IMPACT OF MIXED-USE DEVELOPMENTS ON COMMERCIAL PROPERTIES IN CENTRAL AREA

Abstract

The literature suggests that mixed-use developments spurred the ‘flight-to-new-project’ phenomenon and contributed to higher transaction prices. This research aims to determine the impact of mixed-use developments on the office market and to explore the correlation between distance from a mixed-use centre point with prices. It will also provide insights on different uses with varying degree of correlation with transacted prices. Sales transactions obtained from Real Estate Information Systems were used for regression analysis. The analysis suggests that mixed-use developments has a moderate positive impact on transacted price, but this impact can be weakened by agglomeration economies from related industries. By clustering office developments, it was evident that distance has a more significant impact in scattered clusters. Refurbishment of older buildings into mixed-use developments did not always translate into positive relationship with price. This indicates that refurbishment may be insufficient to counter effects of functional obsolesce. Refurbishment was found to have a positive impact on prices in clusters outside the Central Business District (CBD), with an exception for pure office clusters in the CBD. Overall, hospitality space has the most significant impact on transacted price, followed by commercial, residential and finally retail space. Yet, clustered analysis showed that both positive and negative coefficient for retail space have a negative impact on residential space with a mix of commercial, retail and residential use only. Findings of this paper serve to benefit end users to gauge impact of mixed-use developments on prices and developers to select choice of building mix.