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Published by THE COUNSELORS OF REAL ESTATE Volume 34, Number 1, 2009

REAL ESTATE ISSUES ®

www.cre.org

L E A D E R S H I P R O U N D TA B L E

Corporate Real Estate: An Interview With Experts Panelists: Michele Flynn, CRE; Barbara Hampton; Von W. Moody, III,

CRE; and Martha A. O'Mara, CRE. Moderator: Peter L. Holland, CRE

Enterprise Component Allocation: Methodology Discussion

Roland D. Nelson, CRE

Mixed-Use Development and Financial Feasibility: Part I – Economic and Financial Factors

Joseph S. Rabianski, Ph.D., CRE; Karen M. Gibler, Ph.D.; J. Sherwood Clements, III; and O. Alan Tidwell

Credit Crisis has Weakened Global Property Fundamentals

Simon Rubinsohn

Managing Risk in Income Property Loan Portfolios Marc Thompson, CRE, CCIM, FRICS

Islamic Financing and Foreclosure Keith S. Varian, Esq.; and Jennifer M. Rockwell, Esq.

Counseling the Banks: What is the Market for Branches?

Bradley R. Carter, CRE, MAI, CCIM; J. Tyler Leard; and Matthew H. Jackson

The Income Tax Effects of the Housing and Economic Recovery Act of 2008

on Real Estate Transactions J. Russell Hardin, Ph.D.

C O M M E N TA RY

When Will the Miami Condominium Market Recover?

Follow the Land, Man Richard Langhorne, CRE, FRICS;

and John Blazejack, CRE, MAI, FRICS

R E S O U R C E R E V I E W S

Navigating the Redevelopment Maze Redevelopment—Planning, Law and Project Implementation: A Guide for Practitioners

Reviewed by Mary C. Bujold, CRE

A Practical Guide to Commercial Real Estate Transactions From Contract to Closing,

Reviewed by Daniel L. Swango, Ph.D., CRE, FRICS, MAI

Enough. True Measures of Money, Business and Life Reviewed by Bowen H. “Buzz” McCoy, CRE

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www.cre.org

430 N. Michigan Ave. Chicago, IL 60611-4089 Telephone: 312.329.8427

E-mail: [email protected] Web site: www.cre.org

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THE CRE MISSION

To be the forum for leaders in real estate.

CRE CORE VALUES

integrity competence community trust selflessness

ORGANIZATIONAL OBJECTIVES

CREATE: To provide a platform for professional relationships, insight and access to

diverse experience.

PARTICIPATE: Through active participation, contribution, and camaraderie, members

enhance the benefits of a diverse professional community.

COMMUNICATE: To communicate within the membership and marketplace that our

members are the preeminent source of real estate knowledge and advice.

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iREAL ESTATE ISSUES Volume 34, Number 1, 2009

EDITOR IN CHIEF

Peter C. Burley, CRE Simpson Housing LLP, Denver, CO

ASSOCIATE EDITOR

Marc Louargand, Ph.D., CRE Saltash Partners LLC, West Hartford, CT

2009 EDITORIAL BOARD

Owen M. Beitsch, Ph.D., CRE Real Estate Research Consultants, Orlando, FL

Mary C. Bujold, CRE Maxfield Research, Inc., Minneapolis, MN

Michael Y. Cannon, CRE Integra Realty Resources-Miami, Miami, FL

Susanne Ethridge Cannon, Ph.D., CRE DePaul University, Chicago, IL

Guniz Celen, CRE Celen Corporate Valuation & Counseling Inc., 34337 Istanbul Turkey

Maura M. Cochran Bartram & Cochran, Inc., Hartford, CT

John A. Dalkowski, III, CRE Marcus & Millichap REIBC, Coral Gables, FL

Karen G. Davidson, CRE Davidson & Associates, Anaheim, CA

Manuel Joaquim Monteiro De Barros, CRE 2790-110 Carnaxide Portugal

P. Barton DeLacy, CRE Cushman & Wakefield, Inc., Chicago, IL

J. Terrence Farris Ph.D., CRE Clemson University, Clemson, SC

Jack P. Friedman, Ph.D., CRE Jack P. Friedman & Associates, Dallas, TX

John L. Gadd, CRE Gadd Tibble & Associates, Inc., Arlington Heights, IL

Howard Gelbtuch, CRE Greenwich Realty Advisors, Inc., New York, NY

Tom Hamilton Ph.D., CRE University of St.Thomas, Saint Paul, MN

Peter L. Holland, CRE Bartram & Cochran, Hartford, CT

Thomas O. Jackson, Ph.D., CRE Real Property Analytics, Inc., College Station, TX

Paul G. Johnson, CRE The Paul G. Johnson Companies, Phoenix, AZ

James C. Kafes, CRE AEGON USA Realty Advisors, Inc., New York, NY

Steven Kaye, CRE CB Richard Ellis, Boston, MA

Hugh F. Kelly, CRE Real Estate Economics, Brooklyn, NY

Peter F. Korpacz, CRE Korpacz Realty Advisors, Mount Airy, MD

Mark Lee Levine, CRE University of Denver, Denver, CO

Gerald M. Levy, CRE Gerald M. Levy & Co., LLC, New York, NY

Timothy R. Lowe, CRE Waronzof Associates, Inc., El Segundo, CA

David J. Lynn, Ph.D., CRE ING Clarion, New York, NY

Richard Marchitelli, CRE Cushman & Wakefield of Washington, D.C., Inc., Charlotte, NC

Michael S. MaRous, CRE MaRous & Co., Park Ridge, IL

William P.J. McCarthy, CRE W.P.J. McCarthy and Co., Ltd., Burnaby, BC, Canada

Julie M. McIntosh, CRE The Integral Group, LLC, Atlanta, GA

John A. Meltzer, CRE Meltzer Properties, Ouray, CO

Brent A. Palmer, CRE NewTower Trust Co., Seattle, WA

Joe W. Parker, CRE Appraisal Research Co., Inc., Jackson, MS

Stephen F. Peacock, CRE The Staubach Co., Houston, TX

Martha S. Peyton, CRE TIAA-CREF, New York, NY

Joe Douglas Prickett, CRE Archon Group, LP, Irving, TX

Jeanette I. Rice, CRE Verde Realty, Fort Worth, TX

Roy J. Schneiderman, CRE Bard Consulting, San Francisco, CA

Karl-Werner Schulte, CRE IREBS International Real Estate Business School,

D-65185 Wiesbaden Germany

Lawrence A. Souza, CRE Johnson/Souza Group, Inc., San Francisco, CA

Lewis W. Stirling, III, CRE Stirling Properties, New Orleans, LA

Daniel L. Swango, CRE Swango International, Tucson, AZ

Marc R. Thompson, CRE Bank of the West, Walnut Creek, CA

David R. Walden, CRE National Property Valuation Advisors, Inc., Chicago, IL

Robert M. White Jr., CRE Real Capital Analytics, Inc., New York, NY

PRESIDENT AND CHIEF EXECUTIVE OFFICER

Mary Walker Fleischmann

MANAGING EDITOR

Carol Scherf

The articles/submissions printed herein represent the opinions of the authors/contributors and not necessarily those of The Counselors of Real Estate or its members. The Counselors assumes no responsibility for the opinions expressed/citations and facts used by the contributors to this publication regardless of whether the articles/submissions are signed.

Published by The Counselors of Real Estate, a not-for-profit organization of the National Association of REALTORS®, 430 N. Michigan Ave., Chicago, IL 60611. Copyright 2009 by The Counselors of Real Estate of the National Association of REALTORS®. All rights reserved. (Printed in USA.)

Third class postage paid in Chicago. Real Estate Issues publishes three times annually. Subscription rates are: $48 for one year (3 issues); $80 for two years; $96 for three years; $42 per year to students and faculty; $54 foreign rate, submit in U.S. currency; single copy $15. Remittances may be made by credit card or personal check, payable to

The Counselors of Real Estate. Remittances, change of address notices, undeliverable copies, orders for subscriptions and editorial material should be sent to Real Estate Issues, The Counselors of Real Estate, 430 N. Michigan Ave., Chicago, IL 60611. Phone: 312.329.8427; Fax: 312.329.8881; E-mail: [email protected]; Web site: www.cre.org.

Library of Congress card number LC 76-55075

Real Estate Issues is a registered trademark of The Counselors of Real Estate, a not-for-profit organization.

Published by THE COUNSELORS OF REAL ESTATE

REAL ESTATE ISSUES

EDITORIAL BOARD

38627_cre.qxp 4/8/2009 3:13 PM Page i

iREAL ESTATE ISSUES Volume 34, Number 1, 2009

EDITOR IN CHIEF

Peter C. Burley, CRE Simpson Housing LLP, Denver, CO

ASSOCIATE EDITOR

Marc Louargand, Ph.D., CRE Saltash Partners LLC, West Hartford, CT

2009 EDITORIAL BOARD

Owen M. Beitsch, Ph.D., CRE Real Estate Research Consultants, Orlando, FL

Mary C. Bujold, CRE Maxfield Research, Inc., Minneapolis, MN

Michael Y. Cannon, CRE Integra Realty Resources-Miami, Miami, FL

Susanne Ethridge Cannon, Ph.D., CRE DePaul University, Chicago, IL

Guniz Celen, CRE Celen Corporate Valuation & Counseling Inc., 34337 Istanbul Turkey

Maura M. Cochran Bartram & Cochran, Inc., Hartford, CT

John A. Dalkowski, III, CRE Marcus & Millichap REIBC, Coral Gables, FL

Karen G. Davidson, CRE Davidson & Associates, Anaheim, CA

Manuel Joaquim Monteiro De Barros, CRE 2790-110 Carnaxide Portugal

P. Barton DeLacy, CRE Cushman & Wakefield, Inc., Chicago, IL

J. Terrence Farris Ph.D., CRE Clemson University, Clemson, SC

Jack P. Friedman, Ph.D., CRE Jack P. Friedman & Associates, Dallas, TX

John L. Gadd, CRE Gadd Tibble & Associates, Inc., Arlington Heights, IL

Howard Gelbtuch, CRE Greenwich Realty Advisors, Inc., New York, NY

Tom Hamilton Ph.D., CRE University of St.Thomas, Saint Paul, MN

Peter L. Holland, CRE Bartram & Cochran, Hartford, CT

Thomas O. Jackson, Ph.D., CRE Real Property Analytics, Inc., College Station, TX

Paul G. Johnson, CRE The Paul G. Johnson Companies, Phoenix, AZ

James C. Kafes, CRE AEGON USA Realty Advisors, Inc., New York, NY

Steven Kaye, CRE CB Richard Ellis, Boston, MA

Hugh F. Kelly, CRE Real Estate Economics, Brooklyn, NY

Peter F. Korpacz, CRE Korpacz Realty Advisors, Mount Airy, MD

Mark Lee Levine, CRE University of Denver, Denver, CO

Gerald M. Levy, CRE Gerald M. Levy & Co., LLC, New York, NY

Timothy R. Lowe, CRE Waronzof Associates, Inc., El Segundo, CA

David J. Lynn, Ph.D., CRE ING Clarion, New York, NY

Richard Marchitelli, CRE Cushman & Wakefield of Washington, D.C., Inc., Charlotte, NC

Michael S. MaRous, CRE MaRous & Co., Park Ridge, IL

William P.J. McCarthy, CRE W.P.J. McCarthy and Co., Ltd., Burnaby, BC, Canada

Julie M. McIntosh, CRE The Integral Group, LLC, Atlanta, GA

John A. Meltzer, CRE Meltzer Properties, Ouray, CO

Brent A. Palmer, CRE NewTower Trust Co., Seattle, WA

Joe W. Parker, CRE Appraisal Research Co., Inc., Jackson, MS

Stephen F. Peacock, CRE The Staubach Co., Houston, TX

Martha S. Peyton, CRE TIAA-CREF, New York, NY

Joe Douglas Prickett, CRE Archon Group, LP, Irving, TX

Jeanette I. Rice, CRE Verde Realty, Fort Worth, TX

Roy J. Schneiderman, CRE Bard Consulting, San Francisco, CA

Karl-Werner Schulte, CRE IREBS International Real Estate Business School,

D-65185 Wiesbaden Germany

Lawrence A. Souza, CRE Johnson/Souza Group, Inc., San Francisco, CA

Lewis W. Stirling, III, CRE Stirling Properties, New Orleans, LA

Daniel L. Swango, CRE Swango International, Tucson, AZ

Marc R. Thompson, CRE Bank of the West, Walnut Creek, CA

David R. Walden, CRE National Property Valuation Advisors, Inc., Chicago, IL

Robert M. White Jr., CRE Real Capital Analytics, Inc., New York, NY

PRESIDENT AND CHIEF EXECUTIVE OFFICER

Mary Walker Fleischmann

MANAGING EDITOR

Carol Scherf

The articles/submissions printed herein represent the opinions of the authors/contributors and not necessarily those of The Counselors of Real Estate or its members. The Counselors assumes no responsibility for the opinions expressed/citations and facts used by the contributors to this publication regardless of whether the articles/submissions are signed.

Published by The Counselors of Real Estate, a not-for-profit organization of the National Association of REALTORS®, 430 N. Michigan Ave., Chicago, IL 60611. Copyright 2009 by The Counselors of Real Estate of the National Association of REALTORS®. All rights reserved. (Printed in USA.)

Third class postage paid in Chicago. Real Estate Issues publishes three times annually. Subscription rates are: $48 for one year (3 issues); $80 for two years; $96 for three years; $42 per year to students and faculty; $54 foreign rate, submit in U.S. currency; single copy $15. Remittances may be made by credit card or personal check, payable to

The Counselors of Real Estate. Remittances, change of address notices, undeliverable copies, orders for subscriptions and editorial material should be sent to Real Estate Issues, The Counselors of Real Estate, 430 N. Michigan Ave., Chicago, IL 60611. Phone: 312.329.8427; Fax: 312.329.8881; E-mail: [email protected]; Web site: www.cre.org.

Library of Congress card number LC 76-55075

Real Estate Issues is a registered trademark of The Counselors of Real Estate, a not-for-profit organization.

Published by THE COUNSELORS OF REAL ESTATE

REAL ESTATE ISSUES

EDITORIAL BOARD

i:i 4/8/2009 4:27 PM Page i

REAL ESTATE ISSUES ii Volume 34, Number 1, 2009

Published by THE COUNSELORS OF REAL ESTATE Volume 34, Number 1, 2009

vii Editor’s Note

Peter C. Burley, CRE

x Contributors

L E A D E R S H I P R O U N D TA B L E

1 Corporate Real Estate: An Interview With Experts

Panelists: Michele Flynn, CRE; Barbara Hampton; Von W. Moody, III, CRE;

and Martha A. O'Mara, CRE. Moderator: Peter L. Holland, CRE

Before real estate can be discussed as an asset class or as something to be valued, leveraged, traded or securitized, it must first be seen as a place for the conduct of work. Put simply, the commercial real estate industry begins with a tenant’s demand for space to house its products, production or employees. In this interview, experts discuss the role of the corporate real estate function within an enterprise.

5 Enterprise Component Allocation: Methodology Discussion

Roland D. Nelson, CRE

In the business of appraising real estate, we continually see changes in the practice of valuation analysis. On an ongoing basis, both old and new concepts need to be considered, analyzed and expanded. This article concentrates on business enterprise value (BEV) and is intended to stimulate thinking about the various methodologies employed to assess BEV.

11 Mixed-Use Development and Financial Feasibility: Part I – Economic and Financial Factors

Joseph S. Rabianski, Ph.D., CRE; Karen M. Gibler, Ph.D.;

J. Sherwood Clements, III; and O. Alan Tidwell

As mixed-use development grows in popularity, the economic and financial factors that lead to feasibility and success need to be known and understood. In this article, the authors examine the risks, as well as economic factors, revenue and lending issues, and costs of development, construction and property operation.

19 Credit Crisis has Weakened Global Property Fundamentals

Simon Rubinsohn

The worsening global economic environment is exerting a heavy toll on commercial real estate around the world. Even those emerging markets which previously had seemed largely immune to the claws of the credit crunch have now succumbed. However, the scale of the decline in capital values and the associated rise in cap rates will gradually create new opportunities for investors. The major issue is likely to be the ongoing lack of debt finance to help support acquisitions.

21 Managing Risk in Income Property Loan Portfolios Relative Index Methodology: A Proposal to Enhance Basel II Regulations on Income Property Lending and Assess Risk Positions in Income Property Loan Portfolios

Marc Thompson, CRE, CCIM, FRICS

The U.S. economy experienced a unique period of real estate mortgage debt growth from 2000 through 2007. Income property investors became caught up in and benefited from it, as did commercial banks, MBS investors and other financial intermediaries. The result was the financing of a great amount of speculation risk in the debt markets. This article identifies and quantifies the amount of speculation risk that exists in the mortgage markets, and suggests a methodology to identify it and serve as a basis to amend Basel II regulations to build financial stability over a three-year period.

31 Islamic Financing and Foreclosure

Keith S. Varian, Esq.; and Jennifer M. Rockwell, Esq.

Over the past several years, the United States has experienced substantial growth in a subsection of international finance sometimes called “Islamic Finance.” Currently, there are three commonly used structures of Islamic financing available to replace the traditional or conventional mortgage structure in the U.S. But because so few foreclosure proceedings based on these Islamic financings have taken place in the U.S., there are questions as to how a court would handle such a proceeding. This article provides an understanding of the separate Islamic financing structures and relevant case law to help analyze how a court might handle this novel issue.

REAL ESTATE ISSUES

CONTENTS

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REAL ESTATE ISSUES iii Volume 34, Number 1, 2009

39 Counseling the Banks: What is the Market for Branches?

Bradley R. Carter, CRE, MAI, CCIM; J. Tyler Leard; and Matthew H. Jackson

This article is intended to provide guidance to counselors who are advising bank clients as they rewrite their acquisition/disposition strategies for branches during this tumultuous time. Through interviews with market participants, recent data from the FDIC and experience in counseling and/or appraisal assignments related to more than 300 bank branch properties, the authors examine the current market for bank branch properties and the impact of the decline of the commer- cial credit markets, increasing foreclosure rates, and the down- turn in residential mortgage origination.

45 The Income Tax Effects of the Housing and Economic Recovery Act of 2008 on Real Estate Transactions

J. Russell Hardin, Ph.D.

On July 30, 2008, President George W. Bush signed into law the Housing and Economic Recovery Act of 2008. This major piece of legislation contains (in addition to many non-tax items) several new tax provisions and amendments to the Internal Revenue Code. This article examines some of these noteworthy provisions and amendments, which include changes to the low- income housing tax credit, the alternative minimum tax, and real estate investment trust reforms, among others. Investors in real estate are urged to gain a clearer understanding of this piece of legislation to seek ways in which they can significantly diminish their income taxes.

51 When Will the Miami Condominium Market Recover? Follow the Land, Man

Richard Langhorne, CRE, FRICS; and John Blazejack, CRE, MAI, FRICS

What does the Miami condominium market look like today? Since 2003, developers have begun construction on 22,000 condos in downtown Miami—more than double the number built during the past four decades. The result is that residen- tial vacancies have doubled in the past year; “for sale” condo- minium inventory has doubled. Prices have slipped downward dramatically. This article focuses on how long the recovery will take and who will benefit.

R E S O U R C E R E V I E W S

57 Navigating the Redevelopment Maze Redevelopment- Planning, Law and Project Implementation: A Guide for Practitioners by Brian W. Blaesser and Thomas P. Cody

Reviewed by Mary C. Bujold, CRE

Mary C. Bujold, CRE, reviews this “primer” on the complex process of redevelopment. Editors Brian W. Blaesser and Thomas P. Cody have compiled works of various authors to create a clear and comprehensive guide, taking readers through the many issues and challenges of redevelopment projects.

59 A Practical Guide to Commercial Real Estate Transactions by Gregory M. Stein, Morton P. Fisher, Jr. and Marjorie P. Fisher

Reviewed by Daniel L. Swango, Ph.D., CRE, FRICS, MAI

CRE Dan Swango highly recommends this book for everyone who counsels buyers or sellers in real estate transactions. He says its practical advice, check-list items, first-rate ideas and accom- panying CD-ROM make it a “must” for every real estate library.

61 Enough. True Measures of Money, Business and Life by John C. Bogle

Reviewed by Bowen H. “Buzz” McCoy, CRE

CRE Buzz McCoy finds inspiration in this timely book and its author, John C. Bogle, founder and former CEO of the Vanguard Mutual Fund Group. In his review, McCoy gives us the flavor of Bogle’s high standard of business ethics and leadership, as well as some disturbing revelations about the financial system.

64 About Real Estate Issues

Inside Back Cover

About The Counselors of Real Estate

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REAL ESTATE ISSUES vii Volume 34, Number 1, 2009

JOHN A. BLAZEJACK, CRE, MAI, FRICS, is president of Blazejack & Company Real Estate Counselors, a Miami, Florida-based counseling and valuation firm founded in 1988. He has been an instructor for the Appraisal Institute teaching Market Analysis courses for 25 years.

MARY C. BUJOLD, CRE, is president of Maxfield Research Inc. in Minneapolis, Minnesota. She is considered a market expert in the field of residential real estate and in market analysis for financial institutions. Her work spans public and private sector clients, including institutional clients.

BRADLEY R. CARTER, CRE, MAI, CCIM, is a principal of Greystone Valuation Services, Inc., an Atlanta-based real estate counseling and appraisal firm. His experience includes providing counseling and/or appraisal services related to 300-plus bank branches throughout the country.

J. SHERWOOD CLEMENTS, III, is a doctoral student in the Real Estate Department at the J. Mack Robinson College of Business at Georgia State University. He is a former real estate appraiser.

MICHELE FLYNN, CRE, is founder and president of Expense Management Solutions, Inc., a Southborough, Massachusetts-based global advisory firm. She has written and presented extensively on the subjects of procurement and sourcing strategy, shared service organizational issues and corporate real estate management.

KAREN M. GIBLER, PH.D., is an associate professor of Real Estate at Georgia State University. An active researcher and publisher, Gibler’s work has appeared in numerous real estate journals.

BARBARA HAMPTON is a consultant based in Providence, Rhode Island. Previously, she served as vice president of Workplace Resources at The Hartford, Hartford, Connecticut.

J. RUSSELL HARDIN, PH.D., is a professor of accounting at the University of South Alabama in Mobile, Alabama. He also is a CPA and teaches tax courses and financial accounting.

PETER HOLLAND, CRE, is a principal with the Hartford, Connecticut-based real estate advisory firm of Bartram & Cochran, Inc. He has more than 25 years of consulting for Fortune 100 and not-for-profits in the field of real estate.

MATTHEW H. JACKSON is a principal of Greystone Valuation Services, Inc., an Atlanta- based real estate counseling and appraisal firm. His experience includes providing counseling and/or appraisal services related to property types including numerous bank branches in several states.

RICHARD LANGHORNE, CRE, FRICS, is first vice president of CBRE's Restructuring Services Group, Miami, which provides real estate problem-solving, crisis and insolvency services involving assets under pressure, bankruptcy proceedings, complex litigation and foreclosure.

J. TYLER LEARD is an associate at Greystone Valuation Services, an Atlanta-based real estate counseling and appraisal firm. His experience includes providing valuations related to an array of property types, including a strong focus on branch banks.

BOWEN H. “BUZZ” MCCOY, CRE, is presi- dent of Buzz McCoy Associates, Inc., Los Angeles, where he specializes in strategic real estate counseling including planning, capital structure and CEO evaluation. McCoy was responsible for the real estate finance unit at Morgan Stanley for many years. Also a writer, his most recent book is Living Into Leadership: A Journey in Ethics (Stanford University Press, 2007).

VON W. “BUCK” MOODY, III, CRE, is senior vice president of corporate real estate for Wachovia Bank (now a part of Wells Fargo). In his more than 30 years of real estate experience, Moody has been involved in counseling, valuation, distressed property, due diligence, tax assessments and asset manage- ment, among other areas.

ROLAND D. NELSON, a CRE for 30 years, began his career in the real estate valuation business in 1953. Until his death in March 2009, he served as a director with Integra Realty Resources in Detroit.

MARTHA O’MARA, PH.D., CRE, is a leading authority on the integration of corpo- rate real estate planning with business strategic planning. She is co-founder and co-managing director of Corporate Portfolio Analytics, Boston, which applies portfolio planning processes, real estate market intelligence and forecasting tools to corporate portfolios.

JOSEPH S. RABIANSKI, PH.D., CRE, is a Full Professor in the Real Estate Department in the J. Mack Robinson College of Business of Georgia State University in Atlanta, where he teaches and researches real estate market analysis, valuation, financial analysis, equity investment analysis and commercial property location theory.

JENNIFER M. ROCKWELL, ESQ., is an associate with the law firm Murtha Cullina LLP, in Hartford, Connecticut, where she represents non-profit organizations, borrowers, lenders, developers and other real estate professionals in all aspects of commercial real estate transactions.

SIMON RUBINSOHN is chief economist for the Royal Institution of Chartered Surveyors (RICS). He is responsible for leading RICS’ economics and research team in providing timely analysis of developments in both the commercial and residential property markets, as well as in the construc- tion industry.

DAN SWANGO, PH.D., CRE, MAI, FRICS, is a real estate appraiser, counselor, broker and educator. In practice since the mid-1960s, Swango has been involved primarily with urban and suburban land, commercial improved and special purpose properties. He currently serves as a real estate tax hearing officer for the State of Arizona Board of Equalization.

MARC THOMPSON, CRE, FRICS, CCIM, is senior vice president of Bank of the West, Walnut Creek, California, where he manages lending operations for senior housing and care properties.

O. ALAN TIDWELL is a real estate doctoral student at Georgia State University, where he teaches courses in real estate development and real estate principles. He is a former commer- cial real estate appraiser.

KEITH S. VARIAN, ESQ., is an associate with the law firm of Murtha Cullina LLP, Stamford, Connecticut. His real estate practice clients include institutional owners, investors and developers of commercial real estate in transactions relating to the development, financing, leasing, acquisition and manage- ment of commercial real estate.

Editor’s Note: In the Volume 33, Number 3, 2008 issue of Real Estate Issues, the biography of author Daniel Lemieux identified his firm, Wiss, Janney, Elstner Associates, Inc., as a law firm. His firm is an A/E firm. Lemieux authored “Trust, but Verify: Building Enclosure Commissioning in Sustainable Design.”

REAL ESTATE ISSUES

CONTRIBUTORS

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11 Volume 34, Number 1, 2009REAL ESTATE ISSUES

Mixed-Use Development and Financial Feasibility:

Part I - Economic and Financial Factors

BY JOSEPH S. RABIANSKI, PH.D., CRE; KAREN M. GIBLER, PH.D.; J. SHERWOOD CLEMENTS, III; AND O. ALAN TIDWELL

FEATURE

INTRODUCTION

MIXED-USE DEVELOPMENTS ARE GROWING IN POPULARITY AS

they reportedly can create additional value and outper- form standard single-use real estate developments. The synergy and appeal of a quality mixed-use development can increase office and retail prices, rents and occupancy rates as well as accelerate absorption rates. Retail tenants may be willing to pay higher rents because of the increased customer traffic generated by the compatible and complementary uses. Residents and hotel guests are attracted by the convenient location of dining, retail and entertainment venues on the site. However, some locations are not well suited for mixed-used develop- ments, and careful consideration must be given to the financial feasibility of each specific project.1

Financial feasibility of mixed-use development occurs when the return on the investment meets or exceeds the required return of the developer and/or the investor. Evaluating financial return on a mixed-use project is more complex than with a single-use development. While some economies of scale may be achieved, the complexity of multiple uses may raise development and operating costs. On the other hand, the synergy of complementary uses may increase cash flows. Financing development is complex and can be more costly than for single-use developments. Measurement tools for such financial success are expressed in different ways. Discounted cash flow analysis generating an internal rate of return is one important tool. Debt service cover and cash-on-cash are also considered useful tools.2

Some developers believe that a mixed-use project diversi- fies risk across the multiple uses.3 Other developers

believe that the added financial and physical complexity of a mixed-use development, in addition to longer devel- opment timelines, heightens the uncertainty associated with the project and thereby increases the level of risk.

Factors influencing the financial success of a mixed-use development can be grouped in the categories of economic and market, financial, physical and public issues.4 This article will focus on economic and financial factors in the professional literature.

ECONOMIC AND MARKET FACTORS The Local Economy

A general economic precondition for the financial success of a mixed-use project is a strong local economy. Employment, population and consumer disposable income should be growing. This growth benefits both tenants and customers for the uses on the site. A mixed- use project developed in a stagnant or declining local economy can have problems attracting quality tenants, an adequate number of customers and rent levels high enough to ensure financial success. A stagnant or declining local economy can be perplexing for a commu- nity that wants a mixed-use development to serve as a catalyst for urban regeneration. However, it may be possible for a certain geographic market area to grow within a larger stagnant local economy. A possible scenario is a high-income geographic market area within a stagnant local economy. The population base of high- income consumers could be underserved (excess demand) for high quality retail goods and convenient personal services such as medical and dental services, accountants, insurance agents and attorneys. In addition, the “empty-nester” portion of the population base desires

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to remain in the area but also wants to downsize to luxury apartments or condo units. This situation could support a mixed-use development of retail, office and residential units. Another possibility is that a strong tourist component could offset some lack of local economic vitality, especially if hotels and entertainment venues were incorporated into the development.

If the geographic market area is depressed or distressed, whether in a stagnant or declining local economy, public sector assistance, incentives and/or participation need to be considered. Because of the positive externalities that such projects are expected to generate and the risk that devel- opers are taking by investing in a depressed area, these projects will rely heavily on public/private partnerships and financial support. Examples include tax abatement for reimbursement of infrastructure costs,5 tax increment financing for parking structure construction,6 and acquisi- tion of land that is then leased to the developer.7

Market Analysis

Market analysis for a mixed-use development is impor- tant in determining the demand and supply of each use

on the site. It should be used in the same manner as in

analyzing a single-use project. The analysis should

demonstrate sufficient net demand from both on-site and

off-site consumers for each use that comprises the devel-

opment. This is because “… many tenants’ businesses will

depend on demand from the surrounding area.”8 In

addition there are other matters that the mixed-use

market analysis should consider.

Market factors are not static; they change with time and

other influences.”9 A market analysis should examine

trends and forecasts to capture the influence of changing

economic, demographic and psychographic factors of

demand. “Two keys to success are to do your homework

upfront, and to revisit it regularly at every phase and after

build-out. These market analyses need to be fine-grained

and tailored enough to your locale for you to identify

both shifts in preferences and niches that aren’t served.

This requires a dual-pronged approach to evaluate the

market at that point in time and the other to assess how

well you’re meeting it. As the market changes, so should

your project.”10 Market research should be performed

REAL ESTATE ISSUES 12 Volume 34, Number 1, 2009

FEATURE

Mixed-Use Development and Financial Feasibility: Part I - Economic and Financial Factors

Joseph S. Rabianski, Ph.D., CRE, is a

Full Professor in the Real Estate Department

in the J. Mack Robinson College of Business

of Georgia State University in Atlanta. A

member of the college and the department

faculty since 1976, Rabianski teaches and

researches real estate market analysis, valua-

tion, financial analysis, equity investment

analysis and commercial property location theory. He has been a

consultant, counselor and expert witness in property market

analysis, commercial property valuation and economic/fiscal impact

studies. He is the author of five texts and more than 70 articles

published in various academic and professional journals in the real

estate discipline.

Karen M. Gibler, Ph.D., is an associate

professor of Real Estate at Georgia State University.

An active researcher and publisher, Gibler’s work has

appeared in such journals as Real Estate

Economics, Journal of Property Investment

and Finance, International Real Estate

Review, Journal of Real Estate Research, and

Journal of Real Estate Practice and

Education. She serves on the editorial boards of several real estate journals

as well as the RICS Foundation Research Paper Series. Gibler is the

2009 president of the International Real Estate Society.

J. Sherwood Clements, III, is a doctoral student

in the Real Estate Department at the J. Mack

Robinson College of Business at Georgia State

University. He has taught undergraduate and

graduate classes in real estate appraisal, investment

and principles. Before entering academia, Clements

was a real estate appraiser, and job assignments

included court testimony cases such as condemnation

cases including pipeline easements, railroad spurs, airport runway extensions

and landfill expansion. He also performed fee appraisals on differing proper-

ties for lenders and governmental agencies including the Federal National

Mortgage Association (Fannie Mae), U.S. Dept. of Housing and Urban

Development. the Veterans’ Administration, and the U.S. Dept. of

Agriculture. Clements earned a bachelor’s degree in real estate from the

University of Georgia and a master’s of business administration degree from

Augusta State University.

O. Alan Tidwell is a real estate doctoral student

at Georgia State University, where he teaches

courses in real estate development and real estate

principles. Prior to his doctoral studies, he was a

senior commercial real estate appraiser at

Commercial Valuation Services, Inc., a Birmingham,

Alabama-based commercial real estate appraisal and

consulting firm. Tidwell also earned the M.B.A.,

Certified Financial Planner® designation, a Certified General Appraiser

license and a real estate sales license. He has extensive experience valuing a

variety of commercial property types, including mixed-use properties.

About the Authors

38627_cre.qxp 4/8/2009 3:14 PM Page 12

early in the developmental process and in some cases, depending on the timing and absorption, updated throughout.11 These statements apply to single-use as well as mixed-use developments, but the complexity of the analysis increases when the number of uses increases.

A word of caution appears in the following statement: “Just because you have high-end retail doesn’t mean you have a high-end condo market.”12 Each use needs to be analyzed with regard to its own demand and supply situa- tion and its relationship to the other on-site uses. Each use on the site must attract sufficient market demand to make it financially feasible. The financial success of one use should not be expected to carry a weak market performance by another use. The contributory value of one use should not subsidize the other uses on the property. The denotation in these statements is clear but connotations are also present. First, while the develop- ment is planned and evaluated as a whole, the analyst must also consider the risks of all phases of a multi- phased project not being completed as planned, and some anticipated uses not opening. For example, the project could have retail with residential on top planned for phase one, and offices in a separate building planned as phase two. Over time, the office market could weaken and phase two is either scrapped or changed to more retail and residential.

Second, the completed phases and the active uses should be financially viable. In some situations these phases and the active uses may be financially feasible but not attain the return that was anticipated from the mixed-use project that was planned. The problem/solution partially depends on which use is curtailed or lost. The key retail tenants are those that draw strongly from the traditional retail trade areas but also draw customers from outside traditional trade area boundaries; these tenants cannot be lost. The key residential units must match the demand from the market. If the development plan calls for equal numbers of one-, two- and three-bedroom units in each phase of the project while the market demands only one- and two-bedroom units, vacancy in phase one will be high, making that mix of residential units financially unsuccessful. The planned units must change if phase two is to be built.

The geographic extent of the retail trade areas of each of the anchor tenants and the majority of the non-anchor tenants needs to be considered.13 Several points to recog- nize are:

The retail trade area for each retail tenant is not the

same. Some of the shops will attract customers from a

greater distance than other shops. Therefore, a three-

or five-mile ring could be too much geography for

some stores and not enough for other stores.

The retail trade area for the most prestigious retail

store or the major anchor store is not the retail trade

area for the project.14 The anchor store might draw

customers from five miles away but the non-anchor

tenants may only draw from a two-mile radius because

of competition in other retail facilities.

A properly developed mixed-use property has the

potential of attracting customers from outside conven-

tional trade area boundaries. Adding components such

as parks, walking trails, playgrounds, ball fields,

community centers, and even municipal buildings can

create habitual or repetitive traffic flow from outside

the traditional boundaries. These elements will give

customers more than one reason to come to the devel-

opment and can ensure that they visit the development

on a regular basis. Boutique shops and soft goods

retailers, which make mixed-use developments more

enjoyable and not just functional, rely on regular

visitors from greater distances who are likely to

patronize these shops.

Entertainment venues may draw customers from a

geographic market area beyond the market area for the

retail uses.

The residential market area for the mixed-use project will more than likely not be the same geographic area as the retail market or trade area, and the office market area may differ from both the retail and the residential areas. The market analysis for a mixed-use development may need to consider a different geography for each specific on-site use.

On-site Synergy

On-site uses need to be compatible, complementary and mutually supportive for synergy to exist. If synergy is achieved, it increases customer patronage, rent levels, sales volumes, and both the investment value and the market value of the project; thus, the mixed-use project has the potential for creating greater total value than if each of the uses were developed in separate locations. Generating synergy in a mixed-use development requires that each on-site use serve as an amenity for the other uses and the

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tenants add to the revenue the uses would otherwise generate from the surrounding neighborhood. Occupants of the office space can generate additional sales for the retail facilities and restaurants beyond what would be expected from area residents. Office tenants are likely to use hotels located in close proximity to service their clients. Office and retail workers may speed lease-up of the residential units. To encourage this synergy, the price mix of residential units should provide options for the categories of workers expected in and near the project.

Some of the financial benefits of mixed-use development emanate from the close proximity of a variety of uses with different peak demand times, increasing the hours that facilities are generating income. The development needs to balance night and day activities so that every- thing on the site does not shut down at the end of the workday.15 With a “24/7” vitality as an ideal goal, bringing together users who will use facilities at different times of the day or days of the week increases the potential revenue tenants can generate. While office workers might dominate the weekday luncheon crowd at restaurants, residents and hotel guests could form the majority of the dinner and weekend trade.

A clear relationship exists between the prospect of synergy and the size of the mixed-use project. This is a definite direct or positive relationship but it is not known whether the relationship is a straight line, a curve that increases at a decreasing rate, or a curve that increases at an increasing rate. At the low end of the spectrum there is very little or no synergy in a mixed- use development consisting of a single residential unit, a single small-scale retail store and a small-scale office structure located adjacent to each other on a single site. However, as the number of residential units increases, a synergistic effect can benefit the retail store. Then, if the most desired tenant mix in the retail space is achieved, it can benefit the residential units by gener- ating higher rents.

Relationships with the Surrounding Market

A successful mixed-use project must be compatible with its neighbors and integrated into the community to maximize its economic effect. Strong linkages among on- site and off-site land users are important. Off-site residential growth leads to an increased demand for on- site commercial activity such as retail stores, restaurants

and personal service establishments. The on-site users such as restaurants need to serve potential customers (residential users and office space users) living or working in close proximity to the project.

Competition with existing single-use developments must be considered. For example, building retail space in a mixed-use project near a highly successful super-regional mall surrounded by power centers, community centers and a lifestyle center may lead to high on-site retail space vacancy and a lower rent schedule, while the office and residential components of the project are financially successful. This same reasoning carries over to the on-site housing option. Building more condo units in a saturated local condo market is not a good plan but building apart- ments could be. Similarly, building a hotel on site could be a problem if the existing market has excess hotel space. Financial success depends on “being able to maximize and mix the uses in a way that responds to market condi- tions, opportunities and economics…”16

FINANCIAL FACTORS AND ISSUES17

A multitude of financial factors can contribute to the success or failure of a mixed-use development. From the planning stage through construction, to lease-up and sale, the developer must maintain focus on the integrated finished living and working environment that the devel- opment promises. The complications of multiple owner- ships, loans and leases, as well as the possible increased cost of construction and time for development make financial planning and oversight essential.

Financial success depends on minimizing the require- ment for initial equity funds. Try to find lenders who are willing to provide high loan-to-value ratios, and try to obtain development incentives from the local jurisdiction.

Lending Issues

Financing construction is a critical element of the deal. Most developers will want to minimize their initial equity in the property, trying to find lenders willing to provide high loan-to-value ratios; however, equity requirements may be higher than for single-use projects. Larger capital requirements limit the number of development firms and financial institutions that have the resources to undertake a mixed-use project. Development incentives are often available from the local jurisdiction if the government is trying to attract development into a blighted area or

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Mixed-Use Development and Financial Feasibility: Part I - Economic and Financial Factors

encourage denser development in urban rather than rural areas or at transit hubs.

Even though mixed-use developments have complicating aspects that make them more difficult for which to struc- ture financing, efficiently priced capital is available for well-conceived mixed-use developments. Lenders’ willing- ness to provide funds may be primarily attributable to:

Financial success of completed mixed-use develop-

ments across the nation;

Increased lender sophistication;

Profusion of mezzanine capital and other unsecured

debt;

Municipalities providing cash subsidies, property tax

abatements or tax increment financing.

Although capital is available for developers, lenders thoroughly analyze the proposed development as well as the developer. The primary lending criteria used are:

Adequacy of the developer or the financial partner to

deal with any cost overruns;18

Unleveraged yield on cost;

Economic environment of the location—adequacy of

consumers’ and the project’s ability to achieve market

thresholds;

Risk profile of the development—preleasing, sales and

absorption time;

Developer’s history and track record—ability to

complete the job on time and according to budget.

Lenders have difficulty determining how well the land uses work synergistically as a single development and estimating the varied sources of the components of income. They tend to evaluate the overall mixed-use project as a weighted average of the individual property types, as collateral that could be sold off separately.19

Underwriting each land use separately adds to the complexity and cost of the deal.

How the financing is structured will influence the owner- ship structure. If a single lender is financing the construc- tion, then that lender would prefer a single borrower entity that owns all of the project’s components. However, if the project is structured such that each of the land uses is in separate ownership with one asset per

special purpose entity, the developer has a more flexible exit strategy with the ability to sell pieces at different points in the development cycle and repay each construc- tion loan. Exit strategies are being emphasized more by lenders as the investment cycles are different for different uses.20 Creative solutions include individual financing of multiple land parcels, each with a separate use, or allowing early partial releases of parcels.21

When mixed uses are vertical in a single building, staging/phasing and financing issues are more complex.22

Also, because many mixed-use projects take longer to develop, phasing takes place over a longer period of time.

When a single construction loan has separate take-outs for the project components, the construction lender is dependent upon each of the permanent lenders to accomplish full take-out of the loan. A large permanent loan on the entire property may be more attractive to many lenders; however, individual loans on each property type parcel will give the owner greater flexibility in exit strategies.23

In addition to private financing, a variety of public financing tools may be available for mixed-use develop- ments. Tax abatement may be available for reimburse- ment of infrastructure costs.24 Parking structure construction may quality for tax increment financing.25

Costs

Several features of mixed-use projects can lead to higher development costs. Initial planning costs are much larger for mixed-use developments because of the complexity and need to integrate varied uses. In addition, the project may require multiple approvals from local regulators under a variety of zoning, conditional use permits and variance requirements.

Then the builder may be required to comply with different building codes for each use, adding to the complications, costs, and the time required to build the project.26 Residential uses in mixed-use buildings often have to be designed and constructed to meet commercial standards for handicapped accessibility, fire safety and mechanical requirements. In addition, special design and construction features may be required to reduce incom- patibilities between uses.27 If the development features a pedestrian-friendly design with automobiles relegated to parking structures, then those structures increase cost beyond that of surface parking lots. Alternatively, integra- tion in horizontal mixed-use developments may provide

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efficiencies in terms of infrastructure, utilities and zoning changes.28

The cost of land that is suitable to serve a range of uses is generally higher than sites suitable for just one land use. Land carrying costs could be higher or lower than for single-use properties. The larger site requirements and longer construction period add to development and construction costs.29 The costs could be less for a mixed-use development than those for a very large single-use project (like an office park or a residential subdivision) because the uses are developed earlier. This can avoid cost increases for subsequent phases in the single-use office park.

Owners hope to reduce operating costs through shared services and facilities, such as common area maintenance, parking, building management and marketing.30 Separate and duplicate technical systems minimize tenants’ impact on each other and make operating expense recovery easier for the manager, but add to construction cost.31

Another cost consideration for mixed-use developers is the issue of sustainability. By integrating uses and higher density, developments may be able to achieve the same amount of usable space in a smaller footprint. Some sustainable design elements may require additional cost in terms of materials, but they are expected to pay for themselves in increased rents and lower operating expenses. Estimates are that cost premiums that have been at 5–10 percent may have dropped to 2 percent with the steep learning curve that comes with new construc- tion methods. One study showed no significant difference in average costs for green buildings versus non-green buildings.32 Another study found that an upfront invest- ment of about 2 percent can yield a life cycle savings of ten times that investment if savings through productivity and worker retention are considered in addition to costs of energy, maintenance and repair, but such estimates are subject to considerable debate.33 In markets where green buildings are available, there is evidence of rental and purchase premiums in both the U.S. and Australia. These buildings use 32 percent less electricity and 26 percent less natural gas, according to analysis of CoStar data.34

Risk

Generally, both lenders and investors have attached a risk premium to mixed-use developments because of the complexity of meshing multiple uses, the increased construction costs, and the longer development horizon.35

The skill, experience and investment required to develop

all components of a master planned mixed-use project

may be beyond most firms, but a skilled developer can

organize a team of investors, designers, builders and

operators who are interested in each component of the

project, allowing the developer to transfer risk during the

development and operational stages. Investment in a

variety of land uses should provide diversification, and

thereby reduce risk. A mixed-use development reduces

reliance on a single market sector and the amount of

space of a single type that must be absorbed by the

market.36

Decision-Making Process

Lenders, investors and developers have asked if mixed-use

project development changes the decision-making

process. Mixed-use development is much more complex

and complicated than single-use development. The devel-

opment model has changed from the situation in which

one person was the expert on all facets of the single-use

development to the need for a committee, group or

organization of experts to plan and execute the project.

Mixed-use development generally moves the industry

away from specialization in a property type to a more

sophisticated consortium of planning and development.

CONCLUSION

The professional literature discussing mixed-use devel-

opment is full of learned opinion about the factors and

features that lead to financial success. Much can be

learned from these expert opinions. This literature

review and its organizational scheme should have

revealed some new ideas and perspectives even for the

very experienced developer or consultant dealing in

mixed-use development. A significant point to realize is

that more empirical information is needed. Real estate

academics need to determine if there is a statistically

significant combination of the factors presented in this

article that is strongly associated with financial success of

mixed-use developments.

Editor’s Note: Part II of this article will be published in the next issue of Real Estate Issues.

ENDNOTES 1. Rombouts, Christine, “Mixed Use: The Right Approach to Mixed-

Use Development Can Indeed Create Added Value, Even Beyond the

Project Itself,” Urban Land, August 2006, pp. 51–57.

2. Niemira, Michael P., “The Concept and Drivers of Mixed-Use

Development: Insights from a Cross-Organizational Membership

Survey,” Research Review, Vol. 4, No. 1, 2007, p. 54.

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REAL ESTATE ISSUES 17 Volume 34, Number 1, 2009

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Mixed-Use Development and Financial Feasibility: Part I - Economic and Financial Factors

3. Aygoren, Sule, “Ins and Outs of Mixed-Use,” Real Estate Forum,

March 2004, 59:3, p. 66.

4. Many of the comments and ideas presented in this article were

obtained in personal interviews with developers of mixed-use

projects. Most of these individuals expressed their desire for

anonymity; others insisted on it. See

www.naiop.org/foundation/rabianski.pdf.

5. Lord, C. S., “A Guide to Governmental Incentives Used in Mixed-Use

Developments,” Texas Bar Journal, 2008, 71:3, pp. 194-97.

6. Kirk, P., “Mixed-Use Musings,” Urban Land, August 2007, 66: 8, pp.

84-90.

7. Culp, L.A., “Mixed Results for Mixed-Use,” National Real Estate

Investor, August 2003, pp. 24–28.

8. Trischler, Thomas J., “In the Mix: Determining What Uses Work

Together Most Successfully,” Development Magazine, Fall 2001, p. 46.

9. Ibid. p. 42.

10. Ibid.

11. Funderburk, Tracy, “Avoiding Pitfalls of Mixed-Use Projects,” Urban

Land; May 2004, pp.36–38.

12. Comment made by Edward M. Kobel in Debra Hazel, “Multi-

Dimensional Retail,” Chain Store Age, August 2006, p. 134.

13. Some mixed-use developers are using the terms “dominant tenant”

and “cornerstone tenant.” The dominant tenant is the largest store

based on square footage while the cornerstone tenant draws the

most customers, pays the highest rent and could be the most presti-

gious tenant but not necessarily the largest tenant.

14. Trischler, op. cit. p. 42.

15. Kelly, Juliane, “Making Mixed-Use Work,” Commercial Investment

Real Estate, January/February 2001, p. 35.

16. Comment by Kenneth A Himmel in S. Aygoren, “Ins and Outs of

Mixed-Use,” Real Estate Forum, March 2004, p. 66.

17. The information contained in this section and subsequent sections

comes from a review of the published professional literature and

findings from an unpublished survey of mixed-use developers. The

survey was performed under a grant for the NAIOP Foundation and

partial results from the survey appear in an online article on

NAIOP’s Web page. See www.naiop.org/foundation/rabianski.pdf. The

bullet point lists appearing in the earlier online article are enhanced

and appear in this article.

18. Goodkin, Alan, “Financing Mixed-Use Development,” Urban Land,

January 2006; pp. 94-95.

19. Gyourko, J. E. and W. Rybczynski, “Financing New Urbanism

Projects: Obstacles and Solutions,” Housing Policy Debate, 2000, 11:3,

pp. 733-50.

20. Wieden, Michael, “Financing Mixed-Use Developments,” Urban

Land, August 2007, pp. 124-125.

21. Ibid.

22. Kettler, R. C., “Vertical Community,” Urban Land,

November/December 2005, 64:11/12, pp. 84-87.

23. Wieden, op. cit.

24. Lord, C. S., “A Guide to Governmental Incentives Used in Mixed-Use

Developments,” Texas Bar Journal, 2008, 71:3, pp. 194-97.

25. Kirk, op. cit.

26. Harbatkin, L., “Multi-family’s Rising Star in Mixed-Use

Development,” Development, Summer 2005, 36:2, pp. 30-35; Kettler,

op. cit; D. Koch, “Looking Up,” Retail Traffic, December 2004, 33:12,

pp. 38-42; and P.J. Titcher and D. P. Lari, “The Right Mix,” Urban

Land, July 2005, 64:7, pp. 27-28.

27. Baers, R. L., “Zoning Code Revisions to Permit Mixed Use

Development,” Zoning and Planning Law Report, December 1984,

7:11, pp. 81-86, and Kirk, op. cit.

28. Aygoren, S., op. cit., pp. 66-71.

29. Jones, D. H., “Financing for Mixed Use/Planned Development

Projects,” Real Estate Finance Journal, Spring, 2003, 18: 4, pp. 33-37.

30. Schwanke, D., E. Smart, and H. J. Kessler, “Looking at MSDs,” Urban

Land, December 1986, 45: 12, pp. 20-25.

31. Richter, A., “Mixed Bag,” Journal of Property Management,

September/October 2006, 71:5, pp. 26-30.

32. Davis Langdon, “The Cost of Green Revisited,” July 2007.

33. Roper, K. and J. L. Beard, “Justifying Sustainable Buildings,” Journal

of Corporate Real Estate, 2006, 8:2, pp. 91-103.

34. Green Building Council of Australia, The Dollars and Sense of Green

Buildings, 2006; and N. Miller, J. Spivey and A. Florance, “Does

Green Pay Off?” Journal of Real Estate Portfolio Management, 2008,

14:4, pp. 385-399.

35. Leinberger, C. and H. Kozloff, “Financing Mixed-Use,” Multifamily

Trends, Fall 2003, 6:4, pp. 36-39, and M.P. Niemira, “The Concept

and Drivers of Mixed-Use Development: Insights from a Cross-

Organizational Membership Survey,” Research Review, 4:1, 2007, pp.

53-56.

36. Aygoren, op. cit., and M.J. Kane, “Multiple Sources: Financing the

Mixed-Use Development,” The New York Law Journal, Sept. 29, 2004,

p. 5 col. 2.

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