Mixed use refers to property development that comprises at least two uses, such as office, retail, residential, tourism and leisure, community facilities, logistics/warehouse, distribution or high technology.
In residential mixed use, we recognise that continuing and increasing pressure on land supply in urban areas has seen a decline in providing amenity for residential communities. This has resulted in mixed-use developments having to raise the bar in creating a sense of community and encouraging the activation of public and shared spaces. There is also an increasing acceptance that mixed use developments need to cater for a broader range of uses than the traditional retail/parking/residential components. This is particularly so in 2020 with the increase in online retail and the gradual decline of bricks and mortar retailing - a clear and obvious trend prior to the advent of covid-19. Housing affordability is also driving demand for alternate tenure options.
A broad range of uses can provide mutual value to owners, landlords and tenants. Equally, issues can arise, driven by competing and often conflicting physical, legal, operational and cultural requirements and attitudes. Failing to properly address one issue can lead to the potential of negatively impacting other components of a mixed use development. Complexities to consider may include:
- integration into the surrounding environment and the site-specific sustainability response
- customer profiling and the placemaking response
- the development ownership and leasing model, and the operational design response.
Key issues for consideration with Mixed Use development
In NSW the common method of titling for a mixed use development is to effect a stratum subdivision (freehold title limited in height and depth). Similar mechanisms exist in the other states and territories. Within each stratum it is possible to strata subdivide if required to allow for sale of individual lots.
The relationships between the stratums are governed by the Building Management Statement or a Strata Management Statement (SMS).
It is important that the SMS clearly sets out the rights and responsibilities of each Stratums owners, such that they do not negatively impact on value through creating uncertainty, inability to act commercially or impose undue cost. Owner occupied assets (especially residential but may also apply to retail and commercial strata assets) are typically managed with a different (shorter term, cashflow driven) mindset to commercially owned assets, where a longer-term view (capital value) is often taken.
Where possible, the structure that is supporting strata residential development should carry through any other uses and be self-supporting. A commercial use could have a right of support granted off a residential structure, however preferably not the other way. Particular issues also relate to the statutory 7-year structure warranty period if residential is constructed utilising existing commercial structure for support. Note that mutual rights of support are automatically created under a stratum subdivision in NSW.
It is preferable that all services supply to residential development is a dedicated supply that runs through dedicated service risers. Not only should the services to residential not be reliant upon any jointly owned equipment (such as switchboards) but the non-residential components should be able to be redeveloped without fear of cutting off services to the residential components.
Any residential component should have dedicated mechanical and electrical services and equipment. Non-residential components are able to share some of this equipment, such as main switchboards, chillers etc. if required. Dedicated equipment located in a shared use space would be preferable.
A key area of ongoing tension in a mixed use center, for example, is caused by the incorrect location of kitchen exhaust from restaurants and food courts. It is not enough to be compliant – any ongoing food smells will often lead to much aggravation from residents, hotel guests or other occupants. These odors can be via the AC system, or by opening a balcony door.
Lifts servicing residential, hotel or commercial components should be dedicated for the primary function i.e. from lobby/foyer to room/apartment/office floor. Due to the cost and volume associated with lifts and lift shafts there will be pressure to compromise on this. Some solutions that have proved to work include:
- providing a “sky lobby” for a hotel component, with express lifts from minor GF entry lobby to the main lobby located on an upper floor
- providing shared car-park access lifts from a common plaza level area.
Street address/pedestrian access
The key integration challenge with mixed use arises at the ground plane or podium interface between the various uses and users. Key issues are:
- Separating primary pedestrian access for different users e.g. keeping primary residential access point separate to retail center, hotel lobby or office foyer.
- Providing a dedicated and identifiable residential street address, and similarly any major commercial office space should have a dedicated street address that is clearly separate from the other users.
- Providing easy secondary access from the non-retail uses into the retail component. These non-retail occupants are a potential “captive market”.
- Providing some vertical separation between residential dwellings and any active podium or piazza area, particularly if any night time activation of the piazza is proposed. Typically manifests where there is a residential/hotel use that sits immediately above the plaza level.
Providing expertise in Mixed Use developments
APP can manage the entire major tenant process:
- We provide lease input, preparation of lessee/lessor works scopes (LLSOW’s), and administration of the various Development/Hotel Management/Lease Agreements to procurement of changes required by each tenant and liaison through the fit-out and delivery phase;
- We’re experts in the retail and hospitality sector, having delivered Lessor Works for majority of major retail tenants including Woolworths, ALDI, Hoyts and Village cinemas and leading restaurant operators;
- We add value from project inception, where we assist developers in the masterplanning process inclusive of placemaking, precincts, feasibility, buildability, programming and staging;
- We’ve worked with Hotel Owners and understand the bespoke nature of the design process required, as demonstrated on the Accor branded MGallery by Sofitel Hotel at Chadstone Shopping Centre and Castle Residences at 116 Bathurst Street Sydney for United Developments.