use developments because they want to live in smaller spaces within walking distance to stores and restaurants, so they don’t have to go far. Both senior citizens and Millennials are large markets you can attract and rely on coming to your mixed-use property.
- Many of your tenants will be commercial tenants, which means they will likely keep your property highly maintained, because they need to attract the public.
- The hours you need to be available for a commercial tenant are more limiting than residential tenants. Many commercial spaces operate 9 a.m. to 5 p.m. or 10 a.m. to 9 p.m. so you won’t get any middle-of-the-night emergencies or requests, which is easier for a landlord.
