AUSTIN – (Realty News Report) – Mixed-use real estate developments are very popular, but they cannot be built indiscriminately; they must meet specific criteria, says Jonathan Brinsden, CEO of Houston-based Midway, a privately owned, fully integrated real estate development and investment firm.
Brinsden speaks from experience: Midway has nine mixed-use projects in Houston that are completed, under construction or in planning.
“We opened our first mixed-use project, CityCentre, in 2009,” Brinsden said. “Now we are planning East River, a project with a 20-year build-out. East River is an incredible opportunity; we hope to start phase one next year. It will be a trail-oriented, waterfront development connected to Buffalo Bayou Park and represents the highest and best use of the land. Our goal is to deliver an enduring project that becomes a remarkable place.”
Brinsden spoke on the “Next Gen Mixed Use Development” panel during the National Association of Real Estate Editors (NAREE) Annual Real Estate Journalism Conference at the Hyatt Regency Austin. The panel, moderated by Nancy Sarnoff of the Houston Chronicle, included Kyle Reis, Principal and Director of Planning in Cooper Carry’s Urban Design Planning Studio in Atlanta, and Sagar Rathie, vice president of commercial mixed-use development at Crescent Communities in Charlotte, a company focused on developing, owning and selling commercial, mixed-use and multifamily properties across the Southeast and Southwest.
“Not all mixed-use developments are the same,” Brinsden continued. “There is no one-size-fits-all formula. Each project must respond to its location. CityCentre, our first project, is a 37-acre fully integrated development with office, retail, hospitality, entertainment and education. Our ongoing focus is keeping such places fresh and relevant.”
Midway also reinvented GreenStreet in downtown Houston, a stalled three-block mixed-use site they took over in 2012. “Reinventing that project was energizing,” Brinsden said. “GreenStreet originally had retail, entertainment and office. We demolished part of the site, added a 225-room hotel and converted some second-floor retail into coworking space.”
Kyle Reis referenced the Urban Land Institute’s definition: true mixed-use projects include three or more significant revenue-producing uses, foster integration and density, promote compatible land uses, and create walkable communities with uninterrupted pedestrian connections. “We are now in an era of smart growth, walkability, transit-oriented development and traditional neighborhood design,” he said.
Reis pointed out both horizontal and vertical models of mixed use. Benefits include improved quality of life—linking healthy living and wellness to communities—economic advantages such as shared parking in urban cores, and environmental gains by increasing density on smaller parcels and redeveloping brownfield or infill sites.
Sagar Rathie described Crescent’s evolution from land developer to multifamily builder and, eventually, to a commercial platform. One of Crescent’s projects is the 26-story Ally Charlotte Center in downtown Charlotte, a true mixed-use tower with 745,000 square feet of office space above 30,000 square feet of retail, adjacent to a new JW Marriott and connected to light rail. “We wanted to attract people to the plaza, creating an open, inviting space for tenants and the public. It encourages interactions that add value. We’re even installing an oak tree with a tire swing to create a playful sense of community,” Rathie said.
Rathie emphasized that developers must manage risk and carefully choose which uses to include in a mixed-use project. “You have to manage risk. You can pursue new opportunities, but you should avoid simply appending uses solely to boost value,” he said.
Public support is a crucial element. Reis described Cooper Carry’s commitment to public engagement on new mixed-use proposals. “We make sure everyone is heard. In public meetings there are usually one or two vocal stakeholders with specific agendas. We listen. When the process is transparent, most participants—often 85%—support the project. That’s how you build consensus.”
Cooper Carry master-planned and served as architect of record for 725 Ponce, a 360,000-square-foot office tower built over a 60,000-square-foot Kroger. The design blends modern industrial architecture with Class-A amenities and public art. Developer Jim Irwin of New City Development acquired a controversial Kroger site adjacent to Atlanta’s Beltline and worked closely with neighborhoods to secure buy-in before the project became public—an approach Reis praised as a model for community-minded development.
Community engagement is especially important in Houston, a city without formal zoning, Brinsden noted. “Just because you can do something, doesn’t mean you should,” he quipped.
One ongoing challenge for mixed-use projects is the retail component. “Not every ground-floor space can be retail in every project—demand doesn’t always justify it,” Brinsden said.
Financing for mixed-use developments has eased in recent years. Rathie explained that institutional capital now understands and is more comfortable with mixed-use as an asset class, though it remains relatively new. Brinsden added that Midway originally had to finance each CityCentre use separately; today, it is often possible to secure funding from a single institutional partner. Still, different uses—office, residential, retail, hospitality—follow distinct market cycles, so mixed-use developers must navigate multiple forces.
Retail has become particularly challenging. “The retail landscape is more competitive and tenant formats are changing,” Brinsden said. “A 5,000-square-foot soft-goods store from a few years ago might now be 2,500 square feet. At CityCentre we built 400,000 square feet of retail and filled it, but today we might have developed less retail square footage.”
July 1, 2019 Realty News Report Copyright 2019