Study of Mixed-Use Development Trends

Purpose

Montgomery County Planning Department staff, along with the consulting firm HR&A Advisors, completed an analysis on mixed-use development trends in the county. The study looked at mixed-use development from 2010-2020, both on-the-ground development as well as approved projects in the Development Pipeline. Its primary goals were to understand the characteristics of mixed-use properties in different parts of the county, as well as what aspects of mixed-use are doing well, and, finally, to provide recommended improvements to Montgomery County policies to enhance mixed-use development.

Background

Montgomery County is a large and diverse suburb of Washington, DC with a population of 1.05 million people. The County has dense urban central business districts like Bethesda and Silver Spring, large swathes of automobile-oriented suburbs built from the 1960’s to 1990’s, and a rural agricultural reserve that is 1/3 of the landmass of the County. Especially within the last ten years, mixing uses has become an increasingly central component of real estate development in Montgomery County as growth shifts from greenfield to infill.

Mixed-use may take many forms, including vertical mixed-use (multiple uses within a single building) and horizontal mixed-use (multiple uses in separate structures on a single property). Within Montgomery County, mixed-use constructed in the past 15 years is primarily vertical mixed-use with retail on the ground floor and office or residential above. For the purpose of this study, M-NCPPC is interested in vertical mixed-use within a single building.

Findings

Mixed-use development is steadily growing as a share of total development, with Pipeline projects even more weighted toward mixed-use than other types of recent development. Between 2010 and 2020, mixed-use development made up nearly 50 percent of new commercial and multi-family development delivered. Consistent with national trends, that mixed-use projects are becoming more common than single use, the Pipeline shows that split increasing, approaching 60 percent.

Mixed-use development is predominantly anchored by residential uses with ground floor retail as the secondary use. They are primarily located down-county and along the I-270 corridor. The scale is generally mid-rise in form, with high-rise buildings occurring most frequently in Bethesda and Silver Spring. To that point, the study notes that Rockville, Bethesda, Silver Spring, Gaithersburg, and North Bethesda make up 88% of total mixed-use square footage.

There are several drivers of success and failure regarding ground floor retail. For example, mixed-use near, or within, already vibrant areas, succeed better than not, or those situated on back-streets. Similarly, connectivity and costumer-attraction are made more difficult when near large, vacant areas and parking lots. Vacant storefront space also acts as a “negative amenity.”

Success factors

The study includes a section describing factors that contribute to successful mixed use development, including:

• Sustainability: Sustainability is both environmentally responsible but also can be seen as an amenity, often returning premium rents. Mixed-use projects can explore traditional methods of sustainability, such as LEED certification, as well as less traditional methods like green roofs, stormwater collection and recycling, or solar panel integration.
• Walkability: The ground floors of these projects can affect the larger pedestrian experience in a district. Most mixed-use projects rely on ground floor activation to create success for the commercial uses within the building, usually in the form of retail. These spaces should contribute to, and plug into, the pedestrian experience.
• Authenticity: The most successful mixed-use projects, especially in the case of mixed-use districts, should strive to either reinforce, or establish, the character, and feel, of a neighborhood. In smaller developments, authenticity can come by adding to the existing fabric of an area and aim to lease ground floor space to local retailers as opposed to national brand names, support and display local art, or host community and neighborhood events. In mixed-use districts, the authenticity of the project can be strengthened through the engagement of the local community throughout the planning process, ensuring the community’s vision and voices help to drive project design.
• Convenience: Mixed-use projects are most successful in areas proximate to transit. These areas tend to be more easily accessible to residents, workers, and shoppers of diverse incomes. Having a variety of retail, restaurants, and other amenities activate ground floor space.
• Flexibility: Zoning and regulations that can accommodate changes in consumer preferences and market conditions will result in more successful mixed-use projects. The Commercial/Residential zoning family (CR) allows for a wide-range of uses to respond to development trends and needs.
• Inclusion: Mixed-use projects should be designed for all people, both community members as well as visitors. Montgomery County’s inclusionary zoning policy is a good example of creating inclusion in mixed-use. Other methods include leasing retail space to smaller, local businesses and designing spaces to be welcoming to diverse users of all abilities.

Recommendations

The study includes recommendations based on the data analysis, policy analysis, and a review of case studies from comparable jurisdictions. The study notes that many other jurisdictions tend to rely on a combination of more frequent plan updates and site-specific approvals to accommodate shifts in developer demands or policy. It also recommends having a more discretionary review process, as is the case in Bellevue, WA, which has a mix of requirements and discretionary items in the review process, offering developers both certainty and flexibility when needed. Regarding high-priority design guidelines, Bellevue also has a mix of required and negotiable design guidelines, allowing the City to prioritize their guidelines and ensuring that developers comply with design preferences that are considered a top priority. Additionally, Fairfax County has Urban Design Guidelines that provide in-depth descriptions and options for what the County envisions for the Community Revitalization Districts.

The study demonstrates that mixed-use development is most successful in more urbanized places and, thus, provides recommendations prioritizing densification and increased flexibility for ground floor uses and activation strategies. Additionally, it recommends maintaining and increasing affordable housing.

Regarding the development process, the study recommends exploring the streamlining of the development approval process outside of the need for plan updates. This could be achieved through adjusting policies to balance flexibility with minimum requirements, exploring tweaks in the bonus density point system, and establishing policy and workflows focused on flexibility, in general.

Finally, concerning the mixed-use market in a post-Covid-19 environment, the study suggests short-term strategies such as “dressing up” vacant space, incorporating the use of public art, and allowing for altered uses of ground floor retail space for temporary child-care or co-working space, as well as rental assistance and/or small business grants to assist in continuing active ground floor spaces that will enable mixed-use development to be seen in the healthiest light.