In recent years, we have seen a number of clear trends in mixed-used property development:
- international influences, including acceptance of apartment living, international participants in the property development industry, international buyers and international marketing strategies/channels
- significantly increased densification and scale, including the combination of multiple uses within larger projects (residential, retail, office, major retail, serviced apartments, hotel)
- architectural quality, with international and local architects bringing heightened prestige and ‘x- factor’ to projects, including a number of major projects appointing more than one architectural firm to advise on specialist sectors
- sophistication and complexity, recognising that the best opportunities and outcomes may require a level of complexity in securing development rights, integration of uses and alignment of delivery outcomes.
Key legal and practical considerations in mixed-use property development
- Tile and owners corporation issues
While extensive common property can work comfortably with many residential developments, the retail, office, hotel and commercial components of mixed-use projects are often likely to benefit from keeping common property to a minimum. This tends to maximise control of relevant areas for important aspects such as signage, expanded tenant rights, cleaning, access, payment of costs and insurance.
Careful consideration should be given to the owners corporation structuring, to minimise overlap between different components where owners may have divergent interests.
- Integration vs separation
Mixed-use development necessarily involves a level of intersection between uses. Close proximity due to higher densification can deliver benefits but may also present drawbacks. A design focus on place-making, noise attenuation and the compatibility/viability of each use in its own right leads to better development outcomes.
- Car parking
Car parking and the convenient intersection between different uses is important to any development, but a primary consideration for retail.
For inner urban areas, car park management agreements and technology can help deliver intended access and flow.
Technology is rapidly evolving in this area – so much so that flexibility needs to be retained in legal documents where available technology is likely to further develop between documentation and delivery. Effective technology solutions include bay occupancy, number plate recognition and point of sale interaction.
Inner city areas also need to address the impost of the congestion levy and car park management structures to ensure the best outcome on a practical level.
- Transaction structuring
Different components of mixed-use developments will have different delivery methods and timing requirements. For example, retail, commercial and hotel developments will often have more rigorous delivery requirements and require greater certainty of delivery timeframes compared to residential, including specific requirements around accessibility, completion of exterior works and tenant/customer experience.
In this space, we are seeing a willingness to embrace complexity in terms of both legal documentation and project management so as to stage, finance and deliver different components.
|David Hartney | Partner
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