The phone call caught Marc Andres by surprise. It was a local real estate broker saying a national client wanted to look at an Andres’ family property on North Henderson. In fact, the client was seriously considering leasing the property.
“That’s almost unheard of in this business,” says Andres, whose family owns much of the property on Henderson from Central Expressway to Ross. “Typically in a negotiation, no one wants to tell you that they need your site.”
In this case, though, Sunflower Farmers Market did. The 21-store Colorado-based natural grocery chain had seen the listing for the empty Fiesta on Henderson near Ross, and decided it was the next piece in its Texas expansion. Company officials said the location was an ideal fit for their concept — funky and diverse, yet part of an educated, affluent neighborhood. Sunflower will open the store, its third in Texas, later this month or early next.
In other words, someone who doesn’t live here finally appreciates what we have.
Which is the big news about retail development in East Dallas and Lakewood. Despite all of the obstacles the area has faced over the past couple of decades — of which the current recession is just the latest — the people who lend the money, put the deals together, and run the stores see us as a lucrative location for their projects. It may be something as simple as Park Cities restaurateur Alberto Lombardi opening a location in the Lakewood Shopping Center or as massive as the tens of thousands of square feet of retail and residential under construction on Lovers Lane just east of Greenville. But the message is the same.
“A lot of people don’t understand the value of this area,” Andres says. “It’s not a variable that you can plug into a spreadsheet.”
Yet challenges remain, not the least of which is the recession. Managing this growth will be crucial, so that we don’t turn into something that we don’t want to be, like a mini-Frisco in the middle of Dallas. We’re also caught in the middle of several contradictory trends in retailing, in which chains don’t want to be in malls but still haven’t embraced in-town, non-mall locations. In addition, the definition of neighborhood retail has changed dramatically over the past decade and will continue to change, further complicating the issue.
“I don’t think there is any doubt that we have the demographics that retailers want,” says Bob Weiss, the city plan commissioner for District 9, which includes most of Lakewood and the western side of White Rock Lake.
“But will demographics be able to trump economics?”
New Urbanism
Talk to developers, retailers and brokers, and the answer is the same: They love us.
Vaughan Miller, who oversees retail leasing for Henry S. Miller, one of the leading independent commercial brokers in the country, ticks off Old Town, Casa Linda and the Medallion area on Northwest Highway as hot properties. Robert Bagwell, the developer who built West Village, says he has been keeping an eye on Lakewood.
“There isn’t much future in [suburban-style] lifestyle centers,” says Ken Hughes, a longtime Dallas developer whose projects include the Old Town shopping center at Lovers and Greenville and the nationally known Mockingbird Station.
“The baby boomers and the Gen Ys want something else, so development is going to be different, without a doubt.”
What they want instead, and what our neighborhood is situated to give them, is what Hughes calls an activity center. Think of it as Old Town for the 21st century — small, but dense developments, a dozen acres instead of a hundred, and an environment that is walkable, without massive parking lots and the stores that need them (think the Fry’s/Sam’s Club center on Northwest Highway and Jupiter Road).
The retail mix leans heavily toward casual restaurants and services like banks and dry cleaners, things people need to get through the day. This, in fact, is the reason behind the Signature Pointe portion of the Lovers Lane mixed use project.
In this, Hughes and Bagwell are pioneers in what’s called “New Urbanism”, which emphasizes retail and residential development that focuses on density in cities instead of sprawl in suburbs, and where the projects are designed so people don’t need cars to use them.
Bagwell’s term is “pedestrian villages”; urban planners call the new projects “traditional neighborhood developments” because they mimic the best features of older development from 40 and 50 years ago. New Urbanism, says Tre Jordan, a research associate with the American Planning Association, requires older neighborhoods that are close to the city center, where the street system was laid out before cars were commonplace, and the buildings are best suited for re-developing up instead of out.
Sound familiar?
Back to the city
New Urbanism dovetails with the trend that has seen high-demographic consumers moving back to in-town neighborhoods like ours because they’re tired of long commutes and suburban sprawl. Their need for gated communities has been replaced by the appeal of a corner restaurant, which is a 10-minute walk — and not a 30-minute drive — away.
This helps explain the city’s emphasis on what’s called form-based zoning, which reflects many of the tenets of New Urbanism. The city council must still reach a compromise on the specifics, but few disagree with the principle behind it: That Dallas retail and residential development needs to be more like Manhattan and less like the intersection of the Tollway and Highway 121.
This, in fact, can be seen in a host of projects — most of which residents never would have dreamt of a decade ago:
• The Lovers Lane makeover between Greenville and Skillman. Financing woes may slow down some of its three parts, but Signature Pointe owners say its $30 million portion will open by the end of this year.
• Andres’ redevelopment on Henderson between Ross and Central Expressway. The goal for this 1.1-mile strip, Andres says, involves leasing to small, independent retailers and “letting the big boxes go elsewhere. There is nothing unique about them. They’re everywhere. We want unique that people can’t get elsewhere.”
•Medallion/Timbercreek. Preliminary plans called for JCPenney and Walmart to anchor a new shopping center on the site of the old Timbercreek apartments at Northwest Highway and Skillman. Penney’s, apparently, is still committed to the project. Timbercreek, meanwhile, may be the focal point of an effort to remake the Northwest Highway corridor east of Central, including the empty Steakley Chevrolet site and apartment redevelopment behind Medallion Center.
• Casa Linda redevelopment. “This is a fantastic property,” says Miller, who praises the job center owner AmREIT has done restoring the center. Miller says Casa Linda should benefit from AmREIT’s leasing savvy and whatever trends develop toward smaller, more local retail.
• The proposed $40 million apartment-retail complex on the southwestern corner of Gaston and Garland roads. The developer, Zad Roumaya, sees the project as the beginning of the redevelopment of Garland road north.
Overcoming the economy
Yet, as wonderful as this all sounds, there are obstacles. The biggest is the recession.
Generally, says Thompson & Knight attorney Misty Willcox, if a developer hasn’t started construction yet, don’t expect to see construction anytime soon.
Developers borrow money in two stages — for land and for construction. They may still be able to get land loans, though equity requirements have increased, but “it has to be a special, special project to get the interest of lenders and tenants,” Bagwell says. The one exception to this is apartment construction, which generates enough cash to meet the new lender requirements.
In addition, the smaller mom-and-pop retailers who should benefit from New Urbanism may not have the financial wherewithal to withstand the recession. These operations traditionally are undercapitalized and survive on cash flow. If the cash dries up, they won’t have money in the bank to pay their bills and might be forced out of business.
Which leads to a bigger, and potentially more divisive, issue. There aren’t a lot of the smaller, mom-and-pop retailers left, especially in Dallas. Over the last 15 to 20 years, one goal for national retailers was aggressively eliminating small local and regional competition, says SMU professor Ed Fox, a leading authority on U.S. retailing. Walmart came in, and the corner drug store left. Home Depot arrived, and the hardware store closed. That’s one reason why the definition of neighborhood retail has changed so much, from bookstores and drug stores to dry cleaners and restaurants.
This presents developers with a dilemma. If they build a center that’s too small for Target or a 75,000-square-foot grocery store, where are they going find tenants? There are also potential challenges from technology, which has made the video store, long a staple of neighborhood retail, increasingly obsolete. It may do the same for something like Radio Shack. And then what will fill those spaces?
Finally, many people in neighborhoods like ours would rather see a local coffee shop than a Starbucks, which further complicates the developer’s job. This is one reason why academics and urban planners are more excited about New Urbanism than most developers.
“The retailers are still going to be looking north, where they’re going to see growth rates,” Fox says. “I’m not trying to be negative, but you aren’t going to see a lot of new retail inside LBJ because the retailers don’t yet see any reason to be there. They might, but that’s a long time away.”
Still, these handicaps won’t kill development in this area. We’ve probably come too far for that, if the new Sunflower store is any indication. And, Weiss says, in this new retail environment, what used to be seen as a problem may now be an advantage. Developers who used to shy away from this part of town because we were so forceful in our opinions now see that as a plus.
“Engaged neighbors,” Weiss says, “make engaged consumers.”
