Mason asked about the impediments to mixed-use, and Hoag's Smith said the move from suburban to its “version 2” brings a mix of uses versus true mixed-use “as we continue to urbanize, which forecloses verticalization. It's just the mindset of Orange County.” He said his firm is concentrating on positioning its properties so they have access to things that promote health and healthy living. “We're trying to move out of the 'hospital on the hill in Newport Beach' and out into the community. As we move away from care into wellness,” positioning its properties near uses like fitness gyms and healthy food vendors is an important strategy, he said, adding that most people who seek healthcare are healthy people who are dealing with a condition—for example, a triathlon runner with a sprained ankle—rather than sick people per se. This distinction is important to emphasize to those who shy away from having healthcare facilities in the retail mix.

Litwak said affordable housing can have a role in vertical communities, whether everything is going super dense. She pointed out that developers and investors can underwrite these properties with affordable components to take advantage of the tax component and help alleviate the housing crisis at the same time.

Mason asked Greenlaw's Smith if his firm considers affordable housing in its properties, and Smith replied, “Sure. We've got a major problem with housing because people can't get a home loan and can't afford the rents. It's hugely important, but developers have to make the math work.”

Litwak said adding multifamily to a mixed-use project will help it stay leased up, and Mason said, “Yes, but what about affordable housing? How do developers justify developing this?” Litwak said her firm has seen opportunities in Orange County and L.A. for developers to come together in a LLC structure to put affordable units in apartment buildings. “The tax savings have real implications. We haven't executed on this type of project, but we've kicked the can far down the road” for this type of venture, she said.

Mason asked Hoag's Smith if Hoag has looked into these types of projects, and Smith said, “No, but one of the biggest barriers to our success is housing. Doctors really struggle to make the financial part work—95% of our staff do not live in Newport Beach and are struggling to find affordable housing nearby.”

Greenlaw's Smith said forcing developers to build projects that don't work doesn't make sense, and if an apartment/retail project gets approved but doesn't work out, they have to design for plan B. “Retail boxes will continue to close, and there's an opportunity for the next person to utilize that. The non-need impulse component of retail will go away. Retail is the unfavored asset class now; industrial is favored—it's hot—and industrial product is going away” to higher and better uses, he said.

Hoag's Smith said healthcare has crazy parking ratios that are even higher than retail, which doesn't make sense. His firm is looking at abandoned big boxes for opportunities.

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COSTA MESA, CA—As Orange County begins to embrace the live/work/play lifestyle that has become popular across the country, mixed-use properties are emerging as the smart way to utilize space and create synergies among uses, RealShare Orange County panelists said Thursday. Speakers on the panel “Multi-Use: Ways to Merge the Retail, Office and Multi-Family Sectors” discussed the many ways that multi-use buildings can increase value for investors and solve real estate dilemmas.

Jennifer Litwak, executive director for Housing on Merit, said there's less risk for investors in mixed-use because of the variety of uses, and her organization is trying to get stakeholders to consider affordable housing and multifamily as part of the mix.

Sanford Smith, SVP, real estate, facilities, construction and operaitons for Hoag Memorial Hospital Presbyterian, said his firm is “trying to extend our services out into the community,” so mixed-use projects are the place to be.

Wilbur Smith, CEO and president of Greenlaw Partners, said it's important to be mindful of which amenities work and can be successful in mixed-use projects, particularly in horizontal ones, which are more common in the Orange County market than vertical ones. Moderator Randolph Mason, CCIM, a partner with Commercial Realty Specialists, asked Smith which amenities in particular are working, and Greenlaw's Smith gave the example of LBA's Park Place, which he said, “knocked it out of the park” with adjacent uses. The walkability factor of apartments near Whole Foods is a plus in a development his firm is adding in Brea, CA, he said, adding, “We are seeing a lot more walkability in Orange County than we did before, thanks to mixed-use.”

Mason asked about the impediments to mixed-use, and Hoag's Smith said the move from suburban to its “version 2” brings a mix of uses versus true mixed-use “as we continue to urbanize, which forecloses verticalization. It's just the mindset of Orange County.” He said his firm is concentrating on positioning its properties so they have access to things that promote health and healthy living. “We're trying to move out of the 'hospital on the hill in Newport Beach' and out into the community. As we move away from care into wellness,” positioning its properties near uses like fitness gyms and healthy food vendors is an important strategy, he said, adding that most people who seek healthcare are healthy people who are dealing with a condition—for example, a triathlon runner with a sprained ankle—rather than sick people per se. This distinction is important to emphasize to those who shy away from having healthcare facilities in the retail mix.

Litwak said affordable housing can have a role in vertical communities, whether everything is going super dense. She pointed out that developers and investors can underwrite these properties with affordable components to take advantage of the tax component and help alleviate the housing crisis at the same time.

Mason asked Greenlaw's Smith if his firm considers affordable housing in its properties, and Smith replied, “Sure. We've got a major problem with housing because people can't get a home loan and can't afford the rents. It's hugely important, but developers have to make the math work.”

Litwak said adding multifamily to a mixed-use project will help it stay leased up, and Mason said, “Yes, but what about affordable housing? How do developers justify developing this?” Litwak said her firm has seen opportunities in Orange County and L.A. for developers to come together in a LLC structure to put affordable units in apartment buildings. “The tax savings have real implications. We haven't executed on this type of project, but we've kicked the can far down the road” for this type of venture, she said.

Mason asked Hoag's Smith if Hoag has looked into these types of projects, and Smith said, “No, but one of the biggest barriers to our success is housing. Doctors really struggle to make the financial part work—95% of our staff do not live in Newport Beach and are struggling to find affordable housing nearby.”

Greenlaw's Smith said forcing developers to build projects that don't work doesn't make sense, and if an apartment/retail project gets approved but doesn't work out, they have to design for plan B. “Retail boxes will continue to close, and there's an opportunity for the next person to utilize that. The non-need impulse component of retail will go away. Retail is the unfavored asset class now; industrial is favored—it's hot—and industrial product is going away” to higher and better uses, he said.

Hoag's Smith said healthcare has crazy parking ratios that are even higher than retail, which doesn't make sense. His firm is looking at abandoned big boxes for opportunities.