Why Mixed-Use is Staple of New Construction

MIAMI—Mixed-use and transit-oriented developments are emerging as a staple of new construction across the Southeast, though they are still less visible to the capital markets. It's rare to see a new office or condo building rise without ground floor retail or a hotel component.

Miami is witnessing three game-changing mixed-use and transit-oriented developments coming off the drawing board and out of the dirt: Swire's $1.05 billion Brickell CityCentre with office, residential, retail and hotels; the $2 billion Miami Worldcenter with those same components; and Miami Central's All Aboard Florida, a three-million-square-foot urban mixed-use transit-oriented development.

“MiamiCentral demonstrates that a true passenger rail system and a connected public transportation system can reinvigorate a downtown, as so many world-class cities enjoy,” Michael Reininger, All Aboard Florida's president and CEO, tells GlobeSt.com. “This is a rebirth for two ideal areas of Downtown Miami, an opportunity to create an identity for a historic part of the city, and reinvigorate the desire for mass transit. The importance of Downtown Miami is evidenced by the significant investment made not only by All Aboard Florida, but other key developments, and will be a hugely sought after iconic destination, in a newly urbanized neighborhood.”

But it's not just Downtown Miami, although the city has one of the best comeback stories in the Southeast. Traditional Neighborhood Development Partners is planning transit-oriented developments in North Carolina, including Lowe's Grove, on the former site of a farm next to the Research Triangle Park in Durham. And Park Central, a new 17-acre master-planned project in the Perimeter Center area of Dunwoody, GA, recently got underway. State Farm is leasing 585,000 square feet in the transit-oriented development's first office building.

“I see a real resurgence in true urban density, a focus on transportation and stores that are being built to 'human scale' versus mass merchandisers,” Mike Cohn, regional president and co-founder of Lennar Commercial, tells GlobeSt.com. “I see a focus on amenities to serve that growing urban density, all of which makes for more walkable and livable communities.”

Alex Carrick, chief economist at Construction Market Data, tells GlobeSt.com new commercial construction projects in the Southeast are largely stuck in neutral—with one exception. He points to a clear move toward mixed-use projects that combine offices, retail space, condo residences and even manufacturing facilities.

“Out of the 40 largest upcoming commercial construction projects in the Southeast, nearly half will be mixed-use facilities,” Carrick says. “Mixed-use projects provide a developer with a more stable source of revenue. A risk in one area, such hotel accommodation, can be offset by activity levels in another, such as retail. Mixed-use projects can also widen the financing base. Lenders are reassured when borrowers have several different sources of earnings. All their eggs aren't being placed in one basket.” Click here to read more about major commercial real estate trends in the Southeast.