What Is a Mixed-Use Development? Everything You Need to Know About This Growing Sector

Mixed-use developments, and/or mixed-use properties, are at the forefront of the industry right now. As a result of the pandemic years and its fallout, many are rethinking what we need in order to live and work.

There is still an undersupply of residential housing in the UK. Moreover, offices and retails hubs have struggled in recent years as flexible working practices took hold. But it’s become clear to see that consumers and workers are still keen [1]on better utilisation of our languishing assets.

There is a need, especially in city centres, to take another look at how our residential and commercial worlds can better integrate. We’ve already seen some notable attempts made here, but it’s important to remind ourselves of the basics in this burgeoning corner of the market. We need to address the question of what is a mixed-use development, and what exactly do property investors need to be aware of?

What is a mixed-use development?

Broadly, a mixed-use development refers to any building, or collection of buildings, that integrates both residential and commercial spaces[2]. The development itself can be from the ground up, via a widescale conversion, or other means.

To be especially specific, we can turn to Designing Buildings[3] to answer the question of what is a mixed-use development: “The term ‘mixed use development’ refers to development projects that comprise a mixture of land uses, or more than just a single use. In terms of planning permissions, mixed use refers to land or buildings used for different uses which fall into more than one use class.

Mixed use developments can be ‘vertical’, in which a single building accommodates multiple uses, such as a skyscraper that has floors of office space as well as a hotel complex, or a terrace building that has a flat on the first floor and a shop on the ground floor.

Alternatively, they can be ‘horizontal’ mixed use development where a range of different buildings on the same site each fulfil a specific purpose, such as a community area that has accommodation as well as playing facilities, shops, parking and other amenities.”

→  Learn everything you need to know about commercial real estate in our Complete Guide to Commercial Property.

Examples of mixed-use developments

Despite appearances, mixed-use developments are not exactly a new feature of the property market. To illustrate, flats above shops are mixed-use assets, and these have been a feature of the UK property scene for decades.

Still, new developments are emerging which take things to a whole new level. Wood Wharf [4]is a clear example. Situated next to Canary Wharf, it is in its third phase of development and once it’s completed over the next few years, it will provide: “up to 3,600 new homes, 2million sq ft of office space, 350,000 sq ft retail space and more than nine acres of public spaces, squares, and parks along with a GP surgery and a school.”

As mentioned, mixed-use developments do not need to be brand new creations. Grainhouse[5] is/was a refurbishment project that unified and extended five buildings at the heart of Covent Garden. Winning NLA’s 2024 New London Award for the mixed-use category, the new development combined retail, leisure, office space, and more within the same space.

Some projects prove controversial, which could be considered one of the disadvantages of mixed-use development. Many campaigns and protests were levied against the development of 72 Upper Ground, also derogatorily known as “the slab”.

Campaigners argued it would threaten beloved landmarks around the South Bank, and jeopardise London’s architectural integrity. Despite these concerns however, the project was officially approved in December 2024[6].

Do you need planning permission?

Given their complexity, property investors need to ensure they’re on the right side of the rules from the get-go when they start thinking about what is a mixed-use development, and should I get involved?

While a complicated factor, most mixed-use developments will likely require planning permission[7]. Although, planning permission rules can vary between local authorities. As such, property investors will need to familiarise themselves with the rules of where they’re based.

At a minimum, this will likely include understanding different use classes, various building regulations, leasehold and freehold considerations, health and safety regulations, and more[8]. Fortunately, there are various experts available that can guide investors with these concerns.

Is it right for your circumstances?

While a substantial endeavour, there are many benefits of mixed-use development, so long as the project works with the underlying investors circumstances of course. When done right, they can create vibrant communities and economic hubs that address our housing issues. They can also be sustainable in their own right, by reducing the need for travel[9].

Although, their benefits can also lead to challenges. If they prove popular, it may push up prices to unaffordable levels for tenants and buyers. Moreover, constructing these building may prove very costly, given our ongoing inflationary challenges.

Availability may also be an issue. The government is keen to develop on so called “brownfield[10]” land, and has (or will) make it easier to do so. But the reality is, it may be especially difficult to build on these sites[11].

What is mixed-use development financing?

There are many financing options to property investors looking to get into mixed-use development. While not offered by Market Financial Solutions, ground up development finance can be used for the very beginning of a project.

What we do have available for our borrowers though is development exit finance. This funding is there to help borrowers repay the initial loan they secured for their project, and/or find time to finalise their plans.

Also, our permitted and light development loans can support a range of refurbishment, renovation, and/or conversion projects. What’s more, if developers need to reorganise their financial affairs or consolidate their facilities, bespoke refinancing options are there.