Managing a successful mixed-use property – what real estate managers need to know

While mixed-use developments are not new – Rockefeller Center in New York was completed in 1939 – they’ve experienced renewed popularity. Almost all multi-family buildings constructed today include some kind of retail, entertainment, or service component. And the trend is growing. So, what’s driving the trend?

The growing trend of mixed-use

Three of the main reasons mixed-use developments are thriving are:

• Office space within a mixed-use property can command higher rents - 22 to 33% higher than rents at stand-alone office buildings
• Demand for mixed-use property is growing among prospective tenants and residents, as target audiences among all generations seek vibrant, walkable communities
• Mixed-use developments have a built-in customer base, making them attractive to owners and developers

But managing a mixed-use development requires a broad set of property management skills. Consider the complexities that can result from combining a hotel, private residences, parking, restaurants, offices and quite possibly even a theater, all in one property. So, there are several different approaches to the management structure of mixed-use developments:

• A small mixed-use development is likely to have one manager responsible for the entire development.
• A large mixed-use development with a single owner may have a general manager responsible for the entire development and separate managers with property-specific skills, experience, and knowledge for each use.
• If a hotel is a component of the property, a separate management team is required for the hotel component, as hotel management is a unique discipline.

Management and operational issues that may differ among the property types, including:

• Hours of operation
• Signage
• Deliveries
• Trash removal
• Parking
• Promotional events
• Noise
• Sounds
• Odors
• Security issues
• HVAC & utility operations

The real estate manager for each component of the mixed-use development must recognize and appreciate the unique needs of each property type. Each component should have a coordinated management plan that maximizes the benefits of the development, and minimizes potential conflicts. Effective mixed-use property managers:

• Understand how commercial uses intersect with residential uses
• Think holistically and grasp the big picture
• Develop a business plan that meets the owner’s goals and objectives
• Can adapt, be proactive, and anticipate problems and opportunities
• Hold strong leadership, communication, negotiation, and relationship skills

Above all, it’s critical to attract the right mix of tenants and residents – the key to managing a profitable asset. Each property type must be able to succeed on its own in order for the mixed-use development to be successful.

Mixed-use developments are truly unique, as they present opportunities not typically found in other types of developments. With every opportunity, there are challenges. But, when the mixed-use property is thoughtfully planned and managed, the development can meet or exceed the expectations of owners and occupants.