The Challenges Tenants Face in Mixed-Use Buildings

From the outside, mixed-use buildings seem to be the perfect marriage between residential and commercial. Not only do residents enjoy the convenience of having shops and restaurants at their doorstop, but retailers are also given a built-in customer base. And though one would think it’s a win-win, mixed-use has its own set of challenges.

Parking

As mixed-used buildings are becoming more concentrated in urban centers, the ratio of square feet to stalls decreases dramatically. This alone can be a deal breaker for many retailers – in particular, American companies that are used to freestanding buildings with large lots. Therefore, design becomes an integral component to creating efficient parking lots, as it will have to accommodate higher traffic compared to strictly residential towers.

But as Daniel Lee, Principal at Northwest Atlantic shared at last month’s NAIOP Breakfast Event, "The perception of parking is more important than it actually is. It’s less about the actual number of parking stalls, and more about functionality. Parents need to be able to park their minivans and have enough space to take out their strollers." For tenants, a negative parking experience could deter customers from visiting in the future.

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Strata

"Giving residents control through strata is always a deal breaker for tenants, especially those from the U.S.," says Lee. With strata councils, businesses are often limited to when and how they operate. In some buildings, tenants are restricted to the hours of 9am to 6pm as a means to reduce noise, parking, and traffic for residents. For restaurants, patio seating is often a concern. Amanda Vissia, Real Estate Development Manager from Earls Restaurants, says that in concentrated locations such as Yaletown, Earls isn’t allowed to play music or have people on the patio past 10pm, after receiving complaints from residents.

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Earls’ Toronto location in a Mixed-Use Building | Image: BlogTo

When considering a mixed-use building, retailers should note that the operational costs are considerably higher than stand-alone structures. Vissia shared that Earls has to pay for pollution mechanisms to cover the odors from their kitchen and bar. In addition, they’re typically much more labour intensive, as staff have to follow organic recycling protocol from the city, get rid of grease so the smells won’t disturb the residents, and walk five minutes away to take the garbage out. Loading is also a concern, as everyone has to share the same space.

Despite these challenges and higher cost of operation, Vissia says Toronto’s location in a mixed-use building is one of the highest grossing stores, and that 50% of the restaurants they plan on opening will be of this same format.

To learn about the design principles of mixed-use buildings, check out our previous blog post

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