Thinking of Mixed Use?

What Commercial Investors Need to Know in 2025
 

Mixed-use developments aren’t just trendy; they’re increasingly practical in today’s evolving real estate landscape. From walkable, urban infill projects to suburban live-work spaces, mixed-use real estate has piqued investor interest in the 2025 market. 

But smart investing requires more than enthusiasm. It requires in-depth insight into shifting fundamentals, local regulations, and emerging demand. We enlisted the help of Everest Loan Officer Linda Friedman to help us tackle the details of this growing trend. 

Why Mixed-Use Properties Are Gaining Ground

Properties that combine residential, retail, office, or hospitality uses are quickly growing in appeal due to several macroeconomic and cultural factors:

• Urban Repositioning – Many municipalities are revisiting zoning laws for the purpose of encouraging denser, mixed used development that supports walkability and eco-friendly transit. 

• Hybrid Work Models – As remote and hybrid work has become more commonplace, demand has grown for communities that integrate living, working, and leisure in one location. 

• Experiential Retail Demands – Rather than drawing traffic through traditional big-box anchors, many developers are leveraging curated dining, fitness, entertainment, and service-based tenants to attract both residents and external visitors. 

“In many areas, mixed-use projects are outperforming single-use retail and office properties,” says Linda. “These urban centers are especially popular where residential units are integrated with retail or co-working elements.”

4 Market Fundamentals to Consider

“The key with any property, especially mixed-use, is an understanding of the local market,” explains Linda. “It’s crucial to spend time evaluating the various local trends, rates, and risks associated with that specific property before you take it on.”

If you’re eyeing a mixed-use investment for your 2025 portfolio, don’t pull the trigger just yet. Here are some core variables you should evaluate:

1. Rental Yield and Cap Rates – Different areas of a mixed-use property will have different return profiles. Residential components may offer lower cap rates with higher stability. Retail space, on the other hand, may yield higher returns with more volatility and tenant turnover. Blending these streams can be a hedge, but only if you’re comfortable managing diverse tenant types. 

2. Vacancy Risk – Cross-sector vacancy can be a strength or a liability. If your property is heavily weighted toward one use (ex. Ground-floor retail in an area with limited foot traffic), you may face revenue gaps. Be sure to evaluate local absorption rates for each component. 

3. Zoning and Entitlements – If you investigate any of the factors listed, let it be this one. Some jurisdictions have embraced mixed-use zoning while others still opt for rigid separation. Conditional-use permits, parking minimums, and design restrictions may also increase complexity or cost. 

4. Construction and Operation – Mixed-use buildings often require specialized infrastructure (i.e. separate mechanical systems, egress, or loading docks for commercial uses). Shared amenities and security systems can also increase the burden on building management. The complexity of the space can also greatly increase upfront costs. 

“There’s also a factor of location synergy,” explains Linda. “The most successful mixed-use developments feature fully integrated elements. Look for locations where live-work-play (also known as LWP) dynamics are already present. Alternatively, you can look at places where public investments such as transit lines or walking paths are helping catalyze demand.”

Multi-Use Market Snapshot: 2025 Trends

While local considerations are most important, especially with mixed-use properties, a broader picture can also be helpful—especially for investors who are new to LWP investments. Here are some national trends we’ve seen lately:

• Zoning reform is picking up steam. – Cities like Portland, Minneapolis, and Charlotte have passed zoning changes in the last 5 years that encourage mixed-use developments and reduce parking mandates.¹ ² ³

   

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  ¹https://www.portland.gov/bps/planning/mp2h/news/2024/12/18/city-council-voted-unanimously-establish-new-mixed-use-district. Accessed 3 July 2025.
  ² City of Minneapolis. “Land Use & Built Form.” Minneapolis 2040, 2025, https://minneapolis2040.com/topics/land-use-built-form/. Accessed 03 07 2025.
  ³  Brasuell, James. “Charlotte’s New, Controversial Comprehensive Plan to End Single-Family Zoning.” Planetizen, 2021, https://www.planetizen.com/news/2021/06/113893-charlottes-new-controversial-comprehensive-plan-end-single-family-zoning?utm_source=chatgpt.com. Accessed 3 7 2025.
   

• Retail rebound is fluctuating. – Experiential and service retail is growing, but traditional retail struggles in some markets. Anchoring a project with fitness centers, food halls, or pet services may perform better than legacy storefronts.⁴ 
• Smaller cities are catching up. – While large metropolitan areas continue to pioneer mixed-use strategies, smaller cities shouldn’t be discounted. Many areas are starting to attract institutional and private capital for infill mixed-use redevelopment.⁵

“Now that citizens are raising their demands for mixed-use spaces, local governments are working on redesigning their legislation to reflect those changes,” explains Linda. “Sometimes it takes time to get everything in sync. That’s why it’s so important to conduct ongoing research.”

Are Mixed-Use Properties Right for You?

Mixed use developments can offer considerable benefits—particularly resilience in a volatile market. However, they also require careful underwriting, strong local knowledge, and operational expertise. Whether you’re considering ground-up development or adaptive reuse, your best bet is to look beyond national trends and drill into local fundamentals. 

So, do you think you’re ready to venture into mixed-use investments? Use this quiz to get your ducks in a row.

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(This quiz is intended for general informational purposes only and does not constitute financial, legal, or investment advice. Results are not a substitute for a personalized consultation with a qualified real estate professional, attorney, or financial advisor. Always conduct thorough due diligence and seek expert guidance before making investment decisions.)