What makes a mixed-use development work?

When Morguard Investments first presented plans in 2005 for its new tower at the corner of Elgin and Gloucester streets, the company proposed what would have been a first for Ottawa.

The 27-storey tower was slated to include 160 residential units, more than 92,000 square feet of office space, and a 900-seat concert hall.

The project was shelved after funding for the concert hall portion fell through and came back last year as predominately an office development, without residential units.

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While the exact reasons for the shift are unclear, the new plans come as little surprise to observers, who point to several factors behind why mixed office/residential projects are so rare.

For starters, condos and offices are typically constructed differently. The structure of a residential building typically contains “shear walls” that divide one unit from another, says Minto Group chairman Roger Greenberg. By contrast, office buildings are generally supported by columns. Experts say incorporating both into a single structure involves a transfer slab or floor, which adds additional expense and reduces the revenue-generating areas of a building.

Furthermore, developers tend to pick an area of specialization, making companies such as Minto – which builds condos and offices and also operates a hotel and rental properties – rare, says Mr. Greenberg.

Ownership also plays a role, says Broccolini vice-president Derek Howe. Pension funds, such as the ones that own the existing development sites in the core, are looking to hold income-generating assets for the long run and are less interested in selling condos.

There are exceptions where developers have pursued a mixed office/residential model. The Shaw Tower in Vancouver contains 16 storeys of offices below 24 floors of condominium units. In Boston, developer Millennium Partners is planning a tower with retail stores, office space and residences, according to a media report.

Closer to home, a report tabled at the city of Toronto’s planning committee in January called for “true” mixed-use developments and the devotion of at least 25 per cent of the space within some projects for employment purposes.

The more traditional form of mixed-used development involves ground-level retail at the base of condominium and office towers. That model has evolved in Ottawa from the token tuck shop buried in the basement of apartment buildings to national retailers prominently featured in the podiums of new highrises.

Examples include the Shoppers Drug Mart at the base of Urban Capital Property Group’s Mondrian condominium on Bank Street, and Sobeys’ plans for a grocery store inside Claridge’s Tribeca Towers on Metcalfe Street.

“A lot of retailers that were traditionally big-box suburban players … are starting to figure out how to come up with a small-box (version) of what they’re doing,” says Mr. Greenberg.

“It’s an evolution of retailing, and it is an evolution of people moving to the downtown cores again, and then demanding services.”

He says a retailer cannot be supported by the occupants of an office or residential tower alone. Indeed, there appears to be limited demand for retail space in the downtown areas dominated by office towers; there are still vacancies in the new EDC building at O’Connor and Slater streets, as well as in other surrounding office towers.

A few blocks over, however, city planner Alain Miguelez points to Claridge’s condominium project at 700 Sussex St., at Rideau Street, as a particularly successful mixed-use project. It features luxury condominiums, restaurants and retailers, separated by a gym that acts as a buffer.

He adds city planners would support even further integration of different uses within a single building.

“Now that it exists and people can see that it works well, it is much more possible for (developers) to continue doing that and experimenting with different things,” says Mr. Miguelez.

Defining mixed-use

Mixed-use buildings typically combine retail, office and/or residential units within the same structure and are frequently pedestrian-oriented. They differ from mixed-use sites, which have connected stand-alone structures. Local examples include Minto Place and the Place de Ville complex, which consist of office towers and hotels.

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