Developers Can Charge Higher Rents for Mixed-Use Developments, Say Speakers at NAHB’s Pillar’s Conference
- Apr 17, 2008
By Keat FoongExecutive EditorColorado Springs, Colo.—Testimonials from developers lend support to the notion that the monetary benefits of mixed-use developments are greater than for pure apartment projects. Speakers at a panel entitled “Mixed-Use/Multiple-Use Developments” at the recent National Association of Home Builders Pillars of the Industry Conference and Awards Gala held here all agreed that apartments that are built in a retail environment can command a rental premium. Don Briggs, senior vice president and head of development at Federal Realty Investment Trust, said that the apartments can obtain premiums of as much as 15 to 20 percent in rent if the retail is executed correctly. “We’ve seen that in Santa Row,” he said, referring to Federal Realty’s mixed-use development in San Jose, Calif. The speakers were responding to a question posed by the moderator, Tom Senkbeil, executive vice president and chief investment officer of Post Properties. “We have found at Post that these products are immensely complicated,” said Senkbell. “We have to think why we do them. [Do they bring] better rents or higher financial returns?” Greg Lamb, executive vice president and regional managing partner at JPI, said rental premiums are 10 to 15 percent if apartments above retail are properly executed. “Yes, retail on the first floor is accretive, from a return and income standpoint,” he said.Doug Chestnut, senior vice president of investments at Gables Residential, similarly agreed with the contention that mixed-use development bring higher rents. Post’s Senkbeil said mixed-use developments bring higher rents and better returns, which are needed as the projects are also more expensive to develop. Indeed, said Briggs, costs and risks are higher and the time frames much longer, for mixed-use developments compared to single-use projects.