Why Is Mixed-Use Development Growing in Fresno?
Fresno's commercial real estate landscape is shifting toward mixed-use development as the city embraces urban density, walkability, and transit-oriented design in ways that mark a significant departure from the Central Valley's traditionally auto-centric development patterns. Mixed-use properties that combine residential, retail, office, and community space within a single project are gaining traction in Fresno's most dynamic neighborhoods, supported by city planning policies, infrastructure investments, and evolving consumer preferences that favor live-work-play environments.
The planned California High-Speed Rail station in downtown Fresno is the single largest catalyst for mixed-use development in the city. With construction bids expected in 2026 and station construction anticipated in 2027 to 2028, the project is designed as a multi-modal transportation hub with concourses, restaurants, retailers, and a pedestrian bridge connecting downtown with the Chinatown district. Approximately $250 million in state revitalization funding has been earmarked for surrounding parcels, creating a development corridor where mixed-use projects are expected to be the predominant building format.
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Recent Fresno mixed-use projects demonstrate the market's growing sophistication. The Link at Blackstone, a mixed-use community built to net-zero standards with solar arrays, combines residential units with ground-floor commercial space and has achieved LEED Gold certification eligibility. Libre Commons, an 86-unit affordable mixed-use development, includes five live-work units at the ground floor and approximately 7,525 square feet of resident amenity and supportive services space. These projects signal that Fresno's mixed-use market is moving beyond the basic "apartments over retail" format toward more complex, community-oriented developments.
Fresno's Tower District has long served as the city's most established mixed-use neighborhood, where independent restaurants, shops, and cultural venues occupy ground-floor spaces beneath residential apartments along Olive Avenue and surrounding streets. The district's success provides a proven model for mixed-use financing that lenders can reference when underwriting new projects.
For investors and developers exploring commercial loans in Fresno, mixed-use properties present both unique opportunities and financing complexities that require careful navigation.
What Mixed-Use Loan Programs Are Available in Fresno?
Financing mixed-use properties in Fresno requires matching the property's component mix, income profile, and investment strategy with the appropriate loan program. Several options serve different mixed-use scenarios.
Conventional Bank Loans finance stabilized mixed-use properties with established tenancy across all components. Fresno banks with Central Valley experience evaluate mixed-use properties based on blended income, treating each component's contribution to the overall net operating income and debt service coverage ratio. Rates range from 6.5% to 8.0% with 5 to 10 year terms and up to 75% LTV for well-stabilized properties.
SBA 504 Loans provide the strongest financing for owner-occupied mixed-use properties where the business owner occupies at least 51% of the total rentable area. Fresno business owners who operate ground-floor retail, restaurants, or professional offices while leasing upper-floor residential units can access up to 90% financing at fixed rates between 5.75% and 6.75% with 20 to 25 year terms.
Bridge Loans serve mixed-use properties undergoing renovation, repositioning, or lease-up across multiple components. Rates range from 9.0% to 12.0% with 12 to 36 month terms and up to 70% LTV. Bridge financing is particularly relevant for Fresno mixed-use acquisitions where one or more components (typically the commercial space) requires tenant improvements and lease-up before the property qualifies for permanent financing.
Agency Loans (Fannie Mae/Freddie Mac) finance mixed-use properties where residential units represent at least 50% to 80% of the total rentable area (depending on the agency program). These loans offer some of the most competitive rates available (5.5% to 6.5%) with 30 to 35 year terms and non-recourse structures. Fresno mixed-use properties with a dominant residential component should explore agency financing as a first option.
DSCR Loans finance smaller mixed-use investment properties based on the combined rental income from all components. With no personal income verification required and rates between 7.5% to 9.5%, DSCR loans serve Fresno investors acquiring mixed-use buildings with both residential and commercial tenants generating income.
Construction Loans finance new mixed-use development in Fresno, providing draw-based funding for ground-up construction. Rates range from 7.5% to 11.0% with 18 to 36 month terms and 65% to 75% loan-to-cost ratios. Fresno's downtown revitalization and high-speed rail development zone are generating increased demand for mixed-use construction financing.
How Do Lenders Underwrite Mixed-Use Properties in Fresno?
Mixed-use properties present underwriting complexities that single-use properties do not, because lenders must evaluate multiple income streams, different lease structures, and varying risk profiles within a single asset.
Fresno mixed-use lenders evaluate each component separately before blending the analysis into a single underwriting conclusion. The residential component is assessed using comparable apartment rents, vacancy rates, and operating expenses for the specific Fresno neighborhood. The retail component is evaluated based on tenant credit quality, lease terms, and comparable retail rents along corridors like Blackstone Avenue or in the Tower District. The office component, if present, is underwritten using in-place rents compared to market rates for the submarket.
The blended DSCR must meet the lender's minimum threshold, typically 1.20x to 1.35x for conventional programs. However, lenders often apply a weighted analysis that gives greater credit to the more stable income component. A mixed-use property where 70% of income comes from residential rents (which are generally more stable) and 30% from retail rents receives more favorable treatment than a property with the inverse ratio.
Vacancy assumptions for mixed-use underwriting in Fresno typically range from 5% to 7% for the residential component and 7% to 10% for the commercial component. Lenders may apply higher vacancy assumptions for properties with untested commercial tenant mixes or short-term commercial leases.
The property's component ratio matters significantly for loan program eligibility. Properties where residential area exceeds 50% to 80% of total rentable area may qualify for agency (Fannie Mae/Freddie Mac) financing with more favorable rates and terms than commercial-only programs. Properties with a dominant commercial component are underwritten as commercial properties with residential income providing additional support.
Which Fresno Neighborhoods Support Mixed-Use Investment?
Mixed-use properties perform differently across Fresno's submarkets, and understanding which neighborhoods support the strongest mixed-use fundamentals helps investors target acquisitions and development in the most financeable locations.
Tower District is Fresno's most established and successful mixed-use neighborhood. The area's walkable streetscape, cultural identity, and blend of independent restaurants, bars, vintage shops, and residential apartments provide a proven template for mixed-use investment. Lenders with Central Valley experience are comfortable underwriting Tower District mixed-use properties based on the neighborhood's demonstrated demand for ground-floor commercial space and upper-floor residential units.
Downtown Fresno represents the largest mixed-use opportunity in the metro, driven by the California High-Speed Rail station development and associated revitalization. The planned station, pedestrian bridge to Chinatown, and $250 million in state funding create a development environment where mixed-use projects will be the predominant format. Lenders currently apply moderate to conservative underwriting for downtown mixed-use given the area's transitional nature, though terms will likely improve as the rail project advances.
Blackstone Avenue Corridor supports mixed-use development in the northern sections near River Park, where higher traffic counts and consumer activity provide tenant demand for ground-floor commercial space. The Link at Blackstone exemplifies the mixed-use potential along this corridor.
Shaw Avenue / Fresno State Area generates mixed-use demand driven by student housing and neighborhood services. Properties combining residential units with ground-floor food service, convenience retail, or student-oriented businesses benefit from the university's approximately 25,000 student enrollment.
Chinatown District adjacent to downtown is targeted for significant redevelopment connected to the high-speed rail station. The pedestrian bridge planned between the station and Chinatown will create pedestrian connectivity that supports mixed-use projects combining housing, retail, and community space.
What Are the Financing Challenges Unique to Fresno Mixed-Use Properties?
Mixed-use properties in Fresno present specific financing challenges that borrowers need to understand and address proactively to secure competitive terms.
Component Valuation Complexity makes appraising mixed-use properties more involved than single-use assets. Appraisers must evaluate each component using appropriate comparable properties, which can be challenging in a market like Fresno where mixed-use inventory is still relatively limited compared to single-use properties. Appraisal costs for mixed-use properties typically run 20% to 40% higher than single-use properties.
Lease Structure Mismatch between residential and commercial components creates underwriting friction. Residential leases are typically 12-month terms, while commercial leases run 3 to 10 years. This mismatch means that income stability varies across components, and lenders must model different turnover assumptions for each use type.
Management Complexity affects lender confidence. Operating a mixed-use property requires expertise across residential management (tenant screening, maintenance, turnover), commercial leasing (tenant improvements, NNN billing, commercial maintenance), and shared-space management (common areas, parking, building systems). Lenders evaluate the borrower's or property manager's ability to handle all components.
Financing Program Fit challenges arise when a property's component mix falls between program eligibility thresholds. A property that is 45% residential and 55% commercial may not qualify for agency financing (which requires majority residential) and may be underwritten more conservatively by commercial lenders (who view the residential component as adding management complexity).
Exit Strategy Clarity is more important for mixed-use properties because the buyer pool is smaller than for single-use assets. Lenders want confidence that the property can be refinanced or sold to an audience of qualified buyers who understand mixed-use operations.
What Are Current Mixed-Use Loan Rates and Terms in Fresno?
Mixed-use loan rates and terms in Fresno reflect both the property's component mix and the specific loan program being used.
Fresno mixed-use loan rates range from 5.5% for agency-eligible properties (majority residential) to 12.0% for transitional mixed-use properties requiring bridge financing. The specific rate depends on the residential-to-commercial ratio, tenant quality, property condition, borrower experience, and the loan program.
Agency loans (Fannie Mae/Freddie Mac) offer the most competitive rates for mixed-use properties where residential units represent at least 50% to 80% of total area. These programs offer 5.5% to 6.5% rates with 30 to 35 year terms and non-recourse structures, making them the clear first choice for qualifying Fresno mixed-use properties.
Conventional bank loans serve mixed-use properties that do not meet agency eligibility at rates between 6.5% and 8.0%. SBA 504 loans offer 5.75% to 6.75% for owner-occupied mixed-use buildings. Bridge loans at 9.0% to 12.0% serve transitional mixed-use assets undergoing renovation or lease-up.
Using a commercial mortgage calculator helps Fresno mixed-use borrowers model the economics of different financing programs and determine which option maximizes returns based on the property's specific income and expense profile.
How Do You Structure a Mixed-Use Acquisition in Fresno?
Structuring a mixed-use acquisition in Fresno requires coordinating the investment analysis, financing approach, and operational plan across multiple property components.
Start by analyzing each component's income and expense profile independently. Evaluate the residential units using comparable apartment rents in the specific Fresno neighborhood. Assess the commercial space using comparable retail or office rents for the corridor. Identify any below-market rents that represent value-add opportunities and any above-market rents that may represent lease renewal risk.
Determine the appropriate loan program based on the component ratio. If residential represents more than 50% of total area, explore agency financing first. If the property is owner-occupied, evaluate SBA 504. If the property needs renovation or lease-up, start with bridge financing with a clear plan to transition to permanent financing.
Prepare a capital expenditure budget that addresses each component's needs. Mixed-use renovations require coordination between residential unit upgrades, commercial tenant improvements, and shared infrastructure improvements (lobby, elevator, parking, building systems). Budget tenant improvement allowances of $20 to $50 per square foot for new commercial leases and $5,000 to $15,000 per unit for residential renovations, depending on scope.
Engage a property management team with mixed-use experience. Fresno lenders will evaluate the management plan as part of their underwriting, and demonstrating that the borrower has the operational capacity (either in-house or through third-party management) to handle both residential and commercial tenancy is essential to securing competitive terms.
What Value-Add Strategies Work for Fresno Mixed-Use Properties?
Fresno's mixed-use market is still maturing, which creates value-add opportunities for investors who can improve properties across multiple components simultaneously.
Residential Renovation with Commercial Repositioning is the most common mixed-use value-add strategy in Fresno. Investors acquire properties with below-market residential rents and underperforming commercial space, then renovate both components simultaneously. Upgraded residential units command higher rents while improved commercial space attracts stronger tenants willing to pay market rates. This dual improvement strategy can increase property NOI by 25% to 50% over a 12 to 24 month renovation period.
Commercial Conversion transforms unused or underperforming space within a mixed-use building into a higher and better use. Examples in Fresno include converting underutilized storage or basement space into commercial units, adding live-work units that blend residential and commercial functions, or repurposing vacant commercial space as community amenity areas that enhance the residential component's appeal.
Adaptive Reuse of older commercial buildings into mixed-use properties represents a growing opportunity in Fresno's downtown and surrounding neighborhoods. Converting former industrial buildings, outdated office properties, or underperforming retail structures into residential-over-commercial mixed-use developments can unlock significant value, particularly in areas near the planned high-speed rail station.
How Do You Apply for a Mixed-Use Loan in Fresno?
The application process for mixed-use loans in Fresno requires more detailed documentation than single-use property financing because lenders must evaluate multiple income streams and operational components.
Assemble a complete package that includes a property summary describing all components and their current and projected performance, a detailed rent roll broken out by component (residential units, commercial tenants), historical operating statements for at least three years, current lease agreements for all tenants, a capital improvement plan if applicable, borrower financial documentation and experience resume, and a management plan addressing both residential and commercial operations.
Submit to multiple lenders who actively finance mixed-use properties. Not all commercial lenders are comfortable with mixed-use underwriting, so targeting lenders with specific mixed-use experience and Central Valley market knowledge ensures more productive conversations and competitive term sheets.
Contact Clearhouse Lending to discuss your Fresno mixed-use financing needs and receive a customized term sheet.
Frequently Asked Questions About Mixed-Use Loans in Fresno
What is the minimum down payment for a Fresno mixed-use loan?
The minimum down payment depends on the loan program and component ratio. SBA 504 loans for owner-occupied mixed-use properties require as little as 10% down. Agency loans for majority-residential mixed-use require 20% to 25% down. Conventional bank loans require 25% to 35% down. Bridge loans for transitional mixed-use typically require 25% to 35% down. The specific requirement depends on tenant quality, property condition, and borrower experience.
Can I get an agency loan for a mixed-use property in Fresno?
Yes, Fannie Mae and Freddie Mac finance mixed-use properties where the residential component represents at least 50% to 80% of total rentable area (program-specific thresholds apply). Agency loans offer the most competitive terms available: rates from 5.5% to 6.5%, 30 to 35 year terms, non-recourse, and up to 80% LTV. Fresno mixed-use properties in the Tower District and along residential-dominant corridors frequently qualify for agency financing.
How do lenders handle the different components of a Fresno mixed-use property?
Lenders evaluate each component separately using appropriate comparable properties and operating expense assumptions, then blend the analysis into a single underwriting conclusion. The residential component uses apartment comparable data, the retail component uses retail rent comparable data, and office space uses office market data. The blended DSCR, LTV, and cap rate determine the financing terms. Components with stronger fundamentals improve the overall underwriting, while weaker components may require reserves or lower leverage.
What are the insurance requirements for mixed-use properties in Fresno?
Mixed-use properties require comprehensive insurance that covers all building components and use types. Policies must include commercial property coverage, general liability, residential liability (if applicable), loss of rents coverage for both residential and commercial tenants, and potentially specialized coverage for certain commercial uses (restaurants, fitness facilities). Insurance costs for mixed-use properties typically run 10% to 20% higher than comparable single-use properties due to the additional liability exposures.
Are there zoning restrictions on mixed-use development in Fresno?
Fresno's zoning code includes several mixed-use zoning designations that allow combined residential and commercial uses in designated corridors and districts. The Downtown Neighborhood and Downtown Core zones, the Commercial Main Street zone, and certain Planned Development zones all permit mixed-use development. The city has been actively updating zoning to encourage mixed-use development, particularly along transit corridors and in the downtown high-speed rail station area. Developers should verify zoning compliance before closing on acquisition or construction financing.
How does parking affect mixed-use loan underwriting in Fresno?
Parking is a significant underwriting factor for Fresno mixed-use properties because the city's auto-dependent culture means tenants and customers expect adequate parking even in more urban locations. Lenders evaluate the parking ratio (spaces per unit or per 1,000 square feet of commercial space) against both city requirements and market expectations. Properties with parking deficiencies may face lower valuations and more conservative financing terms. Downtown mixed-use projects near the planned high-speed rail station may receive parking ratio reductions as transit access improves.
Moving Forward With Your Fresno Mixed-Use Loan
Fresno's mixed-use market is entering an exciting growth phase driven by the high-speed rail project, downtown revitalization, evolving consumer preferences, and city planning policies that encourage density and walkability. From established neighborhoods like the Tower District to emerging opportunities in downtown and Chinatown, mixed-use properties offer investors the ability to diversify income streams, capture multiple demand drivers, and participate in Fresno's urban transformation.
Whether you are acquiring an existing mixed-use property, converting a single-use building into a mixed-use format, or developing a new mixed-use project, understanding the financing options and underwriting requirements specific to mixed-use assets is essential to securing competitive terms.
Contact Clearhouse Lending to discuss your Fresno mixed-use financing needs and receive a customized rate quote for your property.