Mixed-Use vs Pure Multifamily — Risk & Stability

[Tracy Thielman]

In smaller commercial deals, are investors favoring pure residential stability or mixed-use yield upside?

What’s underwriting looking like in your market?

[Michael K Gallagher]

anecdotally, I've see a lot of mixed use being built, especially along the "main drags" of my market.  One lot on the east side on main, was a "save a lot" grocery that got scrapped and re developed into mixed use.  The issue in my mind was they didn't or at least have not yet accounted for the lost draw of that grocery store in the area.  Which in my opinion ends up hurting the marketability of the lower retail spaces.  

We've had a couple prominent mixed use developments go up on the west side too, most notably "river and rich" which went in probably 10+ years ago now, was really the first one in the area, and they still have 2-3 retail spaces vacant in cold dark shell condition.  

My point being, I think there's an "sexiness" maybe to the mixed use, but as far as getting things leased up, It appears the residential component is still the driver of the incomes, at least until the retail spaces fill and the area progresses enough to fill that need.  its not halting building though, phase to of the above mentioned project is rockn and rolln.