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Are There Investment Premiums for Mixed-Use Properties?

Author

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  • Shohei Nakamura
  • Richard Peiser
  • Raymond Torto

Abstract

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.

Suggested Citation

  • Shohei Nakamura & Richard Peiser & Raymond Torto, 2018. "Are There Investment Premiums for Mixed-Use Properties?," Journal of Real Estate Research, Taylor & Francis Journals, vol. 40(1), pages 1-40, January.
    • Handle: RePEc:taf:rjerxx:v:40:y:2018:i:1:p:1-40
    DOI: 10.1080/10835547.2018.12091489
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