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Rethinking Mixed-Use

SAN FRANCISCO—Is the retail component in a being-planned mixed-use too costly? Ms. Real Estate weighs in.

By Nina J. Gruen | Updated on October 14, 2016
Ms. Real Estate Ms. Real Estate

SAN FRANCISCO—Wouldn’t it be convenient if someone had clear, intelligent answers to most of your CRE-related questions? Problem solved. Nina J. Gruen, a.k.a. Ms. Real Estate, a.k.a. the principal sociologist overseeing market research and analysis at Gruen Gruen + Associates, is here to answer readers’ questions.

Dear Ms. Real Estate,

I develop multifamily rentals, primarily in Southern California. I am currently beginning the entitlement process for an 84-unit mid-rise. The city is insisting that all of the 17,000-square-foot ground floor space be leased to retailers. The problem is vacancy rates for the type of convenience retail that would be expected to locate in my building have been on the increase. As a result, lease rates continue modest declines. If I were to be able to obtain retail tenants, it is likely to be a financially losing proposition by 2018, when I expect my building to be ready to lease. On the other hand, the market remains relatively robust fort the type of multi-family I propose building. What do to?

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