New York City—Many retail developers who don't have residential space associated with their shopping centers are planning or at least considering mixing the two. But the marriage is not as easy as building apartments over stores.

Executives who have built both say developers face multiple challenges when taking on these types of projects. The first is whether a market is even appropriate for such a venture, says Dan Herman, Developers Diversified Corp.'s senior vice president of development. “You have to do your homework on the residential side,” he says. “While there may be demand for residential, are you creating something different?”

The homework involves determining if a particular market needs more housing, and, if it does, whether rental or ownership units work best. He also points out that housing in retail environments tends to price higher than average in a market, so there needs to be consumer demand for higher end units.