Mixed-use developments are becoming more common in commercial property. If you are considering one of these projects, you may plan to combine stores, offices and homes on the same site. Developers and investors increasingly use this model to breathe new life into aging shopping centers, empty office buildings and other vacant properties.
A mixed-use project can create new sources of income and bring more activity to your property. However, putting several uses on one site can raise legal and business issues that many other projects do not face.
Why mixed-use projects continue to gain interest
Several market trends continue to drive mixed-use development. If you own or are thinking of buying an aging shopping center or office property, a mixed-use project may offer a way to give that property a new use. These projects also appeal to communities that want places where people can live, work and shop in one area.
Mixed-use projects can produce income from different kinds of tenants and create new uses for vacant property. At the same time, combining several uses in one development can create more moving parts among owners, tenants and others involved in your project.
Legal issues can arise before construction starts
Before construction begins, your project can involve several activities and issues, including:
- Obtaining approval for different uses on the same property
- Negotiating agreements with investors and business partners
- Creating easements for access, parking and utility service
- Addressing site conditions that affect redevelopment plans
- Resolving payment disputes that lead to mechanics’ liens
Each of these issues can affect costs and timelines. Delays in approvals, disputes among the people involved and construction disputes can affect several parts of your project at the same time.
Multiple uses can create competing interests
A mixed-use development can bring together people and businesses with different needs. Retail businesses may want customer parking and visible signs. Office tenants may prefer quiet work areas. Residents may focus on traffic and noise.
These competing interests can create disputes when project documents do not clearly define each party’s rights and duties. Shared spaces, parking areas and maintenance work can become sources of disagreement during the project.
Mixed-use developments need long-term planning
A mixed-use development is more than a large commercial project. It brings together many parties that have different goals and plans.
Decisions made during the purchase, planning and construction stages can affect how your property operates for years. As these projects become more common, developers and investors will likely continue to face legal issues when stores, offices and homes share the same property.