Lifestyles in transit: mixed-use developments arise to accommodate mass transportation, urban renaissance.

• Author: Lewis, Pete
• Position: Q1 real estate - Cover Story

While stumping across the metro area for passage of the FasTracks initiative in 2004, Denver Mayor John Hickenlooper asked voters to envision the region transformed into a network of "villages" connected by mass transit. Each village would contain places to live, work, shop and play. Residents in these pedestrian-oriented, mixed-use communities, no longer reliant on the automobile or on an overburdened highway system, could walk to work, stroll to a coffee shop, corner store or neighborhood park, or hop a bus or train and be transported to another village anywhere in the metro area.

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It isn't difficult to envision such a community or lifestyle. Mixed-use developments--the redeveloped Stapleton Airport area or the former Lowry air base--were an anomaly just a decade ago, but now are springing up all over America and the Denver metro area. Almost half the developers who responded to a 2004 survey by the National Association of Industrial and Office Properties indicated that they were involved in at least one mixed-use project.

Combining residential, retail and commercial/offices within a high-density environment is nothing new. The concept is as old as civilization itself. Yet for most of the 20th century, mixed-use development was virtually absent in this country. Why then has mixed-use suddenly become the hottest trend in real estate? "Slowly, people are rediscovering the value of an urban lifestyle," said Michael Leccese, director of the Colorado District Council of the Urban Land Institute. "It's a national trend that started with the restoring of brownstones in New York City more than 20 years ago."

Living in a downtown loft or an apartment above a retail store may not be everyone's dream, but neither is a house in the suburbs or in a rural subdivision. The market finally is responding to the fact that many people prefer high-density, urban environments, said architect and urban designer Tim Van Meter. "We've always had choices for the cars we drive, everything from hybrids to SUVs," Van Meter said. "But for where we live, it's pretty much been the single-family home and strip malls. That suits many of us, but not everyone. We're finally looking at various market segments and providing choice. Mixed-use, walkable, high-density urban centers address our underlying need, as social animals, to interact with others," Van Meter said.

"People go to Europe to walk the streets and sit in cafes," he added. "Our ski towns and resort communities are pedestrian friendly. Why do so many people from all over come to Boulder to park their cars and walk the Pearl Street Mall?"

But why, then, has it taken so long for the real estate industry to recognize and respond to this need? And why has there been such a dramatic shift toward mixed-use development in such a relatively short time? Until recently, the pervasive philosophy in this country was that land should be developed and regulated based on its intended use, and that those uses were best kept separate. Governments embraced single-use zoning, which mandates that houses be segregated from apartments, residential from commercial.

"Mixed-use development was essentially illegal in this country," said Hank Baker, senior vice president of marketing and economic development for Forest City Stapleton. "We built businesses in one place and residences in another. It was no wonder that the highways that ran between the two were so busy." Single-use zoning spurred the suburbanization of America, a 50-year orgy of development that gobbled up raw land surrounding our major cities and spat out single-family subdivisions, strip malls and office parks. "Suburban zoning is a result of the fact that after World War II, we had what seemed like an infinite amount of land to develop," said Tom Clark, executive vice president of the Metro Denver Economic Development Corp. "The problem is we don't have an infinite amount of money to keep building roads to those developments."

Traditional building codes, parking requirements and impact fees all favored low density, single-use development, Baker said. Parking requirements and the economics behind those requirements have dictated the character of most commercial development. Building more than three or four stories increases density, but also increases a mandated number of parking spaces. Providing a surface parking space costs a developer about $3,000 per space, compared with $10,000 for a space in a parking structure, and $20,000 for an underground parking space...