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Delivering Mixed-Use
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There has also been a recent shift towards more central locations. The
likelihood however is that only small sites will become available in city
centres. Where planning policy promotes mixed-use development, and
where it may allow for high rise buildings, then higher densities may
be achieved as a trade-off for the complexities introduced when
undertaking mixed-use development. Increasing a site’s density may
therefore be the only means of addressing the aspirations of
mixed-use where land is in short supply and where ultimately its
viability will determine whether it ever materialises.
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We have examined the issues and this paper highlights our research
findings, which will be available in detail on request of the main
Report.
Completion 2009-2010
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Completion 2009-2010
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Mixed-use buildings are more common in other countries, but are still
rare in comparison with mixed-use schemes. Mostly they are located
in the centre of major cities, where high land prices naturally favour
dense mixed-use development. Examples include the John Hancock
Tower in Chicago, the Trump Tower, and One Beacon Court in
New York.
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Name City Developer Size, scale ,mix Project status Location Iconic
Quarry Hill Leeds Vinci Circa 1 acre site. Mixed-use Proposal for major Close to city No
building, 62 residential units, mixed-use centre and
250 room hotel, 60,000 sq ft train station
office space and casino, bar,
restaurant.
Grand Central Liverpool Chieftain Sub 1 acre site. 32-storey Planning appeal City centre, Yes
Lime Street mixed-use tower, apartments, set for April 06 adjacent to
hotel and ground floor retail. train station
Project X Liverpool Vermont Sub 1 acre site. 22 storeys, Planning Waterfront – n/a
Developments 400 units residential 140 hotel application 1 mile city
rooms, retail, offices. centre
Queens Retail Preston Brookhouse Group 106-bedroom hotel, Outline planning Close to city Yes
Park Tower 20,000 sq ft of offices and application centre
65 flats.
Sheffield Tower Sheffield n/a Circa 0.5 acre site. Around Outline planning Close to city Yes
100,000 sq ft of offices over 28 application centre
storeys, with 61 apartments on submitted.
the upper floors and ground-
level shops.
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The pipeline schemes that have been identified have some common
characteristics, such as:
These criteria are reflected in the examples throughout our analysis and
we feel are the pre-requisite of a successful mixed-use building. As the
Matrix in Table 2 shows, The Shard is an example that “ticks all the
boxes”. It is built in a central location, on top of a major transportation
node with substantial density, it has a unique design and will be a
landmark in the London Skyline.
TABLE 2: MIXED-USE BUILDINGS - COMMON CHARACTERISTICS
Name Central Good connections Iconic building High value Small scale site
location transport location
Shard London Bridge
Bridgewater Place
Quarry Hill
Grand Central Lime Street
Project X n/a
Queens Retail Park Tower
Sheffield Tower
John Hancock Tower
One Beacon Court
Time Warner Center
Jin Mao Tower
Burj Dubai
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Scenario Two:
A 20-storey mixed-use building incorporating ground floor retail,
six floors of offices, a plant floor, twelve stories of residential units
and basement parking - c.20,000 sq ft NIA of retail space,
together with approximately 145,000 sq ft NIA of office space,
130 parking spaces, and 184 residential units (c.137,500 sq ft
NIA).
We provide full details of this and the rest of our assumptions in our
main Report. In determining our appraisals, we have considered the
current conditions of the respective sectors and locations, with
guidance on residential elements provided by CBRE Hamptons
International.
Arrangement The office floor plates are deeper than usual to allow for greater
flexibility of use, within the limits of the lateral 7.5m grid. The building
is configured as two 18m wide parallel blocks separated by an atrium
12m wide.
The residential blocks are 15m wide with 1.5m balconies on either
side, the hub being planned around a central corridor. In designing
the residential floor plate we have adopted a grid which can provide
a range of sizes of units from studio to three beds. It does however
equally lend itself to commercial use.
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Cross-Stepped Residential
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Cores The key to mixing the uses within the building is the configuration of
the cores which avoid duplicating staircase and lift provision. Office
lifts are located within the atrium, and the cores for the residential are
located at either end of the atrium.
The office floor plate “gross to net ratio” is affected by the residential
cores passing through, and with a proportion of the 8th floor plant
room included in the calculation of net areas, the office element has
a gross to net ratio of approximately 81%. The gross to net of the
residential is largely dictated by the maximum corridor length. For the
purpose of this study an 85% ratio as been used.
Car Parking Car parking is in a basement floor. It is assumed that the urban
position of the site would imply that it has benefit of good transport
facilities, and therefore minimal parking provision is required.
Servicing Plant is located so there can be shared usage of risers and equipment
between different uses. This also allows for a beneficial use of waste
heat from the offices to pre-heat the water or structure of the
residential element.
A detailed analysis of the actual likely diversified usage for the site
which considers timing of usage peaks would be carried out. Applying
a diversified usage to the building services design ensures the capacity
of installed equipment is optimised and therefore capital, running and
maintenance costs are minimised.
The offices have the greatest need for an environmental control system
by virtue of their high density of occupation or heat gain through
computer use. The scheme therefore encompasses a controlled lower
energy system of heating and cooling, combining 15/18m spaces with
a low energy chilled ceiling system of cooling which can be allied to
mixed node ventilation.
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The Appraisals The development appraisals take into consideration two hypothetical
property developments, a 6-storey office building, and a 20-storey
mixed-use building. They have been undertaken on a traditional basis
to determine and compare residual land values. These take into
consideration construction costs, professional fees, acquisition and
disposal fees, development profit and other associated costs. Tables 3
and 4 summarise the appraisals for London and Birmingham
respectively.
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TABLE 3: LONDON
Scenario 1: Scenario 2:
6-storey single-use building 20-storey single-use building
Gross Development Value Sq Ft ERV/Sales Rate Yield (£) Total Sq Ft ERV/Sales Rate Yield (£) Total
Residential - Private 82,497 £800.00 65,997,672
Residential - Affordable 54,998 £200.00 10,999,612
Office 149,204 £40.00 5.75% 103,793,896 145,859 £40.00 5.75% 101466,939
Retail 19,700 £28.00 5.50% 10,029,091
Car Parking 100 130
Gross Value 103.793,896 188,493,314
Purchaser's Costs 5.7625% 5,981,123 5.7625% 6,424,959
Net Value 97,812,772 182,068,355
Costs
Site & External Works 500,000 1,500,000
Construction Costs 25,365,000 66,636,800
Construction Contingency 5.00% 1,293,250 7.50% 5,110,260
Professional Fees 12.00% 3,258,990 14.00% 10,254,588
Tenant contribution 500,000 500,000
Planning Process 986,250 2,273,795
Disposal Fees 1,467,192 3,226,008
Letting Fees 1,193,630 1,277,190
Rent Free Cost Months Months
Retail 6 - ERV - 6 551,600 ERV 275,800
Offices 18 5,968,149 ERV 8,952,224 18 5,834,349 ERV 8,751,524
Development Interest 6.25% per annum 5,142,900 6.25% per annum 15,405,186
Funding Charges 1,477,636 2,726,992
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TABLE 4: BIRMINGHAM
Scenario 1: Scenario 2:
6-storey single-use building 20-storey single-use building
Gross Development Value Sq Ft ERV/Sales Rate Yield (£) Total Sq Ft ERV/Sales Rate Yield (£) Total
Residential - Private 103,121 £360.00 37,123,691
Residential - Affordable 34,374 £200.00 6,874,758
Office 149,204 £28.00 5.10% 81,915,771 145,859 £28.00 5.10% 80,079,300
Retail 19,700 £20.00 5.25% 7,504,762
Car Parking 100 130
Gross Value 81,915,771 135,707,364
Purchaser's Costs 5.7625% 4,720,396 5.7625% 5,047,032
Net Value 77,195,374 130,660,333
Costs
Site & External Works 500,000 1,500,000
Construction Costs 23,692,500 59,554,030
Construction Contingency 5.00% 1,209,650 7.50% 4,579,052
Professional Fees 12.00% 3,048,225 14.00% 9,188,632
Tenant contribution 500,000 500,000
Planning Process 986,250 2,273,795
Disposal Fees 1,157,931 2,166,148
Letting Fees 835,541 895,609
Rent Free Cost Months Months
Retail 6 - ERV - 9 394,000 ERV 295,500
Offices 15 4,177,704 ERV 5,222,130 15 4,084,044 ERV 5,105,055
Development Interest 6.25% per annum 3,922,670 6.25% per annum 9,504,109
Funding Charges 1,269,251 2,126,416
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Birmingham
Input % Change
Construction Time 30 (base) 0.00 Reducing the construction period here has a more pronounced effect, with
24 9.58 6 months reduction leading to an increase in land value of close to 10%.
18 19.52
Height (Storeys) 20 (base) 0.00 The higher the level of residential accommodation the greater the sales
25 5.04 value. Each additional 5 storeys of residential accommodation adds
30 16.06 approximately £25 per sq ft to the average sales value. Therefore, each
35 32.80 additional 5 storeys would exponentially add to the land value. The first 5
40 54.42 additional storeys add 5%, then the next 5 storeys would add a further
45 82.59 10%.
Net to Gross (Office) 85% -9.64 Here the land value is more sensitive to the gross to net ratio of the office
87 (base) 0.00 element, where a 2% improvement would add almost 8% to the land
89% 7.63 value.
Residential £170 (base) 0.00 A 10% reduction in cost here would equate to approximately a 24%
Construction Costs £150 27.70 increase in the land value.
£130 55.25
Affordable Housing 25% (base) 0.00 Reducing the affordable housing required by 5% increases the land value
20% 5.62 by close to 6%.
15% 11.08
Private Residential £360 (base) 0.00 Increasing the residential sales values by 10% increases the land value by
Sales Value £400 22.44 approximately 20%.
£440 44.82
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The design and timing hurdles associated with such development are
relatively well recognised, however what remains less understood is
the relationships between the key conditions required to make a
mixed-use building successful. What weighting should be attached to
which criteria, and how can these be best addressed?
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Notes
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Notes
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CB Richard Ellis (NYSE:CBG), a FORTUNE 1000
company, is the world’s leading commercial real estate
services firm (in terms of 2004 revenue).
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