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The Challenges and Benefits of Mixed-Use Facilities

Oct. 15, 2009
Mixed-use facilities are a productive use of space, and they add vitality to urban areas, but they're not without challenges.

Designing, owning, or managing a mixed-use facility – especially considering the slowing economy and an ever-growing concern about the environment – means there’s an opportunity for multiple challenges, but also opens the door to multiple opportunities.

"The biggest concerns anybody has about a mixed-use building in this economy are getting and keeping the space leased," says John Breshears, principal at ZGF Architects LLP in Portland, OR. "Depending on how developers gauged their projects over the past few years, they may end up with a surplus of spaces that aren’t renting very quickly."

"A mixed-use center is, in my opinion, a lot more appealing to the marketplace," says Sean Davis, principal at Morris & Ritchie Associates. "It’s got that 24/7 feel, where you can walk from your residence and get on the street, and you can go shopping and go to the bar or the restaurant, and you don’t have to get in your car. It’s got a lot more curb appeal."

Diversification of uses in mixed-use facilities aids greatly in efficiency. To begin, the land is used more efficiently. "If we were to separate the uses, the traditional, ‘horizontal’ mixed-use communities (where they’re not integrated in one component), are much more land consumptive," says Davis. "You’re able to get a higher density from a residential and commercial retail standpoint by vertically stacking the uses."

Davis also adds that vertically mixed-use facilities can be beneficial because they reduce long-term maintenance costs of individual buildings. "If I’m able to stack apartments over retail or an office, then I’m going to be able to share in some of the maintenance of that building between the two uses," says Davis.

Mixed-use facilities, particularly those that serve as town centers or are in the heart of urban areas, not only conserve valuable land resources, but also brighten communities and present opportunities for building efficiency, energy efficiency, and sustainability.

"This kind of diversification has an urban component, which keeps the space vital and occupied 24 hours a day," says Breshears. "People are coming and going at different times to do different things. That’s a good thing from a variety of points of view. You can keep the space, and your property, working and occupied; as you add urban vitality, you can also leverage and make it work harder. It might level out your utility demand, for example, or flatten out demand curves."

Many developers and owners are seeing this facet of mixed-use buildings as an opportunity. "Energy use, sustainability, LEED certification, and those kinds of things have to be done carefully so you’re using resources properly," says John Fullerton of Fullerton Diaz Architects in Coral Gables, FL. "I think everybody’s on board with that now. Even owners and developers are realizing that that has real value to them in the long run. All of our owners and developers are looking at how to be more responsible in terms of material and energy use."

Sustainable and green efforts are especially appealing to owners because improved energy efficiency can save on costs and draw renters; however, in this economy, owners must make sure the return on investment is worth it when choosing sustainable systems and materials.

"A lot of the developments we looked at were accommodating with energy efficiency, and they were looking at newer systems and things like LEED certification and a much more sophisticated system to control costs," says Bill Feinberg, president of Voorhees, NJ-based Feinberg & Associates. "The builders and developers were willing, and were putting those types of equipment and accommodations into their projects; now they’re looking at the rate of return and what they can get in terms of rents. They’re saying, ‘Do I get a return on my investment, and what does that cost me in terms of financing a project?’ "

Financing and cost are issues that owners and managers of mixed-use buildings face when upgrading for greater energy efficiency. "That’s the biggest struggle," says Feinberg. "Financing is more difficult, and it may be a more expensive outlay to put in new systems or a more sophisticated system. They do want to accommodate energy savings, but they’re struggling with how to work out the finances."

When it comes to financing energy-efficiency projects, Breshears encourages owners and developers to look at the big picture: "Any developer has to make his/her pro forma work, or the project isn’t going to work," he says. "They’re certainly going to consider first cost, but also operational costs and ongoing maintenance and replacement. Certainly, choosing durable materials and durable systems, where the maintenance costs and the replacement costs are going to be dramatically reduced, is a huge advantage. And sometimes that requires a very big shift from first-cost thinking to life-cycle cost thinking."

Life-cycle cost thinking can not only help reduce operating costs, but also helps attract tenants – a very important point for owners and managers of mixed-use facilities. "Often, with a triple net lease, the operational costs are passed on to the tenant, so it’s not as much of a direct incentive to the developer because those costs aren’t going to be paid by them directly," says Breshears. "But, despite that, tenants are beginning to see the value in long-term life-cycle thinking, and, therefore, it’s trickling up."

Long-term life-cycle thinking has worked well for Twelve West, an energy-efficient mixed-use facility in Portland, OR, designed by ZGF Architects. The building features four floors of offices and 17 floors of apartments. According to Breshears, the building utilizes a concrete structure and stripped-away surface finishes.

"This does a number of things," Breshears says. "It reduces the capital cost because you don’t have to pay to put another finish on top of the exposed concrete. It reduces the environmental impact because it’s a more efficient use of materials; you’re not doubling up where you don’t need to. It helps with conditioning the building, and helps stabilize the internal temperature – the spaces don’t heat up as quickly on hot days or cool down as quickly on cold days. It also reduces maintenance costs – none of these exposed concrete floors, and, in some places, none of the concrete columns and walls, and none of the ceilings ever have to be painted or ever have to be maintained."

Twelve West is also utilizing a green roof, which will aid in sustainability, increase the roof’s R-value, and provide a rooftop garden for tenants. "It’s going to be a nice roof terrace," says Breshears. "But it also does a very good stormwater management job, and one of the untold benefits is that about 80 percent of the roof membrane, which tends to age and wear heavily on buildings because it’s one of the most exposed pieces, is covered by a 2-foot-deep layer of soil, which, depending on the estimate, should increase its life by 2 to 6 times."

Furthering the green trend, Twelve West is experimenting with rooftop wind turbines. "There are two things to note," says Breshears. "One is that you can find almost no built examples of [rooftop wind turbines]. Second, Portland, OR, doesn’t have much wind, so it’s never going to make sense on its own."

However, ZGF Architects is working with Gerding Edlen and its partners, alongside top wind experts, to install the rooftop wind turbines as an experiment in alternative energy. "We expect the turbines to generate a very small fraction of the total energy use of the building, but the real question is, ‘Does the wind, and do the turbines, behave in the way we predicted?’ If they do, then we feel like we’ve learned something," says Breshears.

The energy generated by the rooftop wind turbines is net metered, so if it ever does generate more energy than could be used in the building, it will be back-fed to the grid; however, the goal for Twelve West is to embody the mixed-use facility as a haven for sustainability.

"The developer has an aspiration that he/she aspires to, and makes his/her project embody that," says Breshears. "And that’s how developers reach the sort of market they’re looking for – they try to do something they believe in, and people who share those values will come to it."

While such state-of-the-art, environmentally friendly technology may draw renters, there were some concerns when it came to the wind turbines. "The vibration was a very big concern because the turbines have to produce a little bit of vibration (just because they’re pieces of moving equipment, and that transfers down the mast)," says Breshears. "A little bit of vibration going into the ground or into a foundation doesn’t matter – but we were bolting these masts into the roof slab of the highest-rent penthouse units."

Custom vibration isolation mounts were created especially for the turbines to mitigate the problem. But, while the vibration problem from the turbines is a unique challenge, even for mixed-use facilities, similar problems can arise when you have systems that must function across a variety of uses. Scheduling maintenance can be one of the biggest problems in mixed-use buildings. Breshears says this is because different parts of the building are accessible and occupied during different times of the day.

"When repairs need to be done, trying to work out the logistics of access, particularly if it’s for a system that spans multiple occupancies or tenancies, and you need to get into all of them, can be a challenge," says Breshears.

Additional problems that arise involve trash, smells, traffic, and noise transferring from one use of the building (a bustling restaurant or store) to another (apartments). Feinberg’s advice is simple: "You have to bring in a good acoustical consultant," he says. "That has to be done upfront. And you really have to be sophisticated – especially with restaurants in the same building – about eliminating odors from trash and from accommodating intake of smell."

Parking is another common issue that arises for mixed-use facilities. "We’re finding that shared parking, whether it’s on-grade or in the building, has to be separated, and you have to be vigilant about policing," says Feinberg. "[Too often], people come into a restaurant and want to park as close as they can, and a resident comes home from work, goes out shopping, and comes back, and, all of a sudden, he or she has lost his/her parking space, even though there’s a big sign that says, ‘Residents Only.’ If you don’t have a relationship with your own security, depending on the size of your facility, or accommodations with local police force, that’s one of the things you have to put into place."

Parking is just part of the relationship between residences and retail that can be a challenge. Sean Davis of Morris & Ritchie Associates says that balance is the key in managing these relationships. "It’s the right mixture in the right locations and the right types of retail and residential uses," says Davis. "For example, if I have residential over retail, and it’s for-sale residential, like condominiums, then, as someone who purchases that property, I have greater expectations [that the managers] maintain low noise and low impact to me. But, if those are apartments above the retail, that relationship isn’t as demanding. If I rent an apartment, the reason I rented here is because I think this place is cool."

Despite these challenges, more and more developers are bringing mixed-use facilities to suburban areas, such as at Fullerton Diaz Architects’ One College Park, Feinberg & Associates’ Washington Town Center, or Morris & Ritchie Associates’ Richwood Town Center. "In general, mixed-use buildings are a very productive thing," says Fullerton. "They’re good for the neighborhood because they bring activity and energy to the streets day and night. Now I think the trend is toward bringing mixed-use into the downtowns, and I think that’s where it really works well. But, in some smaller, outlying suburban locations, depending on the nature of the surrounding buildings and activities, they can work outside of the center of the city. It’s a good thing to bring people to live where they work – it takes cars off the streets, and it does very positive things to our lives." 

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