Mixed-use properties represent an attractive alternative for real estate investment funds seeking diversification, flow stability and resilience to economic cycles. However, before incorporating this type of asset into a portfolio, it is essential to conduct a thorough analysis of its composition, location, legal structure and financial requirements.

Balance in the tenant base

One of the main advantages of mixed-use developments is the ability to optimize operating income through diversified lease structures and common expense recovery mechanisms. However, the success of these assets depends largely on the balance between the different types of occupants.

When evaluating the optimal tenant mix, factors such as:

Anchor tenants: High-traffic retailers - such as supermarkets or department stores - can generate steady customer flow and attract more commercial tenants, strengthening the asset's ecosystem.

Business compatibility: It is advisable to select tenants whose business models complement each other. For example, a building with high-standard offices or residences could benefit from a street-level café or restaurant, generating operational synergies.

Diversification: A successful development project should aim to incorporate a diversified and balanced offering-gastronomy, wellness, services, retail and residences-that reduces dependence on a single type of tenant or industry.

Location considerations

Location continues to be a determining factor in the performance of any real estate asset, and mixed-use development projects are no exception. When analyzing investment opportunities, it is recommended to analyze:

• Market acceptance: Identify whether mixed-use developments are common or well-received in the area. An environment with proven demand can contribute to less flow volatility.

• Unit compatibility: Residential and commercial components should functionally complement each other. Projects that integrate amenities that are highly valued by residents and users -such as fitness centers or convenience stores- tend to show better occupancy and tenant retention figures.

Legal and regulatory compliance

It is essential to ensure that the asset and each of its units comply with local regulations, including zoning, land use licenses, parking requirements and other municipal ordinances. This challenge can be particularly complex when investing in the U.S., due to the heterogeneity of regulations at the state level.

Compliance not only has implications for the operation of the property, but also for its financing and underwriting. Regulatory restrictions, such as the maximum proportion of residential units, may limit the lending appetite of financial institutions or increase the cost of capital.

Capital reserve requirement

Mixed-use projects typically require larger capital reserves than single-use assets due to the potential cost of commercial tenant turnover.

Assets with office or retail space typically involve a higher investment in fit-outs and renovations, which can impact operating costs. Likewise, especially during the initial phases of projects, investors should anticipate the likelihood of additional liquidity to cover eventual periods of vacancy and contract renegotiation.

In summaryIn summary, mixed-use properties will continue to establish themselves as a strategic option for investment funds seeking stability, income diversification and operational resilience. However, their success will depend on a rigorous evaluation of four pillars: location, balance in the tenant base, regulatory compliance y capital reserve.

DISCLAIMER

Marco Aurelio Arellano
Real Estate Analyst Fynsa AGF