Mixed Use Defines Future

"It's the end of single-use retail," says Steiner. However, the developer, whose mixed-use projects include Easton Town Center in Columbus, and Zona Rosa, in Kansas City, MO; concedes that many developments with warehouse-style big boxes, like Costco and Home Depot, will be hard to convert into multi-use projects.

The demand for areas where people can live, work and shop has been created for a number of reasons, says panelist Lee Wagman, CEO of the Martin Group, of Santa Monica, CA. Younger people perceive such developments are more hip, compared to suburban areas, which are considered sterile. Empty nesters need less space but want more convenience than the suburbs provide. Municipalities like it when firms are interested in redeveloping formerly blighted urban areas, while the suburbs are sprawled to their limits.

And, though having a project with multiple uses can also reward developers with higher returns, costs of building those centers are also elevated, Wagman says. "It is much more difficult to develop multiple property sectors at the same time," he says. "You've got to always balance the costs and the benefits."

To offset costs, developers can partner with other firms on a project or look for incentives from municipalities, which will sometimes offset development costs if a center is built near a mass-transit hub. Firms must also keep in mind a project's tenant mix, Wagman says, pointing out that most people want to live near a gourmet grocer, but a busy nightclub could cause security and noise concerns for those living above such an establishment.