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Pandemic Threatens to Upend New Mixed-Use Projects

What will happen to the bricks-and-mortar retail/office industry once the pandemic ends? With the future unclear, some mixed-use development projects could be delayed.

TAMPA – Mixed-use projects have become extremely popular with real estate developers. Some have transformed whole areas, such as the 53-acre Water Street Tampa in Florida that will connect the city’s downtown to its waterfront.

However, the COVID-19 pandemic threatens the allure of these projects as safety concerns and a changing patchwork of state and local virus-related regulations have developers rethinking the layouts and designs of such areas.

Uncertainty over how to proceed has tied developers’ hands. They cannot pitch office or residential space until they line up the retail and restaurants, many of which are in precarious financial situations due to the crisis.

Developers are also looking at other ways to collect payments as some businesses encounter difficulty paying rent during the pandemic. Among other things, they are considering a model that bases rent solely on sales.

Developers agree that safety measures are needed if mixed-use projects still include shops and restaurants, and they’re considering some changes that would drastically repurpose space. For example, space once planned for sales or dining could now be taken over for behind-the-scenes work as vendors continue a shift to more takeout and pickup service. A safe operation might focus more on controlling the flow of the customers who do go inside.

There are also likely changes related to modular construction, pop-up stores, ghost kitchens, and ways of recirculating air.

Plans to reopen businesses could prove a test of the endurance of the mixed-use model in the United States, though part of the solution might be to simply switch more planned commercial space to residential. Restaurants and retail stores could survive lost foot traffic from fewer nearby office workers by relying on a higher number of condo and apartment dwellers.

Source: New York Times (06/09/20) Acitelli, Tom

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