Commercial Real Estate Mixed-Use
Mixed-Use compared to Single-Use in a secondary market like Bend Oregon.
2008 Commercial Mixed Use Industry
This afternoon the new issue of COMMERCIAL INVESTMENT REAL ESTATE was delivered to the office. In this issue there was an article on how Mixed-Use investments are retaining value in our changing market.
In this article, written by Matt Hudgins, the difference between investing in a mixed-use building in a Primary Market and a secondary/tertiary market is explained. Apparently in smaller markets, city governments will put more effort into mixed-use projects than larger markets will. Smaller markets like the idea of building pedestrian activity for a 24 our downtown.
When this was mentioned, all I could think of is how real this is for Bend, Oregon. Our city loves the idea of mixed-use buildings. Downtown we have buildings like the Franklin Crossing building, the Columbia River Bank building, and others that profit through this mixed-use idea. Our downtown is a 24 hour market that mixed-use really benefits from.
Matt Hudgins wrote that “Knowledge-based companies collect in cities that offer a high standard of living complete with nightlife, art venues, and other recreational outlets that help those companies lure and retain employees.” This is exactly what our city has to offer. I moved out to Bend Oregon in August of 2007, havening lived in several different places, I can compare Bend to them, and Bend is the one city that I have lived in that caters to the “nightlife”, the art walks, the recreation, the events downtown – getting people out of their homes and out on the street to enjoy the town that was graciously created for the enjoyment of the citizens. Here at DuBois Wicklund Group, the first half of 2008 has not shown us that investors are slowing down because of the market, but opposite. Investors still believe in the beauty our town has to offer, Bend has everything required to stay tall during the “slump”.
Mixed-Use or Single-Use? What is the decision factor when a developer/investor is trying to decide between the two?
- Mixed-use properties may actually be faster and easier than single use in the secondary market.
- When retail rents are low, residential rents may be high, or office rents by be on an all time high. Having a mixed-use building allows an investor to benefit from the fluctuations of lease rates on all markets.
- Less competition. When a building has a great anchor, the mixed-use building is not as competitive because you can be the ONLY one around.
- Specific placement. Succeeding with a mixed-use building depends on identifying and meeting site-specific demand. You can easily fail by choosing the wrong location.
Road Blocks! As we all know the lending market over the past year or two has drastically changed. Lenders are requiring a lot more capital than they did in 2006. But even when the financing is available, a mixed-use project can present other demands. With mixed –use, a developer may have to undergo zoning changes, environmental remediation, parking issues, added traffic to the area, hours of operation, and more. Getting through these hurdles, may be a challenge, but the decision comes from the long term investment of value – is the challenge worth the return in the end?
As gas prices are rising and our economy is changing, an area that has everything you need is becoming more valuable. A mixed-use area is desired as the demand for working, shopping, eating, and living in the same neighborhood is growing.
To see more from the Commercial Investment Real Estate Magazine click here.
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Cassie Johnson – DuBois Wicklund Group: Commercial Real Estate Services.