One of the country's top real estate advisors has some practical advice for small to moderate-scale investors looking for the next wave of profit opportunities: Think multiple-use "flex" space properties inside urban cores, says Mike Cannon, executive director of Integra Realty Resources of Miami.

That means looking hard at central-city properties that currently have traditional, relatively inefficient uses that can be transformed into creative combinations of residential, retail, even office and light industrial.

"The move is back to the urban core," says Cannon, whose firm counsels developers and investors from the U.S., Europe and elsewhere. "All the economic and demographic forces are pushing in that direction."

Which raises the question: Why fight those headwinds when you can go with the flow?

Some of the most attractive real estate returns in the coming decade, according to Cannon, will go to investors -- individuals, partnerships, joint venture groups -- who can identify and acquire urban-core land or buildings that are currently underperforming, but that have multiple, adaptive-use potentials going forward.

Say you find an older retail building on the edge of downtown that's earning only marginal returns for its current owners. What you see in the property's potential, however, is something dramatically different: Redevelopment into a combination of residential apartments or loft condos on upper floors -- some of it new construction, plus adaptive re-use of old space -- with updated retail and even office uses.

Many of the high-potential properties Cannon recommends to investor clients are the "live-work" modern equivalents of traditional American urban combinations, such as the retail store on the first floor, and residential units on the one or two floors above.

Now the combinations might be more like retail or studio space below with loft apartments on the upper floors, or parking on the ground floor with condominiums and office floors above.

Examples of this trend abound in areas like Washington D.C.'s Penn Quarter, Columbia Heights and 14th Street and 13th Street corridors, where smart investors snapped up underperforming three and four story retail and commercial buildings and replaced them with ground-floor restaurants and hip retail shops, topped off with condo lofts or apartments above.

Once among the capital's most crime-plagued neighborhoods, they now attract young professionals and empty nesters from the suburbs who want to be close to the action downtown, and who'll pay $500,000 and up for condominium lofts above a high-end furniture or appliance store.

One key to this investment formula: Look for neighborhoods where arts-related organizations are relocating into inexpensive performance or exhibit space. Multiple-use residential, work and retail real estate opportunities probably won't be far behind.

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