5 Reasons to Invest in Mixed-Use Developments

Mixed-use developments are real estate projects that combine apartments or condos with commercial real estate. They're growing in popularity and represent a unique type of investment opportunity for real estate investors. Also called live-work-play properties, a mixed-use development could be a single building or take up several blocks.

And the commercial areas they contain could include everything from retail, restaurant, and gym space to offices, movie theaters, and self-storage. To explain why real estate investors should be interested in these properties, let's take a look at their appeal.

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Good investors understand the importance of diversification, and mixed-use properties offer an opportunity to add an array of property types to your portfolio with a single investment. An investment in a mixed-use property is an investment in several different commercial real estate sectors, including residential and possibly retail, restaurant, experiential, self-storage, office, and more. Some of these properties even include warehouse space, simplifying delivery to the on-site retail properties and diversifying your investment even further.

ALSO READ: Understanding Portfolio Diversification

Priorities shifted for many people during the pandemic. They began to care more about things like spending time with family and experiencing all the world has to offer than constantly working to make as much money as possible. Many have even walked away from jobs that required them to return to a physical office full time.

So, it makes sense that the opportunity to live in a community that will save them the time spent fighting traffic to run one errand after the other could be incredibly appealing. They can put all the time they'll save toward more fulfilling endeavors.

With residents living on the property and potentially even workers coming to work in a co-working space, businesses in a mixed-use property have built-in customers. A supermarket or self-storage facility in a mixed-use property would probably have to charge pretty exorbitant prices before those residents and workers would decide to fight traffic to go elsewhere for these same products and services. They're likely to frequent on-site restaurants and cafes, too.

ALSO READ: This Is the Most Compelling Reason to Invest in Commercial Real Estate

As an apartment resident, you might see your neighbors in the parking lot, hallway, or workout space. But a resident of a mixed-use property will likely run into neighbors while grocery shopping, dining out with friends, or even working in a co-working space. For people who enjoy the social aspect of apartment living, mixed-use properties have the potential to take that community feel to the next level. It could feel almost like a very tiny town.

Many of the mixed-use properties being developed are designed to be attractive, enjoyable places to spend time. They might incorporate outdoor common spaces and recreation areas like parks, tennis courts, seating areas, ponds, or walking trails. Even if someone only has a single stop to make, like grocery shopping, they might enjoy a space designed to draw them in and encourage them to linger over a strictly utilitarian supermarket. The ambiance also adds to the appeal of these properties as places to live and work.

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The appeal of mixed-use properties will most likely only grow as people become increasingly aware that the "necessary" hassle of wasting hours of their lives in traffic may not be so necessary after all. If you agree that people aren't going to stop valuing convenience anytime soon and you'd like to invest in numerous commercial sectors with a single investment, take a closer look at mixed-use developments. You may want to consider investing in one of the real estate investment trusts (REITs) going this route.

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