The Inconvenient Truth About Mixed Use Development
January 25, 2016 | By John Cumbelich
As far as trends in retail real estate development go, none during my 30-years in the industry has been more counter-productive or government-driven than residential over retail mixed-use development (RRMU).
Pick just about any Bay Area city and you will easily identify any number of RRMU projects that have been proposed, entitled and/or developed over the past ten years. And with rare exception, these projects suffer the same ills…relatively high vacancy rates, substantially below market rents, poor credit tenancies and a high turnover rate of the brokerage firms that try, with little success, to lease what is un-leasable.
Don’t get me wrong – as a design concept RRMU works beautifully…in Paris. And in Manhattan. And therein lies a big part of the problem. City planners and city councils across Northern California have revealed an inferiority complex to major urban markets around the world and tried to force feed this utterly urban product type into sprawling suburbs from Concord to Novato to San Jose. Only guess what, the most important ingredient is missing – concentrated, massive, pedestrian populations.