Mark Souris, Managing Director of retail, commercial and industrial property management company, Periscopic, argues “Being able to develop new and successful shopping centres in existing suburban areas is becoming more difficult. Similarly, growth in the rural market, while still prevalent, will soon begin to slow down as that market too becomes saturated.”

According to Heidi Franck, Managing Director of property asset management and quantity surveying company, Intigra, town planners are intent on putting a halt to further urban sprawl and are instead encouraging a more efficient use of existing buildings. “This is particularly relevant in light of the fact that transport costs will continue to soar and that convenience will become even more highly rated by consumers.”

The solution, to this, is to convert existing buildings into mixed use developments. “Obviously this does require an upfront investment in refurbishing a building but depending on where the building is situated and the type of tenant mix you aim for, a mixed use centre can be a worthwhile investment” comments Souris.

Mixed use developments vary in nature and larger projects situated in thriving commercial nodes are generally successful. Melrose Arch is perhaps the iconic new urbanism leader in Joburg, but office parks in Woodmead also include commercial, retail and medical facilities, which allows tenants easy access to these offerings. Another example of successful offices is the Nelson Mandela Square which showcases the accomplishment of a mixed use centre, as they have a wider selection of retail space and a secure residential portfolio. Montecasino offers a variety of uses in one structure such as entertainment, retail, hospitality and offices.

In order to be profitable and successful, mixed use developments must be aesthetically pleasing and well maintained; sufficient and secure parking needs to be considered and most importantly, the tenant mix must be correct. The type of residential tenants the centre attracts will have a direct impact on the type of retail tenants who choose to set up shop in the centre. “The correct tenant mix is vital in order to create a sense of energy and space,” reveals Franck. “Mixed use developments tend to attract cosmopolitan people who buy into a particular lifestyle where safety, security and convenience are highly rated.”

Considering the massive housing shortfall in South Africa there is little doubt that mixed use developments will become increasingly popular in South Africa in years to come. Additionally, the diversification benefits afforded investors should also hold some sway.