June 18, 2018
Five Considerations for Mixed-Use Developers
Mixed-use developments present an enticing investment and lifestyle offer for stakeholders across the board, however, there are several critical areas to consider when looking at developing a mixed-use endeavour.
1: Economic Factors
Does each of the proposed multiple uses of the development garner market demand in its own right, while also contributing to the community as a whole? Performing a thorough market analysis to verify supply and demand for each of the components ensures a community that is planned for success.
2: Financial Requirements
Can financing be secured for a longer and/or phased development project? Will a higher amount of equity financing be required due to the complexity of the project? Since it involves several types of projects, mixed-use can be lengthier and more expensive than a standard single-use project. Having an airtight proforma and comprehensive capital planning provides investors with the information they need to assess and mitigate the riskiness of a mixed-use development.
3: Land & Infrastructure Availability
What are the land-use approval, regulatory and zoning processes for the proposed site? Is there existing infrastructure and access to multiple modes of transportation? With land at a premium in many areas globally, identifying and acquiring the right opportunities for development or redevelopment can be challenging.
4: Political & Public Considerations
Have community members and stakeholders been engaged in the project? Have the public and private benefits been socialized, including infrastructure and economic benefits? In order to minimize public opposition to a development, it is critical to include and work with the local community and ensure that stakeholders understand the benefits, regulatory challenges and developer incentives of the project.
5: Project Complexity
How will the project be planned and managed in a way that maximizes capital resources and minimizes risk? Mixed-use developments are inherently more complex than single use and require cooperation between planning agencies, community and (often) several developers. In order to succeed and meet investor expectations, detailed project, risk and cost management is critical.
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