Mixed Use: Fill & Download for Free

The White House itself wouldn’t be worth much, but the land is extremely valuable. If it were bought, the new owner would no doubt tear down the white house and build a mixed use building complex with shops and apartments, like this one down the street from the White House at 1001 Pennsylvania Avenue:The White House sits on 18 acres of prime land. The building above sits on just over one acre which valued at approximately $120,000,000, so figure the White House and its land could be worth as much as $2.16 Billion.

"Mixed-use development" is kind of a squishy term which sometimes means different things to different people. At base it just means a single real estate development that incorporates several different uses (retail, office, hotel, residential, etc.) But it implies that those uses are designed to work together and complement each other.When it's done well, mixed-use development offers great benefits:For the developer, risk is spread around several different markets, so if the office market tanks while you're under construction (for example), well, you can lease the retail and operate the hotel and hopefully hang on to the thing until office improves. It's just diversification at the project level.The different uses can work in synergy. Office workers want restaurants to eat lunch and entertain clients in, and hotels to host business travelers. Shoppers want to catch a movie. Condos and hotel rooms may be worth more if there are shopping and services right downstairs. From the developer's point of view, since people are looking for these things, why not provide them and keep that revenue yourself?At the city level, mixed-use developments can resolve a dilemma of modern urban real estate: good urbanism should be delivered at a fine grain that people can interact with at a human scale, but real estate financing demands large projects of hundreds of millions to billions of dollars. Mixed use development can be both.There are also downsides:On a practical level, mixed-use projects are more difficult. Financers have to evaluate each use separately, zoning and building approvals can get exponentially harder, and from a design perspective there are a lot more details you have to get right. The developer may have to simultaneously market office, hotel, retail and residential space in order to move forward. Projects take longer and that is the single most deadly thing for real estate (since the developer is usually paying somebody for land or money while the project is crawling forward.) Today, mixed-use projects are much more common than they were 20 or 30 years ago and the difficulty of completing them is also less.From a larger perspective, the whole concept, and often the execution, of mixed-use developments can be anti-urban: the idea is to create a self-contained little world that people don't have to leave. This adds nothing to the city and can be very destructive. For troubled downtowns you could often see a vicious cycle - because the neighborhood was dead and/or scary, developers built very self-contained projects, which further sucked life off the street. (Renaissance Center in Detroit might be the classic example.) Mixed-use developments are also a major building block of what some have called high-density sprawl, which features high density and tall buildings but few connections at street level, strong automobile orientation (i.e. everyone comes and leaves by car) and an overall lack of urbanity. "Edge Cities" in the US are often like this.Mixed-use developments today are quite common, much more than they used to be, and cities are also more demanding that they be more open and less self-contained. Like many practices they are not good or bad in themselves, it's all in how it's done.

During my time as a manager for a chain auto parts store in Chicago, our corporate office decided to turn our store from the Chicago hub to the regional hub. Basically, they increased our inventory two-fold (we had plenty of room even after that), and they increased our fleet of delivery vehicles so we could deliver parts to all six Chicagoland counties. By the time it was all over, we had 25 delivery pick-ups in our fleet.Some of the neighbors complained. Our store was zoned for retail sales, and it was being used more as a warehouse. Our delivery drivers frequently took side streets and cut through alleys to save time. Some neighbors threatened legal action.That’s when the “Chicago Way” kicked in. Our District Manager made a donation to the alderman in that area, and, quietly, our business was re-zoned as “mixed use” or whatever was needed to make what we were doing legal. Complaints to the city about our delivery drivers suddenly fell on deaf ears until the complainers finally gave up.