In early February, I  conducted a study tour for ULI – Mixed Use for the New Economy.  As we learned, success lies in the messy details, and some of the common challenges we saw had no clear protocols for success.

To Park or Not To Park

Like a number of transit focused cities, San Francisco is pushing hard to subordinate the private auto to transit and pedestrians.  This played out in developer conversations and wide ranging opinions about how much parking is too much?  In one neighborhood we visited, the residents were rabidly championing zero parking in new development, because they did not want to attract residents that would commute to high priced Silicon Valley jobs…eroding the vitality of the neighborhood and making it a daytime ghost zone.  In other areas, the neighbors demanded more parking because they didn’t want the cars crowding their streets. This is an increasingly common phenomenon where the parking needs to be carefully thought out relative to the target buyer and neighborhood context, not blind prescriptive standards.  Even some TOD developments are finding that residents use transit all week long to get to their jobs, but still need to park at least one car for use on weekends.

Affordable Housing

San Francisco, like many cities has an inclusionary housing requirement.  While this simple summary belies its complexity, the basic stats are 12% of units if you include them in the building, or 17% if you pay an in-lieu fee.  We saw a cross section of developers that opted for the payment-in-lieu, because they felt it will help keep their product more marketable, while other developers included the units because they wanted to create a diversity of tenants.  What was perplexing to our attendees was that on a per unit cost basis, it appeared that the payment-in-lieu was always a much cheaper alternative.  This seemed counterproductive if the overall goal is to distribute housing in a more fine grained fashion and move away from concentrations of ‘affordable projects’.

Pay Attention to the Unsexy Stuff

Anytime one does a study tour, there is eternal hope for that one epiphany, that great transformational idea that will both inspire and lead to unfettered success.  But throughout our conversations, the key to successful mixed use was keeping an eye on the unsexy stuff.  Ceiling heights, column spacing, leasing structure.  We heard more than once that mixed-use retail – as a subordinated use in a residential building – is an amenity and needs to be pro-formed in that manner.  But while it may not work as a full income producer, getting a retail expert on board to figure out the space is critical to ensuring it doesn’t stay an empty space, dragging down your brand and image.  Residential folks know residential, and retail folks know retail.  Don’t think they are inter-changeable.

‘Big’ Rules

Big, complicated mixed use projects were clearly the focus of our tour, and finding the small, fine grained developments were far and few between, because of challenges to financing, parking and leasing.  One successful example we did see was Lafayette Mercantile.   SZFM Design provided a detailed case study of the design challenges, economic trade-offs and development details that made this small scale, vertical mixed use infill building work.  A discussion of the leasing tricks and pitfalls of such a structure demonstrated the fine art of programming and strategy for obtaining the right tenants, as shared by Main Street Property Services.

The evolution of mixed use continues apace, but there still appear to be no clear formulas.  While those that have done successful projects learned the challenges and pitfalls, each project is different and each solution requires a thoughtful, strategic response.  And while challenging that is a good thing, it may mean that mixed use can be all we hope it will – a flexible, bespoke place that can adapt and evolve over time, just like great streets and neighborhoods have for centuries.

Join me in Washington DC, June 9-11 as we repeat this program, looking at finer grained, urban infill mixed use projects. See the ULI program information here.

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