Are There Investment Premiums for Mixed-Use Properties?

We investigate whether properties in mixed-use developments have overall better financial performance than single-use properties. We select four cases that represent recent mixed-use developments in the United States, and compare key financial indicators for properties within and outside a half-mile radius from the project boundaries. Using data from the National Council of Real Estate Investment Fiduciaries, our panel regression analysis shows that office and retail properties within the mixed-use geographies have 37% and 48% higher market values respectively than those outside. Total returns are also higher for office (67%) and retail (63%) within the radius. By contrast, we find no clear return premium for being located close to the mixed-use geographies for apartments. Our findings are mixed and probably support the developer and financier biases against the complexity of engaging in mixed-use projects.