The Domain and 'Mixed Use'

O

Orange&White

1,000+ Posts
The term "Mixed Use" is a planning buzzword that everyone loves to throw around. It just feels good and sounds good to mayors and citizens. Done right and it actually is a good thing and serves a great purpose for the developers and the people who live in a mixed use project. The idea is simple. Create a place for people to live and work and shop all in the same place, to minimize the need for transportation.

On the outside, the Domain looks great. It has a nice feel and is a pleasant way to spend an afternoon or evening. I just don't understand the economics of the residential aspect.

What you have are a bunch of high end shops and restaurants topped off by a bunch of apartments that rent for about $2/foot. So the people who can afford to shop at the shops there, are not the demographic that wants to rent an apartment at the mall and probably have a job somewhere else. And the people who work at the shops and restaurants, generally don't make enough to afford $2/foot rent.

So what you end up with, is people communting in to work at the shops and people commuting out to go to work, Essentially the exact opposite of what Mixed Use is supposed to accomplish.

Any thoughts? I am particularly interested to hear the opinions bozo cassanova.
 
You make a valid point. It would have been more effective to sell the apartments as condos... but the condo market in Austin is pretty shotty right now. I think the 'Triangle' is by far the best example of mixed-use development in Austin, but I don't consider the 'Domain' to be a failure. Given time, it will do well. They are building a hotel and convention center which will bring in the out-of-town crowd which is important to those stores.

Mueller is another story. That's as bad as mixed-use gets.
 
I lived in a mixed use "area". Although it wasn't developed that way, it worked the same way as mixed use development.

I lived in a loft in downtown Houston. It had a restaurant and a bar on the bottom floor, and there were plenty of restaurants and bars around as well as places to buy clothes and groceries.

I drove to/from work on days I didn't work from home. During the year I lived there before moving to Austin, I put ~12,000 fewer miles on my car that year.

One of my friends who lived in the building worked downtown. He used his car a couple of times a year and eventually sold it. He didn't replace it for almost 3 years.

Anyway, it can work really well depending on your situation.
 
I don't know how you live in anywhere in Austin with a retail job, much less the domain. But isn't the idea that when it's built out it will be truly mixed-use? Right now you can live upstairs and get food and drink by walking outside your door, and eventually there will be some office space within the domain right? Just need some form of grocery and you're set.
 
Some of the smaller projects might have been meant for condo's but like has been mentioned, the condo market (in terms of apartment style buildings) have fallen pretty hard lately. It's a very odd situation how the market is not following the usual trends of high priced stuff and condo's get hit first then it trickles down to entry level houses.

Back on track, the triangle is damn fined use of the mixed use theory. And it is most definitely the buzz word of the decade in development. As has been mentioned, you have to give these projects time to fully develop to determine if they are a success or failure. Eventually, the apartments will be condominiumized (or sold if they already are condos), but the market is just not warranting it. In regards to the domain specifically, if the '2nd downtown of Austin' goes through, that location is going be absolutely insane.

My main problem with some of the 'mixed use' is the lack of public transportation near by. Whether the blame is on cap metro (mostly imo) or the developers (play the hand your dealt), its debatable. But the thought of a mass transit system that had multiple mixed use developments all along it would be crazy awesome. Sorry for the pipe dream.
 
well, there are several now either bulit or being built in dallas.

you have west village (not mass transit), mockingbird station (mass transit), the one at 15th in Plano (mass transit), new one in richardson going up (mass transit), new one in lake highlands (mass transit), and several other ones here and there.

i think you could say west village and mockingbird have definitely been successful, however I doubt many of those folks work there... but shop and eat? sure.

lake highlands will be a success, but no one will work there either. the one in richardson has the best chance of success as a true mixed use development because you have mass transit (dart), lots of actual companies (telecom corridor), and apartments.
 
Not to change teh subject, but what is bad about Mueller? I live adjacent and we were always told what a "new Urbanist" utopia it would be, and now it seems real sucky.

However, I can't describe exactly what doesn't work about it. Will someone elaborate?
 
Orange&white and Kman (and Kaiser)

I agree with your observations 100%, and the connection to Mueller somebody made is right on.

Truly mixed use or live/work communities are the product of organic conditions in cities like Houston (as a result of no zoning), or Baltimore and other east coast cities where it's the result of architecture and pre-automobile urbanization.

The problem with trying to conjure that up from the ground is that the result of planned high density is a proportionately more expensive footprint, which means that you necessarily create the need to do one of two things: import labor from more affordable areas (which means you just blew up your new-urb Utopia's raison d'etre by increasing the need for suburbs and thus sprawl), or you stack people in a high enough tower of "affordable housing" that they can walk to work.
Enterprising developers have realized that the affordable housing option is a great way to get cities to pick up some of their costs, so they often build it into the otherwise Tony (or simply expensive and not high quality) new digs for the people who want to shop where they live. But they don't build enough to really support the consumer outlets with local labor, because the high end stuff is more profitable.

The real irony is that what you end up with are projects that drive the cost of real estate up, with the exclusion of people who are required to make <80% of the household median for the area to qualify for the "affordable housing".
So where does the middle class go? To the suburbs.

So at the end of the day, most of your newurb mixed use projects may or may not make money, but they don't do the social good they market, but they do make people very rich, which is fine.

Now Mueller is an interesting case, because that was city land, and they could have done some good stuff, and really had an obligation to. It's one thing for a private party to make a tall dollar on a big project, but it's quite another for a city project to set out to put a master planned community that would by design be unavailable for the majority of its citizen. It's still correctable, But what we've gotten out of the project on the residential side thus far is what I describe above- mostly relatively high end (or at any rate high cost) housing, with a token "affordable component", so you end up with is a huge piece of real estate in the middle of the city that is not within the reach of anybody but the top 20%, and a lottery limited number of the bottom 40%, obviously only a small number of whom have the magical combination of below-average income BUT also sterling credit and the money to make a ~$1500/mo house payment.

On the commercial side, the story gets even less appealing, as the anchors are the standard Barshop and Oles (or whoever) lifestyle center group of DSW/kohls/bestbuy/Office Depot (or max/petssmart (or co), and so forth. Of course some local businesses will turn up, but the crowing achievement of the Muller redevelopment thus far has been to place the most centrally located big box strip mall in Austin.

In other words, here's my take on Mueller so far: they promised us a "city within a city". The good news is that they are delivering on the promise. The bad news is that the city is Pflugerville.
 
BTW- I need to clarify my previous post- I don't blame or in any way want to sound like I'm criticizing the retail developers, the homebuilders, the homebuyers, or anyone else using the Mueller site to further their economic interests or improving their quality of life- good on them. My criticism of the Mueller project is really about Mueller as a microcosm of the smartgrowth fantasy, which IMO drives gentrification and unsustainable growth patterns/effects.
 
maduro... (rough figures on the way) it takes about $60-70/sq ft (at cost for VERY BASE model) to build a unit. That is just cost #'s for construction only, not counting the land/architects/engineering/permits/taxes/debt service/realtor fee's etc etc. So for a 1000 sq ft unit you are looking at $70,000 just for construction.

Doing some type of condo conversion on a building that already exists... might be possible. but for new build, i would say thats just not possible (unless the other units were priced extraordinarily high).


** Apologize for misreading maduro's post, thought it said purchasing a property for 50-100K. Nonetheless, the figures and outcomes remain the same.
 
The Domain, and most of the mixed-use developments being proposed in Austin, are required to have Section 8 housing for less affluent households. I think it's something like 5-10%.

I live at the Domain and I love it because I work from home. The restaurants being here are wonderful, and there are office buildings here now (I think a few law offices occupy them now).

We'll probably be moving in June when our lease is up, but it will be for other reasons.
 
I have worked on the legal side of about 15 mixed use projects over the last 2 years and it is my observation that the numbers don't work for residential portions that are for sale unless the residents' income is much greater that 50-100k/yr. People in that income bracket would likely only be able to afford residences on the higher side of that range due to land and construction costs. This would result in a noticeable decrease in the purchasing power of those residents to support the retail beneath. Developers normally look at the residential as a way to support retail (and vice versa) and won't develop something unless it allows people to "live, work, and play" in the same development.
 
Any time urban planers try to force the highest and best use of real estate, they will sub-optimize.

Market forces are always better mechanisms. If the best use for the Domain was what was put there, it would have been built by private industry.
 
Thanks for all of the insightful replies. I knew this board would come through.

I have a planning degree, though I have never been a planner. I also work in a planning department (again, not as a planner) so I catch bits and pieces of the planning conversation. The "Mixed Use" idea is constantly being tossed around, I have just never really heard of or seen a good definition of what it is exactly. Going to the Domain for the first time really just spurred me to get some more opinions from a non-planning department crowd.

Thanks again to everyone.
 
The reality of real estate development is that you should throw all planning jargon out the window. Projects are conceived and developed for one reason only: to make the developer money.

Don't kid yourself on this. The only reason developers even speak planning jargon is to convince the planners, politicians, and public to entitle their project. We really couldn't care less, as an industry.
 
I currently work on a very large mixed-use development in finance & I can tell you that the "live, work, play" card inheritantly only applies to the white collar workers that will work in the office towers we are constructing within the development.

I believe if you were to ask those who I work with what about the folks working on the retail component (not the operators obviously) they would probably look at you with bewilderment & hustle away. It is all about selling expensive condos, leasing expensive office space, & generating retail traffic in which the traffic is composed of those with a lot of disposable income. As mentioned earlier, it is simply about the developer making money.
 
Lots of good posts on here. You guys are dead on when you say it is all about $$. It's just the plain truth. But there are developers out there who buck the trend.
The Link

I spoke to one of the guys who developed this project in The Cedars just south of downtown Dallas. Great guy. We talked a lot about what ales the city of Dallas and how to make our community a better place to live for all income levels. It's very hard to do but it can be done to an extent.

We talked for a couple of hours and the reoccuring theme or answer I would get from him as to why good projects weren't happenning or projects that were happenning had such poor urban design fundamentals and it was always the same. GREED.
 
Guys, I guess I disagree with the idea that there's anything wrong with a developer making money. In fact, I view them as more or less blameless.
I blame city officials and neighbors and boosters who get conned into subsidizing projects that are unsound, unsustainable, or simply offer a poor economic return to the subsidizers, which is almost always the case.
 
My initial question was also related to the "Dense" part. I am thinking of a family that makes $65k/yr with two working adults and 2 kids. Say we can build something with more than 5 stories with parking and retail on the lower floor. The new stuff going on up on Guadalupe and 28th is a great example of this (I think that behemoth is completed).

Is that still $60-70/ sq. ft.? Does the cost radically change when you go from the concrete lower floors and wood framed upper floors for a total of 3 livable floors to all reinforced concrete for livable 6+ stories? What determines when more stories create an economy of scale? How does Austin's proposed condo property tax and land values affect this calculation? If you can get economy of scale form more stories in some situations, where can you find such situations?
 
Maduro - your numbers are a little off.

For two to three story wood frame product, it will cost you approximately $80 to $100 per sf to build.

You can do fours stories in wood frame (sometimes 4 can even look like 6, with mezzanine levels), but you framing will cost more, so will your mechanicals. Also, to handle that density, the project will probably need some type of structured parking. Figure the cost at $120 to $150 per sf.

For anything over 4 stories, you must go steel or masonry. Now you are looking at $200 per sf and up.

By contrast, a typical single family house will cost $50/sf to build.

To afford the construction costs, higher density projects really need to be located where there is a demonstrated location premium.

It is very difficult, if not impossible (other than the "affordable" units some cities extort from builders) to build affordable high density units.

Does any of that answer your questions? Oh, and the above numbers are only for direct hard construction cost. They do no include any land, design, financing, overhead, sales, or any other soft cost.
 
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