West Broadway Advisory Committee Final Report

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The Economics of Mixed-Use Development July 2007 Page 2 • Three or more significant revenue-producing uses (office, retail, entertainment, residential, hotel, recreational, civic, cultural) that (in well-planned projects) are mutually supporting. • Significant physical and functional integration of the various parts of a project, which often means having an intensive, high-density use of land with pedestrian connections between parts of the project. This is in contrast to aloes-density master planned community or business parks, which have less integration and are less dense. • Development governed by a coherent plan, which lays out design elements, roles for the public and private sectors, green space, infrastructure, and other types of diverse and specialized elements above and beyond what are typically found in a master planning process. The `smart growth' movement seeks to accommodate population growth while reducing sprawl. The Smart Growth website explains that new smart growth is more town-centered, is transit and pedestrian oriented, and has a greater mix of housing, commercial and retail uses. It also preserves open space and many other environmental amenities.2 An important strategy to implementing smart growth is the development ofhigher-density mixed-use neighborhoods and commercial centers. TRADEOFFS Mixed-use developments are not guaranteed to lead to greater financial returns or a better urban environment. However mixed-use developments may have opportunities for greater financial returns than single-use real estate projects, and offer other advantages, such as place-making, operational efficiencies, and impact on the community. - Mixed-use developments may achieve greater fmancial returns than single-use real estate projects by: • ..Achieving economies of scale through shared operations, such as parking, maintenance, marketing, and promotion. • Collecting higher rents or prices and attaining higher occupancy. Higher rents, prices, and occupancy are partially the result of the creation of a special, distinctive place, or because of synergies purposely created through the design of the project, such as clusters of like firms. • ~ Realizing greater long-term land and property value appreciation. • Reaching a site's development potential more rapidly. The mix of uses allows for a faster absorption schedule, which can achieve a higher present value of investment and reduce the land carrying costs for the developer. Mixed-use developments may create a better urban environment than single-use real estate projects by: • Offering the right mix and scale of real estate products and services, which can (a) revitalize areas that -are empty during nonworking hours because they create residential, 2 From wwwsmartgrowth.org.