Advantages of Investing in Mixed-Use Developments

Author: Brian Jones, Senior Vice President, Real Estate Loan Officer 06/10/2021

The real estate boom across Texas is growing at an unprecedented rate, especially in urban centers such as Dallas/Fort Worth, Houston, and Austin. With skyrocketing costs and a dwindling supply of available housing, many residents are starting to focus on alternative living options instead of traditional suburban tract developments. As a result, mixed-use developments are becoming more popular investments for real estate investors.

A mixed-use development is a combination of residential, commercial, and sometimes industrial buildings that are planned within a city. As more people relocate to that city, the supply of housing decreases. Depending on the availability of land and lot inventory, residents may look to live in a mixed-use development, which can result in considerable foot traffic compared to stand-alone stores, strip malls, or shopping centers.

Diversification of Income Streams

Diversifying can help investors minimize the impact of bad assets and give them resources to counterbalance losses. Mixed-use developments are less volatile and better provide diversification of assets because they includes a variety of uses and tenants.

Often Centrally Located and Near Amenities

According to fortunebuilders.com, one of the most enticing aspects of mixed-use developments is their location. In general, these properties are situated in densely packed areas near existing amenities such as schools, restaurants, and retailers. People are also attracted to the convenience of living near where they shop, eat, and work.

Variety of Tenants Lowers Overall Risk

Because mixed-use developments offer both residential and commercial real estate options, investors can reduce the amount of risk in case of a downturn in either category.

Greater Return on Investments

With diversification and less risk, investors can generate higher income, longer leases, and less competition. And having income streams from both residential and commercial tenants can create future opportunities for more development possibilities. By including different types of businesses, investors create destinations that will attract a variety of tenants and buyers down the road.

Careful consideration, proper due diligence, and ample research of investing in mixed-use developments will assist in reducing exposure and risk of your investment, and will aid in knowing if this is the right investment choice for you. Investments come with a level of risk, but it’s always best to limit exposure and minimize that risk with diversifying your portfolio of investments. For more details on how PlainsCapital Bank can help you enhance your real estate portfolio, please visit the Real Estate section of our website.

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