In article published on November 9 in Multifamily Executive, Rob Benaicha discusses the pandemic’s more limited effect on mixed-use developers and owners in Virginia thus far.
While development is struggling in some cities like Seattle, Benaicha suggests that projects are still moving forward in Virginia. “We are not seeing a negative impact on mixed-use residential developments right now – at least in the projects we have handled in Virginia – stemming from COVID-19 or anything else,” he said. “In a nutshell, new mixed use is moving forward with no hesitation. None of the developments we are seeing are stalling.”
The financial impact of the pandemic on commercial and residential tenants is a key consideration for property developers and owners to assess their potential revenue returns. Many mixed-use developments are weighted more heavily toward rental income from apartment residents, who, in the near-term, are unlikely to consider a move. As a result, owner balance sheets are more stable in residential mixed-use developments than in other types of properties.
“A lot of developers take advantage of multifamily financing options, which means they’re not leaning to heavily on their commercial rent,” Benaicha said. “The commercial rent in some cases only accounts for less than 10% of their income stream, so if those businesses start hurting, it’s a problem, but it’s not insurmountable.”
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