Now more than ever, the development of mixed use buildings is rising across the entire country, including Texas. The proliferation of mixed used buildings can be attributed partly to the changes we have undergone since the start of the pandemic. The COVID19 pandemic undeniably revolutionized all aspects of our lives and industries, including built environments. With many people looking for flexibility and hybridization in their personal and professional lives, urban planning that blends multiple functions is in demand.
Studies show that mixed use properties today enjoy accelerated lease-up periods and rent premiums more than stand-alone properties in the same market. This piece looks at the Texas mixed use development, including the types of multi-use development in the state.
What Is Mixed Use Development?
Mixed use development is a development project that provides more than one use or purpose within a shared building or development area. Most mixed use projects in Texas may combine housing, office, recreational, retail, commercial, or industrial components. These projects usually vary in scale and may comprise a single building with retail shops on the ground and apartment units on the upper floors. Others may comprise comprehensive urban village development featuring multiple buildings dedicated to separate but compatible uses, such as office buildings, retail centers, medical facilities, and an adjacent multi-family housing complex.
What Is a Mixed Use Building?
A mixed use building is one that is partly occupied by residential uses and partly occupied by commercial and/or community facility uses. In a nutshell, a mixed use building is a single building housing three or more revenue-producing ventures such as housing, office, commercial, recreational or industrial spaces. For example, it is common for Texas mixed use buildings to include retail shops and restaurants on the first floor and offices and residential areas on the upper floors.
What Is a Mixed Use Neighborhood?
A mixed use neighborhood is a neighborhood that offers residents the ability to live, work, play, and shop in a single community. Such neighborhoods comprise a diverse mixture of housing types and commercial entities in a walkable community that allows residents to visit daily. These neighborhoods are uniquely designed to foster active living through an interconnected network of walkable streets.
Types Of Multi-Use Development
Multi-use developments come in diverse shapes, sizes, and scales. However, experts say for a project to qualify as mixed use development, it must provide three or more significant revenue-generating uses. It should also factor in community integration and create a walkable community featuring several pedestrian connections. The following are some of the most common mixed use developments in Texas:
Main Street Model
The Main Street model of mixed use development is undeniably one of the oldest models in the history of mixed use property types. The Main Street model features locally owned businesses on the ground floor and condos or apartments on higher floors. In larger metropolitan areas around Texas, services, hospitality, and entertainment venues fill the ground floors.
Shopping Mall/Department Store Conversion
The rise of e-commerce and online retailers such as Amazon spelled doom to most brick-and-mortar retail businesses. These businesses were forced to close shops due to the fierce competition from e-commerce websites. In Texas, mixed use developers have converted vacated shopping malls and departmental stores into highly-priced pieces of real estate to host residential units and businesses that can compete effectively with e-commerce giants.
Vertical Mixed Use Developments
The vertical mixed use developments house a diverse combination of businesses. These buildings typically provide more public uses on the lower floors, such as retail shops and restaurants, and more private uses on the upper floors, such as hotel rooms, office space, or residential units. In Texas, vertical mixed use developments are common in cities such as San Antonio and Austin's downtown areas.
Horizontal Mixed Use Developments
Horizontal mixed use developments consist of a single-use building within a mixed use zoning district parcel designed to provide diverse land uses in a single development project. These developments typically combine several single-use buildings into one cohesive mixed use lot. They ensure a combination of diverse businesses and residential units transform into walkable communities or neighborhoods that encourage active living. It is not uncommon to find repurposed abandoned industrial buildings turned into horizontal mixed use developments in Texas urban areas such as San Antonio or New Braunfels. Developers have repurposed these former industrial buildings into condos, shopping complexes, restaurants, banks, rec centers, and workspace offices.
Why Texas Commercial Real Estate Is As Hot As The Summer Temperatures
Undoubtedly, Texas is home to some of the most diverse cities in the US. In recent times, cities such as Houston, Austin, and Dallas-Forth, posted impressive growth powered by a skilled and well-trained talent base, low cost of doing business, and excellent quality of living. This, in turn, has led to a rise in demand for commercial real estate. Today, Texas is experiencing breakneck retail construction and retail demand that is rare to see in any other part of the country. A recent real estate industry report showed in 2021, Houston recorded the highest volume of commercial real estate transactions in the country, with Dallas coming at number 3. The following are some of the factors driving the commercial real estate in Texas:
Population growth: Population growth plays an integral role in expanding the retail market when the shopper count increases. In many cities around Texas, such as Houston, the metro area has grown almost three times the national rate for the last three consecutive years. Typically, high population growth translates to a growing number of shoppers and an expanding retail market.
Job growth: Home sales in Texas are up 7%, and the primary factor behind this growth is job growth. Houston city ranks second in new home starts in the country, with Dallas/Ft Worth coming second. Studies reveal Houston metro added 167,600 jobs in 2021, thanks to an expanding professional and service sector.
Affordable cost of living: An affordable cost of living attracts new businesses and talent to Texas urban areas. Most of Texas's cities, such as Houston, provide big city life without the hefty price tag standard in other large metropolia. A recent report reveals Houston has the fifth lowest cost of living among the country's most populous metropolitan areas.
Profitable investment opportunity: In a post-pandemic era, investment in commercial real estate remains one of the most profitable ways to make big money. Annual returns from commercial space range from 7% to 12%. This is much higher than residential property, which is only 1% to 4%.
Increase demand for e-commerce: One of the factors driving commercial real estate growth in Texas is the increasing demand for e-commerce. In the era of globalization and information technology, e-commerce is necessary to provide flexibility and convenience. The US Census Bureau reveals in the first quarter of 2021, the country's e-commerce revenue hit $211.5 billion, which was 31.7% higher than the previous quarter's retail e-commerce revenue. This demand is driving massive construction of warehouses and distribution centers in every metropolitan and developing city to ensure that last-mile delivery service to the end user is as fast as possible.
Top 6 Texas Mixed Use Developers
The following are the top six mixed use developers in Texas:
Cortland specializes in multifamily investment, development, and management. They provide real estate services focused on delivering resident-centric, hospitality-driven apartment living experiences. The company provides a transparent and candid approach in its commitment to placing the resident at the center of all decisions. Their goal is to set a new experience standard for the apartment industry - one community at a time..
Olympus Properties is arguably one of the leaders in the multi-family real estate industry. The three-decade-old company provided luxury apartment homes and communities customized to meet the needs of residents looking for quality, style, and convenience.
RAM Partners is a top-rated multi-family company providing a full suite of real estate solutions for diverse clients. They make it their mission to help clients sell or buy homes or residential property easily, conveniently, and securely.
Maxus Properties offer one, two, and three-bedroom apartment & loft homes in various metro areas in Texas. Their communities provide a variety of floor plan options, amenities, finishes, and affordability.
BH Management provides a range of real estate to meet all your property needs, whether you are looking for an apartment to rent, a property manager, or a commercial property to lease. Specifically, BH has set the standard in multi-family, creating a smarter way to live, invest, manage, and grow.
TTI Capital provides multi-family and mixed use assets that add income and appreciation to your investment portfolios. The vertically integrated real estate investment firm focuses on developing, identifying, acquiring, improving, managing, and selling multi-family and mixed use properties.
Urban Value Will Maximize your Mixed Use Property
Mixed use properties have experienced a surging demand owing to many factors. Many investors view mixed use developments as suitable investments with guaranteed high returns and lower risks because they diversify their investments across multiple types of properties within a single development project. By not putting all your eggs in one basket, you avoid losing out much income if you lose one tenant.
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