Putting the Mix in MXDx
by Joel Luna. Published on September 15, 2019 in the Philippine Daily Inquirer
Mixed up about Mixed Use Developments? Mixed use developments or MXDs, have acquired a certain stature in the local property development scene. Several real estate projects boast of Live-Work-Play environments where everything is within your reach. The promise has proven to be compelling to buyers and investors. But what is it really? And why is it proving to be a go-to formula of big developers?
One of the more evocative definitions of a mixed-use development describe it as “a three-dimensional, pedestrian-oriented places that layer compatible land uses, public amenities, and utilities together at various scales and intensities. This variety of uses allows for people to live, work, play and shop in one place, which then becomes a destination for people from other neighborhoods” –www.placemakers.com
MXDs aren’t new. The size of cities is largely determined by its commuting distance or its transportation shed. In earlier times when the primary form of mobility was on foot, everything had to be within walking distance. Towns were compact, no more than 1 or 2 kilometers from end to end. Even structures stacked shops, workspaces, homes and animal stables within the same edifice. The traditional shophouse found in many old towns in the Philippines as well as other countries is an example. As technology allowed for other forms of mobility, notably the automobile, cities expanded in size and enabled the separation of uses.
This exclusionary nature land use development largely defined urban planning in the Philippines after World War 2 with gated residential subdivisions and exclusive office streets patterned after Wall Street. While this pattern allowed for privacy and exclusivity, it also resulted in desolate business districts during off-hours, increased commutes, the dependence on the automobile and that all-too familiar scourge: traffic.
Recent decades have seen the popularity of an alternative model of urban development that has more traditional undertones: environments that are more inclusive, diverse, compact and walkable. The appeal to live in a location where living, working, shopping, recreation are all easily accessible is understandable given severe traffic conditions in the city. Furthermore, mixed use developments are a logical response by property developers to address ever increasing land values and the need to carve a competitive niche in the marketplace.
Mixed Use Developments can be economically compelling for property developers. They can induce demand, enhance the address of location and generate higher values for itself and nearby developments. Bringing together a diverse set of products attracts a larger range of customers and therefore can allow for faster product absorption. Multiple uses can also enable higher densities or Floor Area Ratios than what may be practical for single single-use developments. This can spread the cost of land over a larger floor area and potentially offer more affordable products than projects of less density.
Mixed use allows for infrastructure optimization through time of use efficiencies. Different uses are active and are occupied at different times throughout the day. Combining in a single structure different uses such as residential, office, hotels whose peak hours differ allow for more optimal use of utilities, parking, transit use and other shared facilities, thus saving on potential costs that would have been incurred in single use developments.
Mixed Use Development is all about creating something that is more than the sum of its parts. The key to realizing optimum value in MXDs is in achieving synergy: where each use reinforces the others in a mutually-supportive ecosystem; where the demand for one product increases the demand and value for the others within the same development. MXDs have a multiplier effect, where product absorption, demand and pricing tend to be higher. Achieving the right mix is therefore essential.
While MXDs may reduce market risk by offering multiple products, the wrong mix where a poor product does not perform well relative to the rest, may pull down the marketability of the whole complex. Mixed use developments are also not cheap to build. The complexity of having different uses stacked on top of each other has inherent inefficiencies and incurs cost premiums that should be offset by higher pricing, rent or faster absorption. MXDs perform best in the right location and under the right market conditions. It will be imprudent to assume that MXDs can correct an inherently poor location or a bad economic situation.
A subtler yet ultimately more important benefit of MXDs is its impact on the urban environment and its citizens. Bringing uses closer together in a compact environment encourages a more sustainable lifestyle, where walking rather than driving becomes a real choice and where the provision of transit becomes more feasible. The social interaction and inclusivity fostered by MXDs create vibrancy and a sense of security in the city. One must remember that the mix in Mixed Use, happens at the street level. It is at the ground plane where the users converge. Thus, mixed use developments that fail to invest in creating a pleasant street-level environment will miss out on the most vital element essential to the success of MXDs.