Why Mixed-Use Projects Struggle Before They Even Begin

Mixed-use developments are often seen as the future of urban living—dense, efficient, and designed to bring residential, commercial, and communal life together in one space. These projects promise vibrant neighborhoods, reduced car dependency, and more sustainable land use. Yet despite all the enthusiasm, actually getting one of these developments off the ground remains an enormous challenge for today’s developers.

The primary obstacle? Financing. While the idea of mixed-use communities garners broad support, traditional lenders tend to approach these projects with caution. Banks are generally more comfortable underwriting single-use developments, where risks are easier to assess and returns more predictable. In contrast, mixed-use projects combine housing, retail, office space, and public amenities—each with different financial structures and market conditions. This complexity makes them harder for banks to underwrite, especially in an environment of rising interest rates and tightened lending standards.

And the numbers back it up. A recent study published in Frontiers in Built Environment found that 21.9% of professionals involved in mixed-use projects identified securing financing as the most significant challenge they face. That’s nearly a quarter of all respondents pointing to funding as the biggest barrier to execution. Another 34.4% cited regulatory red tape as the top issue—illustrating just how interwoven the problems of money and bureaucracy are in this space. Meanwhile, Building Design+Construction reported that roughly 30% of multifamily housing projects stall after early design phases due to difficulties in securing financing—a telling statistic that underscores how precarious project timelines can be when traditional funding falls through.

When bank financing proves too rigid or slow, many developers turn to private capital—and this is where real opportunity can lie. Private financing, often brings greater speed, flexibility, and a willingness to work with unique project types. Unlike traditional lenders, private lenders tend to evaluate deals based on asset value and potential, not just a developer’s credit profile. For projects facing tight timelines or unconventional parameters, this kind of funding can make the difference between moving forward and stalling out. It’s a tool increasingly used by developers who need to stay agile in a market full of regulatory and financial friction.

Still, funding is just one part of the equation. Even with capital in place, developers frequently run into bureaucratic bottlenecks that slow progress to a crawl. Each municipality has its own zoning laws, land-use regulations, and planning approval processes, and there’s often little consistency from one jurisdiction to the next. Getting a mixed-use development approved can involve multiple agencies, layers of documentation, and months—sometimes years—of back-and-forth. These delays not only increase holding costs but can also jeopardize financing, especially when timelines are tight.

Local planning departments, already burdened and under-resourced, often can’t keep up with the volume or complexity of modern developments. Developers face repeated requests for revisions, costly impact studies, and drawn-out public hearings that can derail timelines and inflate budgets. Even when local governments set ambitious housing or urban density goals, the mechanisms for approving projects often fail to support those ambitions. Infrastructure constraints, limited staffing, and political pushback from residents further complicate the process.

And there’s more. Beyond financial and regulatory hurdles lies the practical challenge of actually integrating different uses into a single space. It’s not enough to throw apartments above storefronts or stack office suites next to public parks. Each element must function in harmony. Without careful design and thoughtful planning, tensions can arise—residents might object to noise from retail tenants, businesses may struggle with limited parking, and public areas might fall short on accessibility or upkeep. When these tensions aren’t anticipated early, they can undermine the long-term success of the development.

There’s also the issue of community impact. Mixed-use projects are often framed as a way to build inclusive, socially vibrant spaces. But without safeguards in place, they can accelerate gentrification, displacing long-time residents and small businesses. While this isn’t an inherent flaw of mixed-use development, it’s a risk that must be managed proactively through affordability measures, community engagement, and responsible planning.

All these challenges leave developers in a tough position. They’re under pressure to deliver innovative, forward-thinking projects that align with urban goals—yet they’re repeatedly stalled by financial friction and bureaucratic delay. Many smaller developers, in particular, struggle to keep pace with rising costs and shifting requirements, forcing them to scale back, delay, or abandon projects entirely.

This creates a disconnect. On one hand, cities promote dense, walkable, mixed-use communities as essential to their future. On the other, they maintain systems that make delivering those communities incredibly difficult. Without streamlined approval processes, more flexible lending solutions, and better coordination between public and private stakeholders, many of these projects will remain stuck on paper.

That’s why private financing and strategic partnerships are playing an increasingly important role in making mixed-use development feasible. Lenders who understand the unique structure and potential of these projects can offer developers the support they need to stay nimble, overcome red tape, and keep moving forward. It’s not just about funding—it’s about unlocking momentum in a process too often bogged down by inertia.

Mixed-use development still holds enormous promise. But until we address the systemic barriers that prevent projects from taking off, that promise will remain out of reach for many. The future of our cities depends not just on big ideas, but on the practical ability to execute them—and that starts with rethinking how we finance, regulate, and support the people building them.