ORLANDO, FLA.Many affordable housing developers are still scratching their heads over how to economically mix retail and commercial space into their affordable housing projects. That’s because despite the clear benefits of placing some retail near housing – jobs, amenities – the cost of including significant retail space into a residential building can be higher than the project’s often-transitional neighborhood can support.

But Bob Koch has come up with an intriguing strategy. He is the president of Fugleberg Koch Architects, based in Winter Park, Fla. His idea is surprisingly old-fashioned: “Imagine a single-family house where the first floor is a store … circa 1920,” Koch said.

He has tried out this strategy several times, most recently in his master plan for Hampton Park, a small HOPE VI redevelopment in Orlando, Fla., developed by Colonialtown Community Builders and the Orlando Housing Authority. This development includes a small series of live/work units. In Koch’s design, each house totals about 1,400 to 1,500 square feet, with about 600 square feet set aside on the first floor for a business like a hair salon or an accountant’s office.

The homes are set back just 15 feet from the sidewalk, with indented parallel parking in front and a separate entrance for the residents in back. The builders arranged these live/work spaces on the main streets, where they would get the most traffic.

Local Florida market analysts say that these spaces often earn about $1.50 per square foot in retail rental income, about 50 cents per square foot higher than the space would earn as rental housing. These retail rents are still very competitive compared to the rents charged for space at local strip malls.

That’s because the commercial space in the houses is so modest that the developer can build it under the local residential building code instead of the commercial code, saving several dollars per square foot in construction costs.

When Hampton Park is finished in August 2006, the project will include 65 single-family, for-sale homes, including five live/work homes. Of the 65 houses, 20 will be reserved for low-income first-time homebuyers earning up to 80% of the area median income. However, the live/work homes, which were finished in December, do not have income targets and were built using the home builder’s own interpretation of Koch’s live/work concept. The homes are about twice as big as Koch designed and sold at luxury prices: $155 per square foot or up to $550,000 per home.

Koch said that his more modest design is well suited to affordable development, and he is working with several developers to place his live/work units in their mixed-use communities.n

Developers with ambitions to build mixed-use projects on a bigger scale might reach for The Mixed-Use Development Handbook, Second Edition, by Dean Schwanke, who led a team of writers that contributed to the book. Published by the Urban Land Institute (ULI), the handbook guides real estate pros through the development of large, mixed-use projects, from the initial planning to the exit strategy.

Builders will find an honest appraisal of the challenges of mixed uses: The projects involve extraordinary planning and a tremendous investment. Examples of mixed-use projects appear on nearly every page of the handbook. The book is available through the ULI Web site, www.uli.org, and through other Internet booksellers.

ULI writes the book on mixed-use

Bob Koch, president of Fugleberg Koch Architects in Winter Park, Fla., has an old-fashioned design for mixed-used development.