Mixing it up in Mixed Use Communities

August 27, 2018

It’s not a new phenomenon. Since the 1950s, Americans have been searching for the right balance between urban ease and amenities, and the improved education and school rankings of suburban living. With new terminology – surban community – and new approaches, the trend is having a renewed impact on commercial real estate.

The term surban, trademarked in 2016, refers to a community that has the feel of an urban area, but is enhanced with a vibrant mix of housing, retail and work spaces. Once widely known as “mixed use,” the new surban areas focus on the blend of both worlds. They center around transit hubs and feature boutique fitness options, high-quality grocery stores and popular restaurants.

The developments mirror a lifestyle that American families desire – one that delivers a more small town feel near the cities that drive innovation, development and commerce. What’s more, these areas offer it all at a cost that appeals to affluent families.

Construction in such a desirable area often comes at a higher cost, driving higher home prices and rents for residential buyers. However, these developments do offer significant opportunities within the commercial market.

Recent studies have shown that 61 percent of younger households without children and 55 percent of retirees desire a surban community. The Pew Research center backs these trends, nothing that, while 98 million Americans live in urban core communities, 175 million live in the suburbs and small surrounding metros. These numbers reflect possibilities for those looking to invest in multi-family opportunities, retail environments, restaurant and even within the warehouse boom built by increasing online commerce.

The advantages of these developments can be substantial:

Higher Exposure With Affluent Customers

The proximity to new clientele is key here, allowing businesses to cultivate both a residential and commercial audience. These projects have the power to attract a significant amount of interest and foot traffic compared to stand-alone outlets.

Better Property Management

These new surban developments often encompass a blend of residential, commercial and industrial real estate, so a vetted professional management service company is usually necessary. These services have to address the diverse needs of the entire community, and benefits often include quality tenants, better processes and improved support.

Less Risk

As surban developments blend residential and commercial real estate interests, investors are able to minimize the amount of risk their portfolio faces. Bad assets make a smaller impact, and investors are better able to counterbalance the loss. Overall, these options offer higher income longer leases, cash flow and less competition.

Existing Amenities

Location is everything, and surban areas may have the best locations around. Insulated by densely packed areas in close proximity to schools, libraries and parks, they create a haven for new development. Homebuyers, shoppers and foodies alike have a strong preference for these connective and inclusive communities.

Access to Transportation

The biggest benefit of participation and investment within surban communities is walkability. The National Association of Realtors found that Americans prefer walkable communities more now than they ever have in the past. Homeowners want this option, which is why more and more builders are constructing these developments.

While the return of mixed-use developments and surban communities isn’t a surprise, it does present new opportunities for savvy commercial real estate developers. Take note of the trend, and consider it when it’s time for your next investment. The professionals at Intelica Commercial Real Estate can help you navigate the options to help ensure minimal risk and maximum returns.