Vibrant Mixed-Use Districts Offer Blueprint For Revitalizing US Cities

The model for reinventing U.S. cities after the upheaval of the pandemic and remote work – especially for revitalizing their urban cores – can be found within their own boundaries.

CBRE analysis detailed in the new “Shaping Tomorrow’s Cities” report found that offices and other properties in cities’ vibrant mixed-use districts have fared significantly better than those in office-dominant districts. CBRE defines vibrant mixed-use districts as walkable urban areas including a mix of properties such as apartments, retail, restaurants, hotels and the highest quality office space.

CBRE identified 68 such vibrant mixed-use districts in 19 U.S. markets analyzed for the report. Office vacancies in those mixed-use districts were lower (18% average) than in their cities’ nonprime business districts (22%), which are mostly office parks that lack top-quality office buildings and live-work-play amenities. Office rents are higher in prime mixed-use districts, too.

“Reinvigorating city cores will be no easy task, but there are roadmaps for every city to consider,” said Julie Whelan, CBRE Global Head of Occupier Research. “Vibrant mixed-use districts provide a blueprint for vitality that cities can strive to foster in other neighborhoods.”

A key strategy for revitalizing cities struggling with high office vacancies and related challenges is to fortify those mixed-use districts and to encourage development of other property types in office-heavy districts, according CBRE. One way to do that is to convert obsolete office buildings to other uses, namely apartments, and to renovate or redesign some into better office properties.

CBRE’s analysis found that, in and around those 68 mixed-use districts, there is 43.5 million sq. ft. of mostly vacant office buildings that could be candidates for conversion to other uses or upgrade to better office properties. That could yield up to 43,500 residential units across those districts if all buildings were converted.

Beyond that, revitalization efforts could target obsolete buildings in cities’ nonprime business districts, which collectively account for 58% of total office space in the 19 cities analyzed.

To be sure, conversions aren’t the only solution. Several influences beyond location factor into whether a given building can be converted to another use, namely the building’s structure, its value, cost of construction and financing, zoning, and city guidelines.

Opportunity Varies By City

CBRE categorized the 19 cities in its report into four archetypes with similar strengths and weaknesses: Super Cities of New York and Los Angeles; Mixed Majors such as Boston and Washington, D.C.; Sprawling Darlings including Dallas and Phoenix; and Developing Destinations like Austin and Nashville. CBRE highlights varied attributes as strengths for some city archetypes and weaknesses needing improvement for others, including economic diversity, infrastructure quality, responsive governance, and cultural identity.

Select Cities and their Vibrant Mixed-Use Districts

Six Focal Points for Revitalization

The report delves into the recent evolution of U.S. cities and the implications for real estate. Since 2000, population had migrated to urban neighborhoods of many cities, followed by a marked increase in construction of offices and apartments in and around those districts. But the urban exodus sparked by the pandemic in 2020 shifted some populations back to suburbs in many markets and left employees working more remotely, leaving office districts to languish in many.

CBRE’s analysis identified six elements critical for cities’ evolution, including the vitality and adaptability of the city’s economy; the city’s demographics; its quality of life; the state of its infrastructure; its identity as defined by its history, natural resources, and culture; and the responsiveness of city government.

“Some of these elements can only be changed gradually, over decades. Others, such as responsive governance, can be addressed more quickly,” said John Stephens, Senior Director of CBRE Americas Consulting. “There are roles for every constituency to play in revitalizing cities. For example, building owners and developers can invest in redeveloping existing properties and contribute to placemaking of vibrant areas.”

The report maps out responsibilities for seven categories of stakeholders across the public and private sector – including the community itself – who must work together over the coming decade. The public sector, made up of federal, state and local government; and the private sector, made up companies, developers, property owners and local businesses each have a unique set of responsibilities to help drive the fastest evolution of their city.

Click here to read the full report.