For at least four years, retail developers have aggressively pushed the mixed-use trend. Memorable projects such as Atlantic Station in Atlanta, Victoria Gardens in Rancho Cucamonga, Calif., Crocker Park in Westlake, Ohio, Time Warner Center in New York City and Santana Row in San Jose, Calif., now dot the national landscape as a result of these efforts.
Other developers have tried to emulate the success of these centers (and dozens of others) enough to propel mixed-use to the top of the list as the most popular type of retail center under. But now the trend faces its first true test — and it's a whopper of an exam at that. The national economy is teetering at the same time as Wall Street continues to grapple with a credit crunch that emanated from subprime mortgages, but has spread much further than that now.
These two factors are leaving an indelible mark upon the mixed-use pipeline. Questions hang over any kind of residential construction, meaning that developments already under way need to be altered. Condos are to become rental units. Timelines are being stretched to push delivery dates of multifamily components into the future. In some cases, developers are dropping residential altogether from the mix.
Furthermore, mixed-use properties are more expensive than other kinds of retail. At a time when it's difficult to get financing and with underwriting standards becoming tighter, developers may be unwilling to undertake such risky endeavors.
The following stories look at how the mixed-use market is being transformed by the current trends. Difficulties in lining up financing are reducing the number of mixed-use projects under construction (see next page). One possible solution is to lock in a single office tenant to headline a project (p. 26). But even if you do, architects are finding they have to redesign projects where components are changing because of the rocky economy (p. 33).