In the News

Preston Hollow People

September 23, 2018 Bianca R. Montes

Saint Michael and All Angels Episcopal Church has announced plans for a mixed-use development on its property along Douglas Avenue in the southwest part of Preston Center.

The plans include a mid-rise office building on Douglas Avenue and a residential building on the western side of the site. The project will feature a full-service restaurant with a patio and other ground-floor retail that open onto public green space along Douglas Avenue.

Parking for the project will be a mix of self-parking and valet.

A key component of this project is expanded off-street parking for the church, said the Rev. Chris Girata, rector of Saint Michael and All Angels.

“By reducing our surface parking and investing heavily in underground parking, we not only solve our long-term parking needs, but we can create a more inviting campus with expanded green and open spaces and improve traffic flows for the benefit of the neighborhood and the church,” Girata said.

The new plan, he said starts to bring to life the vision his congregation has had for what their campus can be.

Saint Michael and development partner Lincoln Property Company considered a project on the same piece of land in 2015 but put plans on hold pending recommendations of the Northwest Highway and Preston Road Area Task Force led by Dallas city council member Jennifer Gates.

“Just like the task force, our parishioners want wide sidewalks, plazas, and green spaces,” Girata said. “Not only was it the right thing to do to wait on the task force recommendations, but we believe that we now have a far better plan than we had in 2015 – better for us and better for the neighbors.”

John Walter, executive vice president with Lincoln Property Company, said the goal is to build a development designed to meet both the guidelines of the Preston Center Task Force and needs of the church and its surrounding neighborhood.

“It has taken a significant commitment of time and money to accommodate the task force recommendations, but we believe the new result will be worth it,” he said.

Peter Kline, a leader of the Northwest Highway and Preston Road Area Taskforce, agreed.

“Based on my review of the preliminary plans for the proposed Saint Michael mixed-use development, I believe this project could be a role model for future developments in the Preston Center area,” he said. “They have gone to great lengths to address the concerns and the priorities of the area plan.”

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by Jon Anderson
Candy's Dirt

The latest PD-15 meeting was interesting and odd. Unlike in prior meetings, this session was more of a conversation between committee members and city staffers Andrew Ruegg, Neva Dean and City Plan Commissioner Margot Murphy. It was a chance to ask questions of staff and each other to explore the next steps and possibilities moving forward.

It was also a time to debunk some misinformation. Personally, I think the more free-flowing conversation was needed. The committee had absorbed plenty of information from the city and the neighborhood, and needed to make some sense of it to begin piecing it together.

100-FOOT SETBACKS ON NORTHWEST HIGHWAY

One topic of discussion, the existing requirement for 100 foot setbacks along Northwest Highway, highlights my feeling of oddity. The answer from the city, that the committee could change the existing setbacks within PD-15 was half-true. Yes, the committee can, but the 100-foot setbacks are contained within the individual parcels’ deeds and therefore would require city action to change, which is outside the power of the committee. I whispered this to city staff and was told I was correct, but no one clarified this for the committee.

The reason for the setback chat was Royal Orleans, whose swimming pool and garage entrance encroach on the frontage road (not visible on map above). In a scenario where new development would increase traffic, a non-compliant, pinched road isn’t ideal.

JUST FILE A ZONING CASE

Thankfully on another question, Margot Murphy jumped in with an expanded clarification. The question concerned the misinformation floating around the neighborhood, propagated by those against this process – namely whether a developer could just file a zoning case and bypass the authorized hearing.

As I’ve said, yes, a developer can, but they can only file a case for the 60-ish surplus units available. Commissioner Murphy expanded that to say the 60-ish units are a shared resource within PD-15. The other buildings in the PD would view one parcel trying to take those units as diminishing their own value and would fight it. Because of this, passage through Plan Commission and City Council would be very unlikely.

COOKING THE COMMITTEE’S BOOKS

Another piece of gossip is that the city already knows what they want to do with PD-15 and will just run over whatever the committee says. The fuller answer came back that whatever the committee decides will be captured and legalized by city staff, after which the committee will see/vet the final language.

As it comes to Plan Commission, city staff and Plan Commission may add differing recommendations which are called out in separate boxes. It’s then up to CPC and City Council to work with the community before and during those approval steps to accept or deny any suggested modifications.

At this point it’s is just like a regular zoning case where a developer typically says they want “X” and city staff either agree or amend before sending it on. The public gets to weigh in on those changes before they’re voted on. The public and committee aren’t shut out of these decisions until the final City Council approval is done.

TRAFFIC STUDIES

Traffic studies are a catch-22. The city has no money to fund one and won’t require one until a zoning case is filed by a developer, so how does the committee understand the traffic implications on their recommendations (that developers will use to guide their plans) without a traffic study?

After much back-and-forth, the city said they could provide a traffic planner to speak with the group. During this exchange, I had another thought and texted a land-use professional in the room asking how much a study would cost. The answer was “thousands, not tens of thousands” of dollars.

There are six buildings within PD-15, each building should kick in the $1,000-ish and get a study done where they design the parameters and there’s no whiff of developer or city steering the outcome.

ECONOMIC VIABILITY

The city reiterated they have no interest in the financial viability of any development project. Unfortunately, this translates into the city providing no guidance on what would be profitable to build while protecting the neighborhood’s interests.

It was noted that A.G. Spanos, contract holder on the Diplomat parcel, funded two studies on the economic viability of various construction projects within the PD. As part of the developers’ plans, author of the most recent and detailed study, Joseph Cahoon was available to answer questions that the committee didn’t ask.

In tonight’s meeting, city staff poo-pooed the idea of inviting Cahoon to a session to explain his work. Thinking this a mistake, I texted A.G. Spanos’ representatives asking them to invite the committee to a separate session. Alternatively, committee members can also contact Diplomat’s committee representative and pass along any desire to meet.

ALTERNATIVE USE BEYOND MULTI-FAMILY RESIDENTIAL

Thinking they were beyond contemplating uses beyond straight multi-family, one committee member was reluctant to completely abandon the concept of a neighborhood coffee shop and social venue (or even a dry cleaners) within PD-15.

Preston Tower representatives were quick to point out that in the past there was a restaurant, various convenience stores, sandwich shops, and a coming wine bar. They said all those uses failed to attract enough customers to remain open and they gave the wine bar a year before it too closed.  Without the ability to advertise and the extremely limited parking, these uses would continue to fail from lack of patronage.

Dry cleaners are a chemical nightmare for any site and are on par with gas stations for chemical contamination. Getting approval for one might be challenging and would likely wind up being a kiosk where clothes are cropped off and picked-up translating to a bevy of delivery vehicles in the neighborhood providing there was enough business to keep it going.

REMOVE THE DENSITY CAP

Another oddity. If the committee so chose, they could simply raise the overall unit density number and walk away. The density cap is the lynchpin to the PD’s control of development. Were that removed, traditional zoning cases could be filed with developers asking city hall to approve increases in height, lot coverage, setbacks, sidewalks, greenspace, etc. so long as they stayed under the density cap (just like today where someone could apply for the surplus 60-ish units).

I’m glad the committee saw this as the cheat it is. Diplomat representative Maggie Sherod said is best when she said that this process of thoughtfully expanding development rights is complicated, time-consuming and a bit frustrating. However, it would net the neighborhood a better, more controlled result than just abdicating responsibility and hoping, (fingers-crossed) the city would get it right.

Sherod’s words were particularly poignant because those selling (like Diplomat) are portrayed as just trying to grab as much gusto to line their pockets before they run away and leave the neighborhood in ruins.  Were that true, she’d only be pushing for the cap to be raised so she could run faster.

CLIQUES AND MORE CLIQUES

I’ll leave you with a little high school reminder. Note that no entity has polled the residents within PD-15 or the Pink Wall in general to get their opinions on what’s going or thoughts on development. Everyone who speaks, speaks for the few handfuls of people they’ve personally spoken to. Those who are against everything hang in their clique while those who are more open to the potential hang in another. Except when being harangued by someone from the opposing clique, folks stay in their clique. It’s warm, fuzzy and non-confrontational.

So when anyone says, “everyone I talk to…”, remember “everyone” is a small number and their own opinion makes it highly unlikely they’ll hear from the other side. It’s the echo chamber of the clique.

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by Jon Anderson
Candy's Dirt

I’ll cut to the chase (shocking, right?). Of the speakers last night that held opinions about the prospect of development, I counted 10 that were making positive comments and five were negative. There were a couple whose position I wasn’t sure of because their comments were more “don’t forget about X, Y or Z” – perhaps they’re the “undecided” voters?

Not too shabby. The same cast were in each camp with the area low-rises being positive to the process while residents from Preston Tower and the complexes on Bandera being negative. Like politics these days, actual facts don’t shift the world views of people who “just know they’re right.”

Those seeking positive change had many of the same messages on quality, permanence, uplifting the neighborhood, and equity, punctuated by admissions that the low-rise buildings, at 50-plus years old, were simply pooped out. Of course they pointed out that the economics of the situation make increasing density a necessity (unless impoverishing the whole area is a goal).

But beyond economics, increased density done right can make the neighborhood more vibrant, benefiting all. D Magazine recently dedicated a special issue to “Dallas and the New Urbanism” and I read every word. In fact, the city should send one to every home and force citizens to pass a test. It’s that good.

A pair of speakers from the Diamond Head Condos said the word that must not be said. They said that whatever density and height everyone else gets (including a high-rise), they should get too. The word they shouldn’t have said?  Height. While I believe there will be equity in density, there isn’t a snowball’s chance of a high-rise going up across the street from Athena, nor do I think the city would approve one. It would be mutually assured destruction. Spanos isn’t getting a high-rise (and isn’t asking for one) and I’d bet Provident won’t get height on their northern section either. Height isn’t winnable, density is.

The Two Faces of Laurel

The Laurel continues to do double duty being almost unanimously disliked in one breath while being held up as the paragon of future development in PD-15. You can’t have it both ways. You can’t demand setbacks, underground parking, green space, and walkability and hold up the Laurel that gives the neighborhood precious little except underground parking (that one speaker was already complaining about moments later).  The neighborhood squeezed every penny out of the deal in exchange for lower height.

John Pritchett, president of the Preston Hollow South Neighborhood Association continues to point out that if the Laurel could be built at four stories, so can Preston Place and the Diplomat. Here’s the thing. Two financial analyses say it can’t. Also, the Laurel’s land price was last negotiated in 2016. My PD-15 building has seen a dramatic increase in average unit selling prices per square foot since 2016. These last two-ish years are the only time the building has been in the black in pure dollars in the past 15 years. I’m assuming other neighboring buildings have also seen prices rise quickly in recent years (our tax bills sure have).  So no, the Laurel doesn’t prove four-story construction is economically viable today.

IBM a better investment than Pink Wall real estate?

That 15 year study on my building’s selling prices?  Adjusted for inflation, average selling prices are almost identical in 2002 and 2018. Put in perspective, had that buyer invested the same money in IBM, they’d be sitting on an inflation adjusted $56 per share, instead of a Pink Wall goose egg. Smart development will bring real property appreciation to the neighborhood.

Pritchett said that it was false that former Dallas mayor Laura Miller hijacked the Preston Center Area Plan. I’ll say this: People who were in the room when her private meetings were held told me I was absolutely right. City staff and the consultants have told me they were not invited to the closed door sessions. Oh, and I was at the public meeting, sitting in back of Miller, when she announced she and the committee would rewrite the consultants’ report and deliver it back to Council Member Gates. If not a hijack, then what?

He spoke about the monies spent, consultant-created reports created and such. Well, none of it made it into the main part of the report, whatever scant information the consultants provided can only been seen in the appendix. None of the major recommendations  on density, increasing residential in Preston Center or the Pink Wall made it into the main report.

Lastly, let’s talk money. If it’s to be believed that the Provident contract was for $18 million and that it intended 220 units (versus the bloated vision they showed), that’s $81,818 in land costs per constructed unit. Extrapolating that down to the 60 units Preston Place could build by right, that equates to $2.45 million per acre. Not only does that impoverish Preston Place owners, but the resulting building would impact area-wide values.

One speaker noted that were either Athena or Preston Tower destroyed, they’d not adhere to the Preston Center Area Plan either. She’s right. At $2.5 million per acre, each Athena unit would be valued at approximately $35,000 while Preston Tower residents and business owners would reap a pitiful $27,700 on average. They’d be whining bloody murder, and yet it’s fine for everyone else to adhere to the plan they pray to.

On The Upside

After the meeting, one high-rise resident commented that seeing Spanos’ proposed project during the prior meeting had alleviated a lot of fears (while Provident’s proposal heightened many). What that person didn’t seem to know is that last year Spanos presented their project in a closed door session with the Athena and Preston Tower representatives and volunteered to present to the towers’ residents. Both towers refused their request.

A few seemingly innocent comments focused on items, like traffic planning, the committee simply hadn’t addressed yet. There was continued scoffing at studies showing that traffic on Preston Road and Northwest Highway has been decreasing for years. During the Preston Center Area Plan meetings, I wrote about the data presented …

Preston Road and Northwest Highway Traffic DECREASING?

The imagined current state of traffic on side streets wasn’t the only figment. Turns out much to everyone’s surprise (certainly mine), actual traffic on Preston Road and Northwest Highway has been decreasing … since 2001! There was a big dip during the recession, but it’s pretty much returned to pre-recession levels which are lower than 2001. In fact, according to Patrick Kennedy, a partner at the urban design and planning firm Space.Between.Design.Studio, when comparing traffic on Northwest Highway just west of the Tollway from 2004 to 2013 traffic decreased by 17 percent! Using another metric, Northwest Highway traffic at Preston Center has vacillated between 52-57,000 cars per day for eighteen years … in spite of the fact that the City of Dallas’ population has grown by hundreds of thousands of residents during this time (over 151,000, or 6.4 percent growth in Dallas County since 2010 alone).

Who’d a thunk?

Turns out that this mythology that traffic must be getting worse over time, is just that, mythology.

Finally, one Preston Tower resident blamed Council Member Jennifer Gates for giving away money earmarked for fixing area flooding. Memory is a bitch, but Gates wasn’t in office during that bond program. Her predecessor secured the funds but didn’t spend them at the Pink Wall because that plan required University Park to help and they refused.

Finally (really), in between meetings, a PowerPoint presentation was distributed calling on the committee to adhere to the Preston Center plan while also wanting underground parking, large setbacks, and the usual green space. For the last time (probably not), an expensive wish list doesn’t get done with no money in the deal.

 

Remember:  High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. In 2016, 2017 and 2018, the National Association of Real Estate Editors recognized my writing with three Bronze (2016, 2017, 2018) and two Silver (2016, 2017) awards.  Have a story to tell or a marriage proposal to make?  Shoot me an email sharewithjon@candysdirt.com. Be sure to look for me on Facebook and Twitter. You won’t find me, but you’re welcome to look.

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The hyperlocal social-media platform highlights small grievances—and proves that neighbors have more in common than they think.

Ian Bogost July/August 2018 Issue
The Atlantic

Here are some of the things I heard about in my neighborhood over the past year: A thunderstorm downed a tree, blocking a central road; a shadowy agent called “the night clipper” arose, surreptitiously cutting overhanging bushes while unsuspecting property owners slept; several dogs and cats were lost, found, or “on the loose,” whatever that means for a cat; a federal-grand-jury-summons telephone scam struck; someone sought belly-dancing classes, an apparent alternative to Pilates; and, innumerable times, people deposited bags of dog poop into lawn-clipping and recycling canisters at the curb. All of this news came courtesy of the social-media service Nextdoor. On its website and app, people can post recommendations, updates, and warnings about their building, block, or neighborhood.

Anyone who has subscribed to a neighborhood email listserv—or used the internet—can guess what might go wrong. Social networks connect people, but many of those connections degrade into vitriol. If Twitter is where you fight with strangers, and Facebook is where you vie with friends, then Nextdoor is where you get annoyed with neighbors—for sending “urgent alerts,” pushed late at night to mobile phones, about questionable emergencies; for trying to sell a tattered massage table or used carpet shampooer at near-retail price; for issuing nasty reprisals on matters large and small. But it can also foster connections among neighbors and help counter the social isolation brought about by technology.

Nextdoor works a lot like Facebook, but instead of a “Like” button, it offers a “Thank” button, encouraging a kind of neighborly grace. More important, in order to join, you have to prove that you live where you say you do (by entering a code mailed to your home address, for example). Which means the community you enter is not imagined or diasporic, comprising people from the same school, profession, or interest group—it’s physical. You can “mute” neighbors on Nextdoor to hide their posts, but you can’t make them move away. Like it or not, these are the people in your neighborhood—the people that you meet each day, as the old Sesame Street song goes. Not just the postman and the barber, but also the aspiring belly dancer, the night clipper, the cat looser, and all the rest.

Thanks to its popularity, the service offers a unique window into daily life around the country. Nextdoor’s virtual communities—which cover more than 180,000 U.S. neighborhoods, including more than 90 percent of those in the 25 largest cities—are becoming representative of the country’s actual populations.

What do Nextdoor users talk about? On April 18, 2018, to pick a random day, the nation mourned former First Lady Barbara Bush, Japanese Prime Minister Shinzo Abe visited Donald Trump to discuss North Korea, and the world reacted to a deadly accident aboard a Southwest Airlines flight. But on Nextdoor, the overwhelming majority of Americans were focused on the impacts of late-season snowstorms: stuck cars, downed power lines, and especially snowplows. Grout and kittens were on mountain-time minds, and Oregonians seemed to be enduring a spate of lost wallets and duck encounters. In Florida and Colorado, problems with telecom services dominated the conversation.

This is pretty normal. Steve Wymer, Nextdoor’s vice president of policy, told me that the same topics arise again and again, modulated by region and neighborhood type. Service requests and recommendations constitute 30 percent of chatter, and discussions of real estate make up another 20 percent. About 10 percent of Nextdoor conversations relate to crime and safety, Wymer said. (Suspicious persons come up a lot, often amounting to sightings of people of color in predominantly white areas. Nextdoor has attempted to discourage posts that use appearance as a proxy for criminality by prompting users to add more detail and blocking some posts that mention race.) Public agencies such as police and emergency-management departments also post updates to their constituencies. Noise complaints are another popular subject, according to Wymer—fireworks seem to raise particular ire—as are classifieds, missing pets, and gardening tips.

Judging by the conversations on Nextdoor, it would seem that Americans are concerned first about the safety and security of their property, family, and pets, and then with their property’s, family’s, and pets’ upkeep and improvement. Though the platform breeds its share of conflict, it is notable—in contrast to other social networks—for the commonality it reveals, even in these times of unprecedented political division. No one, Democrat or Republican, wants a neighborhood strewed with dog poop.

Jenn Takahashi operates a Twitter account and Facebook page called Best of Nextdoor. Because Nextdoor posts are private to local communities, Takahashi relies on users to submit funny or weird things they see in neighborhood groups across the country. (When her Twitter following recently surpassed that of Nextdoor’s corporate account, the company’s head of community congratulated her, while also gently wondering whether she would blur the neighborhood names in her posted screenshots.) Less than a year after launching the accounts as a loving gag, Takahashi has built what might amount to the most complete contemporary picture of day-to-day American behavior, a kind of crowdsourced Kinsey report on municipal perversity.

Takahashi echoes Wymer on noise complaints—talk of fireworks or gunshots (they are rarely actual gunshots) is common, she says. Sometimes these complaints have dramatic consequences. In Seattle, a post about a dog’s bad reaction to some kind of cannon that was sounded during Seahawks football games led to an online dispute, and a neighborhood meeting at a library to talk it out erupted into a brawl. “Seattle is like the Florida of Nextdoor,” Takahashi told me, referring to the Sunshine State’s tendency to surface all manner of improbable events. Los Angeles is another source of good material: She’s received a handful of submissions about unrest in parts of the city where YouTube stars live, as fans mob the streets trying to catch a glimpse.

Best of Nextdoor reveals a charming cluelessness that pervades America’s communities. People in cities can’t seem to tell the difference between a possum and a house cat, for example. In Alabama, someone tried to sell an unopened box of Hot Pockets. Near St. Louis, one resident asked why the neighborhood of WingHaven is called “Swinghaven.” In a suburb of San Diego, someone posted an image of a found sex toy and—not comprehending the purpose of the device—worried that it “looks valuable.” But most of Takahashi’s collection catalogs more-mundane patterns, like the poop-in-the-trash-bin crisis that seems to plague all Americans. Takahashi has amassed countless specimens, as it were, from run-of-the-mill lamentations to complex home-surveillance-camera-facilitated stakeouts conducted to find and shame the offending dog walker.

In our conversation, Steve Wymer brought up Robert Putnam’s 2000 book, Bowling Alone, about the decline of in-person social discourse in America and its consequences for civic life. Putnam criticized the technological individualism encouraged by television and the internet, which had already shown a capacity to promote selfishness. Wymer argued that Nextdoor cuts against that trend: The company boasts dramatic examples of new collaborations the service helped enable—the neighbor who donated an organ to someone 10 doors down, whom she wouldn’t have known were it not for Nextdoor, and the person stranded on a roof by Hurricane Harvey who was able to summon a rescue boat via the service.

But usually life is less dramatic than that. In the most-common Best of Nextdoor submissions, neighbors worry about a weird truck driving by slowly, early in the morning. Ever vigilant, other users respond that they have already reported the suspicious vehicle to police, as law-enforcement representatives on the service encourage. Typically, the offending vehicle turns out to be the newspaper-delivery person, plodding through the suburbs to bring print news to the residents who still read it that way. Eventually, someone explains how newspaper delivery works, and order is restored.

I’ve seen a version of this post in my own neighborhood. Someone writes: “Concerns about white man with turban on bicycle.” Almost instantly, responses arrive: “Oh, that’s Floyd, he’s harmless,” and “Yeah, he’s been around forever.” Some neighbors theorize that he might be a wizard. It’s a small thing, and maybe not one to be proud of—but the neighbors’ concerns get assuaged, and Floyd escapes torment. That’s a post worth clicking “Thank” on.

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by Jon Anderson
Candy's Dirt

Example of seven-story building construction and density options

A.G. Spanos has released a second, more thorough economic analysis of the feasibility of redeveloping Pink Wall parcels within the confines of the Preston Road and Northwest Highway Area Plan (PRNHAP). Spanos has a contingent contract to redevelop the Diplomat condos within PD-15 and has financed both viability studies. While Spanos has obvious motives, any economic data supplied is certainly more than the economic nothingness contained within the $350,000 PRNHAP study. How the city adopted that Santa’s lap of a plan, containing no financial underpinnings, still astounds.

You’ll recall that in October 2017, my rough calculations exposed the then 10-month old PRNHAP as economically bogus. That was followed up in January 2018 by Spanos’ first report developed by architects Looney Ricks Kiss that backed-up my findings. Namely that the recommendations contained within the PRNHAP study’s “Zone 4” are not viable to build. This latest study offers more detailed and dire details for the PD-15 area (download here).

To be clear, “not economically viable” means that a condo unit would sell for more money as a condo than as developable land. To sell under those conditions would equate to owners taking a loss on their home. In many cases it’s good when land is worth some fraction of a structure. It helps with neighborhood stabilization, curbing gentrification, etc.

PD-15 area

However, neighborhood revitalization is hampered when the combination of land costs and development rights are less than the value of existing development.  I catch flak for “secretly” wanting to bulldoze the Pink Wall and put up acres of junky apartments. I don’t. But I do realize that some Pink Wall buildings have undercharged their HOA dues, resulting in years or decades of deferred maintenance. A cursory glance tells me that Imperial House is the only building to have swapped their original inefficient windows, let alone the number of hidden plumbing, foundation and electrical issues that continue to mount. Residents of more than one Pink Wall complex have told me that while they look good on the outside, they’re rotting on the inside.

The Latest Study

Produced by internationally known real estate consulting firm HR&A, the 18-page report isn’t for the feint hearted looking for a quick read. The firm’s business ranges from High Line Park and a five-year advisor on energy efficiency in New York to analyzing Dallas’ underinvestment in its park system. Author Joseph Cahoon has extensive work experience in multi-family residential development and is an adjunct professor and Director for the Folsom Institute for Real Estate at SMU’s Cox School of Business. In a word, qualified.

For the uninitiated, the document is dense, probably requiring more than one read-through (I did). There’s jargon that won’t be immediately comprehended, so before we discuss, here’re the two biggies:

Residual Land Value: The cost of land. We typically think of land prices from a seller’s point of view. But from a developer’s viewpoint, land value is backed into by deconstructing the total cost and ultimate selling value of a building (rent, cap rate, profit margins). Therefore, residual land value is how much a developer can pay for land minus the costs of a project and expected cap rate (below).

Capitalization or “Cap” Rate: The initial yield or profit margin expected from the project (total generated rent minus construction and long- and short-term operating costs).

With that in mind, the study builds out nine scenarios (three heights, three average unit sizes). The four-story examples adhere to the PRNHAP study’s height and underground parking limitations. The seven- and 10-story scenarios are three-story steps in height, taller than the PRNHAP study allows, but do include completely underground parking.

Ignoring PD-15’s density limitations, the assumed number of units are what could be built on an acre of land with reasonable setbacks. Extrapolating these to the larger Preston Place and Diamond Head lots or Royal Orleans’ smaller buildable lot would adjust unit counts accordingly (but not linearly as larger and smaller lots offer different economies of scale).

Next is the estimation of construction costs per square foot based on unit counts, size and underground parking. Construction costs may appear high but they include all underground parking (expensive) and also factor in the tighter one-acre example lot. Smaller lots are less efficient to build on. Construction costs relating to the two-acre Preston Place costs would be lower, all things being equal.

Filtered into the numbers is the type of construction. Four-story construction would be wood “stick” construction above ground sitting on 1.5 to 2.5 levels of underground concrete parking (depending on unit size/count – fewer/larger units require less parking). Of the three this is obviously the cheapest to build and can be seen at the Laurel on Northwest Highway and Preston Road.

With seven stories, hybrid building techniques come into play. From the bottom, there would be 2.5 to four levels of underground parking. Concrete would continue for an additional two stories of apartments above ground before five stories of stick construction for the bulk of units. These are sometimes called “five over two” buildings

At 10 stories, there would be 2.5 to 4.5 levels of underground parking with a full 10 stories of concrete construction. You may be wondering why the uplift to all-concrete is less than the difference between the four and seven story examples if concrete is supposed to be so much more expensive. Two points: There isn’t a lot of difference in the number of total units between seven to 10 stories due to lot coverage differences (a 10-story building covers less lot). Essentially adding 10 units (and three stories) to the seven story model raises overall costs nearly 15 percent. Because of the small number of units added, there’s not much more underground parking required either. Lot coverage could be increased were the pool placed on the roof (which would add height and/or cannibalize a whole floor).

The 10-story example is what I call the “no man’s land” of building. The gains over a hybrid building aren’t enough to justify going all concrete (unless you go higher).

Studying the Dallas area, the report sets a 5 percent return (cap rate) as the average based on comparable buildings. By comparison, the interest rate on a no-risk 10-year Treasury note is currently around 2.85 percent. A cap rate less than the Treasury rate wouldn’t make sense for the risk involved. Risk comes from a variety of factors including future property taxes and chargeable rents.

There’s a lot of red in this table. Essentially, based on the PRNHAP study, none of the four story scenarios are cost effective to build in the current market. The higher buildings even less so.

The report concludes with the understanding that the PRNHAP study is economically unworkable if the goal is to revitalize the neighborhood as it claims. Even at its best, can you imagine the Preston Place owners paying a developer $260,000 (double lot) to build a four-story building with average units of 1,450 square feet?

The report states that in order for the math to work, there has to be give in the PRNHAP study and/or rents will have to rise well above expected rates in a market where the high-end is cooling. There’s little anyone can do about rents, but construction costs are another ball game.

Underground Parking

One of the big levers is the preference for completely underground parking. The cost differential between above- and below- ground parking is roughly two- or three-to-one. Were some of the parking allowed above ground, the economics shift for the taller buildings. But the four-story would need to trade residential space for parking, reducing unit counts (and profitability) and therefore it never reaches economic viability. Played out …

Take the mid-sized example of 950 square foot units — 80 units in total and two full underground parking levels. Bringing those two floors above ground could cut the unit count in half to 40. But 40 units wouldn’t need two floors of parking, so call it a single floor of above ground parking with three levels of 60 apartments. While you’d save the excavation costs of the parking, you’d still incur the concrete costs of the above ground garage (can’t park cars in a wood parking lot). Net-net, the reduced unit counts would reduce the profitability so you’d still be in the hole (and so no one would build it).

Looking at the seven- and 10-story examples and it appears that those projects are even more unprofitable. But there’s opportunity in their height and resulting unit counts to enable some above ground parking (wrapped inside the building and invisible outside) to make the numbers work.

Combining an ability to increase to seven stories with a mixture of above and underground parking gets you so far. Building a better quality building that generates slightly more rent is the intersection where developer, seller, and neighborhood meet.

With the ongoing trade war impacting raw material pricing and the ongoing shortage of construction workers that federal immigration policy is exacerbating, construction margins are more on a razor than a year ago when labor shortages alone had raised prices.

A little on the nose?

Some of you may be thinking that this research plays suspiciously into Spanos’ hands because their proposal is for just such a seven-story building at Diplomat. But here’s the thing, this isn’t Spanos’ first turn on the dance floor. Surely they ran their own numbers before deciding to proceed. After all, they spent a year measuring, drilling core samples, negotiating and crunching numbers before writing their contract for Diplomat.  Like Goldilocks, the four-story was too little, and the 10-story wasn’t worth the aggravation for little upside, but the seven-story was just right.

And sure, there are ways to push and pull the metrics that the PD-15 authorized hearing can explore to further fine tune things for the neighborhood. Just remember that higher margins enable a developer to give back more to the neighborhood. Higher density also allows for the costs of givebacks to be spread out. Balance is key.

At any rate, this new report gives committee members (and the neighborhood at large) some idea of the financial aspects in redevelopment.

Finally, to those praying at the altar of the Preston Road and Northwest Highway Area Plan, where are your numbers? We know none of the $350,000 spent was for economic modeling to back up its desires, but how about now?

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Other regions have discovered huge value in walkable urban places while North Texas lags. But that is changing—fast.

BY CHRISTOPHER B. LEINBERGER AND TRACY LOH PUBLISHED IN D MAGAZINE DALLAS AND THE NEW URBANISM 2018

This piece is a feature from our special edition, Dallas and The New Urbanism. The magazine examines the successes and pitfalls of the urbanist movement in a region well known for its dependence on the automobile.

At this moment, before our very eyes, the entire nation is undergoing a structural shift that is generational, deep, and pervasive. It is more important and will be more lasting than the usual real estate cycles that Dallas and Fort Worth know so well. This structural shift is forcing sweeping change in how cities create their built environments, including housing, workplaces, cultural facilities, and even sports facilities. Cities that respond well will flourish; those that don’t will fall behind in capturing the huge opportunities in value creation this shift represents.

Dallas-Fort Worth is predicted to grow substantially. How it grows will determine its future wealth and its place among the world’s great metro areas.

The size of the built environment may surprise you: it represents 35 percent of the assets of the economy—by far the largest asset class. This is where our wealth is. A structural shift in how this wealth is invested and what it returns has tremendous implications. The structural shift currently underway is not the first; we can understand and anticipate where the market is going by revisiting the past.

Forms of the Built Environment

Fountain of Youth: Southlake Town Square offers shops and retail around a communal gathering space.

First, it is important to understand that the built environment takes two basic forms: walkable urban and drivable sub-urban. There are many variations, but broadly speaking there are just these two.

It is important to note that walkable urban development can occur in both central cities and a region’s suburbs. Likewise, drivable sub-urban development can occur in both central cities and the suburbs. There are many drivable sub-urban parts of the central cities of Dallas and Fort Worth, just as walkable urban places are in the suburbs, such as Legacy in Plano, Southlake Town Square, and Grapevine Main Street, and many other places.

Walkable urban is the oldest form employed in building cities and metropolitan areas. This type of development is the basis of how we have built our cities since Çatalhöyük (in present-day Turkey) around 9,500 years ago—the oldest city known. Walking has been the primary means of getting to and getting around these kinds of places. The distance that most people feel comfortable walking is about 1,500 to 3,000 feet, which limits the geographic size of a walkable urban place. Our research has shown that the average walkable urban place in metropolitan Washington, D.C., is 306 acres, about the size of three regional malls, including their parking lots.

ABOUT THIS STORY

The George Washington University Center for Real Estate and Urban Analysis, working with the Urban Land Institute, the North Central Texas Council of Governments, and D Magazine, are in the process of completing the WalkUP Wake-Up Call for the DFW metro area. This never-before-completed analysis will be a nearly 100 percent census of all real estate product in the region, including owner-user and publicly owned space.

It will define where the potential, emerging, and established walkable urban places are and how they compare to the drivable sub-urban locations in Dallas-Fort Worth with regard to place-based economic and social equity performance. This article is based on preliminary results of the WalkUP analysis. The complete analysis will be published in October 2018. Our appreciation to Shea Byers of PM Realty Group for leading this effort locally, Scott Polikov of Gateway Planning, Brandon Palanker of 3BL Strategies, and DFW donors to the George Washington University for their support.

Beyond that distance, most people will use another easily available means of transport. Historically that has meant a horse, wagon, bike, public transit (rail or bus), or a car. Within that defined walkable urban place, walking provides access to many if not all everyday needs—shopping, social life, education, civic life, and maybe even work. This mixed-use character means the walkable urban place has a relatively high density, generally between the density of places like downtown Grapevine or Watters Creek in Allen at the lower end of density, to places like Main Street in Dallas or Sundance Square in Fort Worth in higher-density places.

The second form of built environment is drivable sub-urban, using a term that intentionally employs a hyphen to indicate that it is fundamentally different from and less dense than an urban place. Drivable sub-urban development segregates the various needs of everyday life from the other: retail is in a shopping center, work is in a business park, housing is in a subdivision, and the only way to connect these is by car. Walking is generally not a safe or viable option, nor is generally any other form of transportation, such as public transport or a bike. The early 20th-century introduction of cars as a means of transportation was the obvious prerequisite for the drivable sub-urban form of development, enabling a never-before-known-in-human-history form of building and living.

Dallas-Fort Worth will grow substantially. How it grows will determine its future wealth and its place among the world’s great metro areas.

And once this new form was introduced after World War II, this first structural shift in how we build feverishly took hold, especially in Dallas.

Today’s homebuyers, real estate developers and investors, government regulators, and financiers have come to understand the drivable sub-urban model extremely well, turning it into a successful set of development formulas. This means that real estate has been commoditized, just like agricultural products or stock of a publicly traded company, into standard real estate product types. This is why the country has come to look alike no matter where you go; a strip mall in Arlington looks like a strip mall in Paramus, New Jersey, or Palo Alto, California.

Drivable sub-urban development was a major economic driver for the mid- and late 20th century, especially in a state like Texas, which made its living literally providing the fuel for this way of building and living. As we were inspired to “See the USA in your Chevrolet,” the 1950s GM sales jingle, we were making those who built and were allowed to buy into the suburbs wealthier. Drivable sub-urban development put a foundation under the economy and galvanized the dominant industry of the industrial era—the building of automobiles and trucks, including the support industries of road-building, finance, insurance, and oil. Drivable sub-urban development was essential to American economic growth in the mid- to late 20th century.

Economic Functions of the Built Environment

Within a region, places play one of two economic functions, either regionally significant or local serving. Regionally significant locations, sometimes referred to as “sub-markets” by commercial real estate brokers, may have:

• Concentrations of jobs
• Civic centers
• Institutions of higher education
• Major medical centers
• Regional retail
• One-of-a-kind cultural, entertainment, and sports facilities

Regionally significant land, combining walkable urban and drivable sub-urban forms, constitutes less than 5 percent of all metropolitan land mass, according to our research. Regionally significant land use is where the vast majority of the DFW region’s wealth is created. In fact, it is why the region exists.

Walkable Urbanism Rankings for the 30 Largest U.S. Metros, 2016

(based on percentage of office, retail, and multifamily buildings)

Pent-up Demand for Walkable Urbanism

The structural shift underway today in how we build is actually a return to the original way of making cities: walkable urbanism. We looked at the top 30 U.S. metropolitan areas by population in 2016 and conducted a real estate census of each region’s walkable urban places. In all 30 metros, we found that WalkUPs (for “walkable urban places”) command rent premiums across real estate product types and that in the current national real estate cycle (since 2010), WalkUPs are gaining market share in every metro region. In other words, in every major U.S. city, people pay more to be in a WalkUP, and market share growth is going to WalkUPs, while drivable sub-urban is losing market share. We ranked the top 30 metros by the share of their overall real estate inventory that we found located in WalkUPs.

This nascent shift is being driven by our changing economy. Today, participants in the knowledge economy, both companies and their employees, have moved to and are demanding walkable urban places. Many downtown turnarounds have been led by knowledge-based companies, such as Spotify, Twitter, Google, WeWork, Yelp, Dropbox, Compuware, Quicken, and Square, among many others. They are locating south of Market Street in San Francisco, in New York’s Meatpacking District, and even in downtown Detroit.

The knowledge economy is relocating to walkable urban places because WalkUPs attract knowledge talent and stimulate productivity.

The same trend is occurring in the urbanizing suburbs, such as Cambridge in metro Boston, Bellevue in metro Seattle, and Perimeter Center in Atlanta. Even the Research Triangle of Raleigh-Durham-Chapel Hill, North Carolina, is attempting to urbanize what has been the quintessential drivable sub-urban business park.

The knowledge economy is relocating to walkable urban places because WalkUPs attract knowledge talent and stimulate productivity. Our research shows a significant correlation between the most walkable urban metros and both higher education (measured by the percentage of the population over 25 years of age with a college degree) and metropolitan GDP per capita. In 2013 the Milken Institute released a study of the GDP performance of 261 U.S. metros that concluded: “The overall explanatory power of the relationship [between higher education and GDP per capita] is strong and robust. More than 70 percent of the variation in real GDP per capita across the 261 metros from 1990 to 2010 is explained [by higher educational attainment].”

The six highest-ranked walkable urban metropolitan areas of the largest 30 U.S. metros are New York City; Washington, D.C.; Boston; Chicago; San Francisco; and Seattle. These six metros have 40 percent of their workforce holding college degrees, compared to 30 percent or less in the seven least walkable urban metros. This translates into the most walkable urban metros having an average GDP per capita of $74,241. The seven lowest-ranked metros have an average GDP per capita of $49,061. The most walkable urban metros have a whopping 49 percent premium in GDP per capita over the lowest ranked. This is the same premium per capita that first-world Germany has over second-world Croatia.

Dallas-Fort Worth’s Walkable Urban Ranking

Rocky Mountain High: Belmar in Lakewood, Colorado, is a prime example of drivable sub-urban transforming into walkable urban.

Dallas-Fort Worth ranks among the least walkable urban of the nation’s largest 30 metropolitan areas, along with the likes of Tampa and Orlando, Florida, and Phoenix. Even Houston was ranked higher than Dallas-Fort Worth. While no surprise to most residents who spend a good percentage of their life in a car, it is a rare low ranking for a region with so many remarkable achievements and economic successes.

Having said this, it is important to point out that the region does stand out in GDP per capita from the other predominantly drivable sub-urban metros. Your 2016 GDP per capita was $65,154, which is close to the six most walkable urban metros. There are two possible conclusions to draw from this anomaly. First, you do not need to change from the drivable sub-urban development patterns, since it seems to be working for you. The second conclusion is that you have hung on to a mid-20th-century development pattern for too long and eventually the price you pay will be heavy in terms of talent attraction, corporate relocations, and poor investment returns in comparison to other cities. Our guess is that the demand for walkability is too strong to ignore. Sub-urban development will continue, but it will pale by comparison to the investment returns and low governmental costs of walkability.

Metropolitan Dallas-Fort Worth Established Walkable Urban Places or WalkUPs

Urbanizing in and Around Downtowns

We found 35 established WalkUPs in DFW in our 2018 in-depth analysis, up from the 18 we found in the 2016 general analysis referenced earlier. We have ranked them by a “composite premium” measure, which combines the weighted average rental premium across products that the place commands, discounted for vacancy. A premium above 1 means the place outperforms the DFW regional average. A premium below 1 means it underperforms and has high potential for investment.

Most people think that walkable urban places tend to be in and near downtown, which is partially true. Downtown Dallas and downtown Fort Worth have redeveloped in remarkable ways over the past 20 years, such as Sundance Square, Dallas Main Street, Bass Performance Hall, Klyde Warren Park, etc. While downtown Fort Worth is slightly higher ranked than downtown Dallas, both are low to middle of the rankings. This represents a significant investment opportunity as both downtowns come up to the level of downtown Seattle or Washington, D.C., both of which were very much like Dallas and Fort Worth only a decade ago.

Today, the downtown-adjacent WalkUPs of both Dallas and Fort Worth outperform their downtowns in walkable urbanity. Surrounding downtown Dallas is Deep Ellum, Victory Park, and, most impressive, Uptown. Surrounding downtown Fort Worth is the Near Southside and the city’s Cultural District.

It is surprising that downtown-adjacent Dallas WalkUPs are outperforming downtown Dallas. These surrounding neighborhoods have been redeveloping first, followed by the somewhat lagging downtown. This is just the opposite of how other center cities throughout the country have redeveloped, where the downtown redeveloped first, followed by the downtown-adjacent WalkUPs.

Urbanizing the Suburbs

Not all market demand can be satisfied in city centers. A market exists for walkable urban places that are not as gritty as most center cities. The large number of people who opt for center cities enjoy their variety of people, diversity of uses, mixture of old and new, and the excitement of crowds. But not everyone wants to share heavily used sidewalks or look up at tall buildings. Suburban walkable urbanism tends to be nearly Disney-esque in its cleanliness and newness. WalkUPs like Reston Town Center in Virginia, Avalon north of Atlanta, and Sugar Land in metro Houston all represent examples of “just-add-water instant urbanity” that has significant appeal to certain market segments.

Another major factor in suburban urbanization is the quality of schools. While many center city school districts are slowly turning themselves around, many young couples are not willing to wait or work hard to effect change in their city schools. They bolt to suburban systems as soon as they have children. Many choose walkable urban suburbs with outstanding schools in order to have the best of two worlds: good schools and walkable urbanism. Suburban WalkUPs like Santa Monica and Palo Alto in California; Bellevue, Washington; Evanston, Illinois; Bethesda, Maryland; and Arlington, Virginia, offer both good schools and walkable urbanism.

A lesson can be learned from Arlington, Virginia, one of the best urbanizing suburban models in the country. Most new development in the past 20 years has been in multifamily residential, both for rent and for sale. The typical attitude of suburban towns toward multifamily development is to ban it. The fear is those units will contain families with children, and educating those children would impose prohibitive costs on the school district. However, Arlington has found that the school-generation rate for residents of multifamily developments in its seven WalkUPs is one-eighth the rate found in its for-sale single-family neighborhoods. The new multifamily households are paying school taxes but sending hardly any kids to the schools—a huge benefit to a school district.

Urbanism in the suburbs improves quality of life and home values in the adjacent single-family neighborhoods.

There is another reason urbanization benefits the suburbs: it improves the quality of life of the single-family neighborhoods immediately adjacent to growing WalkUPs. This is counterintuitive. Generally these dense, walkable urban places have faced vigorous NIMBY opposition, particularly from the immediate neighborhood. However, our experience and research show great walkable urbanism, particularly with the thoughtful management of noise, overflow parking, and cut-through traffic, improves quality of life for the immediate neighborhoods. This is achieved by providing households with the best of two worlds: suburban living within walking distance of restaurants, shopping, transit, and maybe work. Our research shows 40 to 100 percent per square foot valuation premiums for nearby for-sale housing in comparison to similar housing in the same school district but not within walking distance of a WalkUP. As a result, suburban Washington, D.C., and parts of Long Island, New York, have begun to see NIMBYs turn into YIMBYs (Yes in My Back Yard), advocating for increased density and walkable urban place development.

Neither research nor our experience has delivered a final verdict, but it appears likely that at least 50 percent of the demand for walkable urbanism will be satisfied in the suburbs, as it is in metro Washington, D.C., the leading urbanizing suburban metro. It may be even higher. Yet it is important to note that the demand for walkable urbanism, both in the center city and in suburbs, will be concentrated in only 3 to 5 percent of the land mass. The rest of the drivable sub-urban locations in the suburbs will stay the same as long as the car remains a viable means of transportation.

One of the best examples of a drivable sub-urban suburb transforming into a walkable urban place is Belmar in Lakewood, Colorado, a first-ring suburb of Denver. The first regional mall in the metro area, Villa Italia, occupied the Belmar site beginning in the early 1960s and provided the tax base for the jurisdiction and a shopping destination for two generations of Denver metropolitan residents. However, by the late 1990s, the mall was dark, shrinking the town’s tax base dramatically. A developer, in joint venture with the town, bulldozed the bulk of the mall, built a grid of walkable streets, and focused on urban entertainment (restaurants, a 14-screen movie theater, specialty shopping), high-density housing, and some offices in the first phases. It became a stunning success for the city and for the developer as a new WalkUP emerged from the dust of the bulldozed mall. Many more regional mall transformations are underway in suburban Denver as a direct result.

Walkable Urban Absorption Metro DFW, Atlanta, and Washington

(office and multifamily rental)

What Can Dallas-Fort Worth Learn From Comparable Metros?

There are two metropolitan areas that have been as infamous for their sprawl as Dallas-Fort Worth over the past 60 years: metropolitan Atlanta and Washington, D.C. All three metros are more similar than you may think, including:

• They grew from modest Southern metro areas of about 1 million in population in 1950 (metro Dallas at 1 million people, metro Atlanta also at 1 million, and Washington, D.C., at 1.5 million) to approximately 6 million by 2016.
• The huge mid- and late 20th-century economic booms in these three metro areas, while driven by different industries, took the form of being almost entirely drivable sub-urban. Residents abandoned their center cities, sprawling to the hinterlands that had no topographical barriers.
• All three created some of the iconic drivable sub-urban edge cities: Galleria in metro Dallas, Perimeter Center in metro Atlanta, and Tysons Corner Center in metro Washington, D.C.
• The growth patterns of all three metros focused on the “favored quarter” where economic growth primarily went, due to racial housing patterns. The favored quarter of Dallas was to the north, Fort Worth was to the southwest, Atlanta was to the north, and Washington, D.C., was to the northwest.

There is one major difference between how these three metros grew that has proven to be significant in satisfying the walkable urban market: rail transit infrastructure. Washington, D.C., and Atlanta got two of the three 1970s federally funded subway systems (the third was San Francisco). The Metro system in Washington, D.C., and MARTA system in Atlanta have built an armature around which walkable urban development has and is forming. The rail system in Dallas came after the great drivable sub-urban sprawl of the late 20th century, which means the length of the system and therefore commuting times to get between walkable urban concentrations are exceedingly long. In Atlanta and Washington, D.C., the vast majority of walkable urban development has been built in relatively concentrated, close-in places served by rail transit. Meanwhile, DART has been chasing low-density sprawl.

In the Dallas market, walkable urban office space is today 20 to 30 percent more valuable and apartments are 40 to 50 percent more valuable than sub-urban.

Our research shows that there are laggards and leaders in the structural shift by metropolitan areas toward walkable urban development. Metro Washington, D.C., is the leader of these three comparable metropolitan areas, metro Atlanta is following as fast as it can, while Dallas-Fort Worth lags but is still moving toward more walkable urbanism. Metro Washington, D.C., had 33 percent of its total 2010 inventory, built over the past 200 years, of office and apartments in walkable urban places, yet 91 percent of the new absorption between 2010 and 2015 has been walkable urban. Metro Atlanta had 16 percent of its total inventory in 2010 in walkable urban places but 49 percent of absorption from 2010 to 2015 has been in walkable urban. Dallas-Fort Worth had only 9 percent of its 2010 inventory in walkable urban places, but—in a sudden spurt—21 percent of its absorption between 2010 and 2017 went to walkable urban.

In all three metros, walkable urban has increased in market share absorption by two to three times sub-urban development. (In Dallas-Fort Worth it is 2.3 times faster.) The shift is moving all three metros in the same walkable urban direction. They started at different bases but today are responding to the same demand. The last time these three metros saw market shifts of this magnitude was in the 1980s—but going the opposite direction as white flight and newly constructed highways created the drivable sub-urban boom.

These market share shifts are impressive. But the premiums for walkability are even more impressive. In the Dallas market, walkable urban office space is today 20 to 30 percent more valuable and apartments are 40 to 50 percent more valuable than sub-urban. Dallas-Fort Worth walkable urban product is absorbing more than two times faster than sub-urban, with a 20 to 50 percent valuation premium.

There is only one explanation for such a phenomenon: pent-up demand. If Dallas-Fort Worth is anything like other metro areas we have studied, it will take 20 to 40 years to catch up with that demand, since we add only 2 percent to the built environment inventory in a good year.

There are a number of benefits in being a follower, one being that you can learn from other metro areas. Walkable urban places require entirely different skill sets than drivable sub-urban development. This includes fundamentally different ways to acquire land, plan, design, finance, develop, market, manage, own over time, and, most important, engage in what is known as “place management.” Engaging in place management, whether through a nonprofit like Downtown Fort Worth Inc. or Downtown Dallas Inc., or through private place management like in Legacy West or Watters Creek, is essential for success. We think place management is a new level of societal governance, joining the three levels of government we have today (federal, state, and local). Note we refer to this as “governance,” not “government,” and it generally arises out of the private sector.

Meeting the pent-up demand for walkable urbanism will put a strong foundation under the region’s economy and local government finances. Developing walkable urban in Dallas is in 2018 comparable to the building of the drivable sub-urban in, say, the 1970s. There are decades of demand to be satisfied that will put a foundation of 1 to 2 percent of GDP growth per year under the regional economy.

That walkable urban growth can also be supported by infrastructure that, counterintuitively, is much cheaper to build than the spread-out roads, sewer and water lines, electric, communications, and other infrastructure required by sub-urban development. As previously mentioned, it is concentrated in 3 to 5 percent of the land mass. Walkable urban infrastructure is one-tenth the cost for each supportable square foot cost of development, even accounting for rail transit. Drivable sub-urban infrastructure is unbelievably costly and inefficient. This is because infrastructure cost is determined by the distance that is required and the intensity of use. For example, a mile of sewer line costs about the same whether it is used for one-house-to-the-acre housing or 40 housing units to the acre; the difference is that those fixed costs are one-fortieth per walkable urban housing unit.

Dallas-Fort Worth is proceeding down a fundamentally different path of development than it has experienced over the past 60 years. It is more complex and has a different risk profile. With leadership, it will create a new economic base under the regional economy and give investors a substantial return on investment while meeting this different structural demand. Properly incentivized and managed, it can also recapture value and expand opportunity for areas long left behind. Dallas-Fort Worth has only started capturing the environmental, social, and economic benefits of walkable urbanism.

Eight Types of WalkUPs in Dallas-Fort Worth

GWSB research shows there are eight types of regionally significant walkable urban places in Dallas-Fort Worth. A ninth type, called an Innovation District, described by the Brookings Institution as an area “where leading-edge anchor institutions and companies cluster and connect with startups, business incubators, and accelerators” does not appear in Dallas-Fort Worth.

Downtown
The traditional center of the metro’s central city. Dallas-Fort Worth is one of the rare “binary” metropolitan areas, like Minneapolis-St. Paul, so it has two center city downtowns.

Downtown Adjacent
Neighborhoods surrounding the downtown in a 360-degree fashion, such as Dupont Circle in Washington, D.C.; Capitol Hill in Seattle; Uptown in Dallas; and the Near Southside in Fort Worth.

Urban Commercial
Local-serving commercial districts in the early 20th century that went into decline in the late 20th century but have experienced a recent revival as regionally significant WalkUPs, such as Fourth Avenue NE in Washington, D.C.; West Hollywood in Los Angeles; and Knox-Henderson in Dallas.

Urban University
Institutions of higher learning that have embraced their community, such as UCLA, Penn and Drexel in West Philadelphia, and Georgia Tech in Atlanta. SMU, the University of Texas at Arlington, and the University of North Texas at Dallas aspire to a similar role.

Major Town Center
Eighteenth- and 19th-century towns that the metro area grew to include and that have enjoyed a recent revival, such as Evanston in metro Chicago, Bellevue in metro Seattle, Decatur in metro Atlanta, and Grapevine in Dallas-Fort Worth.

Small Town Center
Eighteenth- and 19th-century farm towns that the metro area grew to include and have enjoyed a recent revival, such as Roswell in metro Atlanta; Leesburg in metro Washington, D.C.; and Roanoke in
Dallas-Fort Worth.

Redeveloped Drivable Sub-urban
Strip and regional malls that have urbanized, such as Belmar in metro Denver; Tysons Corner in metro Washington, D.C.; Perimeter Center in metro Atlanta; and Addison Circle and Cityplace in Dallas-Fort Worth.

Greenfield/Brownfield Development
A complete WalkUP built from scratch, such as Reston Town Center in metro Washington, D.C.; Atlantic Station in metro Atlanta; Easton Town Center in metro Columbus, Ohio; and Legacy (greenfield) and Victory Park (brownfield) in Dallas-Fort Worth.

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Christopher B. Leinberger is the Charles Bendit Distinguished Scholar and Research Professor of Urban Real Estate at the George Washington University School of Business and Chair of the Center for Real Estate and Urban Analysis. Dr. Tracy Loh is a senior data scientist at the Center for Real Estate and Urban Analysis. 

What Dallas can learn from Charlotte, Seattle, and Ann Arbor, all smaller cities embracing the opportunities of new urbanism.

BY KATHY WISE PUBLISHED IN D MAGAZINE DALLAS AND THE NEW URBANISM 2018

This piece is a feature from our special edition, Dallas and The New Urbanism. The magazine examines the successes and pitfalls of the urbanist movement in a region well known for its dependence on the automobile.

Dallas is not New York City or San Francisco—and never will be. But neither is anywhere else. We selected six cities smaller than Dallas with less robust regional economies that are speeding ahead in the generational change to urbanism, with tax windfalls to match.

Charlotte, North Carolina

Charlotte Center City

1.25

Regional Real Estate Premium

Charlotte has created a vision for its city center to be “viable, livable, memorable, and sustainable.” Within 15 minutes of Charlotte Douglas International Airport, the city core is currently home to more than 1,200 companies and expected to be home to 40,000 residents by the end of the decade. By combining high-rise housing with restaurants, bars, shops, museums, hotels, and the 7th Street Public Market—all situated along a light rail line—Charlotte has become the second-fastest growing city in the nation.

San Diego, California

Little Italy

Under the Tuscan Sun: It’s hard to imagine a derelict corner of San Diego, but this waterfront property fell into disrepair when the tuna canneries left. Now it is an Italian-inspired oasis.

1.45

Regional Real Estate Premium

At one time, more than 6,000 Italian families lived in this neighborhood, working in the fishing industry and turning San Diego into the Tuna Capital of the World. But after World War II, many of the canneries closed, and the construction of the I-5 freeway helped cement the area’s decline. With the urging of Marco Li Mandri, chief executive administrator of The Italy Association of San Diego, the neighborhood has been revived and now includes restaurants, retail, residential, and the Piazza della Famiglia, a 10,000-square-foot, European-inspired gathering space for the community.

Washington, D.C.

U Street and 14th street

1.74

Regional Real Estate Premium

The greater U Street Historic District in Washington, D.C., became a cultural center for the African-American community in the early 1900s, but, after Martin Luther King Jr.’s assassination, in 1968, much of it was burned down in the resulting riots. Now the birthplace of Duke Ellington is once again alive with jazz clubs and restaurants like Le Diplomate, which turned a former dry cleaning shop into a nightlife destination.

Somerville, Massachusetts

Assembly Square

1.38

Regional Real Estate Premium

The relatively small city of Somerville—only 4 square miles—is the most densely populated city in New England. Yet a 143-acre brownfield site, named Assembly Square for the former Ford Motor Company plant that operated there until 1958, had been sitting vacant and unused. Federal Realty Investment Trust partnered with the city to turn the area into a vibrant mixed-use neighborhood, investing $1.58 billion in private funding, contributing more than $30 million in city taxes, and coordinating fundraising for the Orange Line, the first new MBTA subway station to be built since 1987.

Seattle, Washington

South Lake Union

1.20

Regional Real Estate Premium

Lake Union was once primarily used to float logs to the sawmills along its banks. Microsoft co-founder Paul G. Allen saw the south shore’s potential for much more, but when his vision for a massive park failed to get approval, he changed his focus to developing the land for mixed use. The Brookings Institution has since named South Lake Union, home to Amazon’s HQ1, one of the country’s seven “innovation districts” for successfully prioritizing the best qualities of successful cities: density, proximity, authenticity, and vibrancy.

Ann Arbor, Michigan

Downtown

2.55

Regional Real Estate Premium

Ann Arbor’s downtown encompasses 67 city blocks, which include a historic district, University of Michigan properties, and public use areas. The region had fallen into disrepair, but it now provides a spectrum of services to meet the needs of full-time residents, students, and visitors, from new high-end housing developments to the historic Michigan Theater.

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From the publisher: It's time to decide the future of Dallas.

BY WICK ALLISON PUBLISHED IN D MAGAZINE DALLAS AND THE NEW URBANISM 2018

This piece is a feature from our special edition, Dallas and The New Urbanism. The magazine examines the successes and pitfalls of the urbanist movement in a region well known for its dependence on the automobile.

The Dallas region is playing a fast game of catch-up. A generational sea change back to the city is in full tide. Right now, we’re behind comparable regions such as Washington, D.C.; Atlanta; and (cough) Houston. But we’ve got all the ingredients to fuel a jump-start: solid population growth, a diverse economy, a strong civic culture, comparatively lower costs, and a world-renowned development community.

Since 2010, Texas has experienced the largest average growth rate of any state. Demographers say Dallas-Fort Worth will grow by 4.5 million more people in the next 20 years. Collin County is expected to double in population in the next 20. The Dallas urban area is expected to more than double—and it could grow faster if we are able to transition our infrastructure to be more resident-friendly.

Population growth is the tsunami coming right at us. Last year we were the fastest-growing region in the nation, a designation that can be for good or ill. Either we direct this growth to more efficient land use or we let inefficient sprawl exhaust our resources and burden our future. We either ride the wave or we will be engulfed by it.

I’ve visited with business and civic leaders all over the region. They still exude typical Texas optimism, but no longer with the bravado that Texas is famous for. Instead, they realize that the past is no guide to the future. Sprawl is not infinite. Even in the farthest suburbs, the most successful projects are mixed use and offer walkability. Taken together, population growth and generational change require that we thoughtfully transition from a car-dependent culture to a future of transit options that allow people to live, work, and play where they are. In short, towns that became sprawling suburbs are being forced to become towns again—a lot bigger and more diverse but towns just the same.

In the core of Dallas, a city designed for commuters must be overhauled for residents. The central business district concept is a relic of the past. Millennials and baby boomers—the two largest generations in American history—demand walkability. The downtown Dallas area will be the largest of many urban mixed-use centers in the region. Its success will have a spillover effect on the poorer neighborhoods to its east, west, and south. If managed thoughtfully, it will channel the tide to lift all boats.

The facts are in. Anyone who wants to argue with the future doesn’t have one.

Dallas has a very bright future, but we have to move very fast to seize it.

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by Jon Anderson
Candy's Dirt

At the end of the meeting, Plan Commissioner Margot Murphy thanked the committee members and audience for sticking with what may be viewed as a tedious process. She said it was like painting where 80 percent was preparation with the 20 percent at the end being when the magic happens.

Murphy was observer and host. The heavy lifting was handled by city staff from the Planning office.

The meeting kicked off with committee members being given an interesting task. They were shown four buildings of varying height and quality and asked to silently write down their gut thoughts on Post-It Notes and affix them to the wall. They were then asked to arrange them all by similar sentiment.

I’ll admit I was steeling myself for much more confrontational messages. Instead the responses were more considered. Albeit a pinch naive.

Negative reaction to all but the high-rise (“Maybe one”).

All the right words were there … walkability, sidewalks, neighborhood feel, setbacks and quality construction. All the right “wrong” ones too – ugly, cheap, institutional, yuk, and tacky. What was interesting was that example “A,” the high-rise, received no ugly, vanilla, or institutional type comments. Those epithets were reserved for the lower buildings.

Four building types committee members were asked to react to

In the category eventually named, “Fits the Neighborhood,” half were for the high-rise example while the other half were for mid-rise. None responded that the low-rise “fit the neighborhood.”

Within “Infrastructure” grouping, drainage and flooding were front and center while “Parking” was unanimous in underground parking.

There were 23 notes under “density,” by far the largest. Fifteen of the notes affirmed the desirability of a high-rise, most wanting it located along Northwest Highway. The reasons given were quality, longevity and steel construction.

All wonderful messages. The naivety comes in under the initial “Quality Livability” heading. Again, all the right messages of trees, greenspace, landscaping, walkability and underground parking. But here’s the thing. In order for those items to be feasible for a developer to create for the neighborhood, there has to be some give on what is developed. The only reason Santa didn’t bring you a pony was because Buttercup wasn’t in the budget.

Let me explain …

Yesterday, the Oak Lawn Committee saw a proposal for a high-rise office building. Its seven stories of underground parking will cost $59 million … for parking. However, doing so gave back an acre of public green space from their parcel. To offset the underground garage’s cost and resulting green space required nearly doubling the height of the building. The unsaid question that project asked was “how much do you want the green space?”

The same is true in PD-15. Again, I’m in complete agreement with all the asks. Green, walkability, underground parking, etc., etc. etc. But it must be financially viable for a developer to deliver along with a profitable project.

It was mentioned that Diplomat contract holder A.G. Spanos had commissioned a second, more thorough, feasibility study with HR&A Advisors who have ties to SMU (first one here). I will write about the report in detail next week (after I read it). A sneak peek chat with Spanos after the meeting told me it was actually worse than the February one. I’ll be curious if it factors in the escalating trade war that’s increasing raw material prices for builders.

All in all, very interesting. I think once the developers put on their show ‘n’ tell and the Q&A begins, some of this will be explored in more detail. After all, committee members aren’t construction pros. A raucous session with a developer or two will help crystallize what’s really important from the wish list.

More rules, regulations and interpretations

After the “fun” of the exercise, city staff walked through more zoning information and definitions for the group. Tedious to be sure, but necessary.

City staff made a point of saying that for those enamored with the Preston Center plan’s guidelines, while the city adopted the plan, they’re not zoned. The (Athena and Preston Tower) camp wanting to limit height to four stories would still have to go through the same Authorized Hearing process the committee is working now. This is contrary to the “fake news” being trotted out in the form of a neighborhood petition, trying to stop the process and use the Preston center plan guidelines.

And I know that city staff are overworked but …

When presenting concepts, the common question always came, “how does X specifically affect PD-15?” The unfortunate answer tended to be that they’d have to check and return with answers. A little more anticipation of these obvious questions would be appreciated and give the presenters more credibility.

Royal Orleans representative Ken Newberry pointed out that the city continues to change and evolve their interpretation of PD-15’s documentation. Specifically, he meant May’s sudden interpretation that since existing building heights were listed on the PD development plan, that was now the height limit. And I agree, the ship has to stop moving, the footing must, at some point, be secure.

This second meeting was perhaps not the rollercoasters and popcorn you may have been hoping for, but to return to Plan Commissioner Murphy’s thoughts … we know we’re going to paint, but we need to stick the painter’s tape first or we’re going to wind up with a mess.

Next Meeting: July 26 at 6 p.m. at the Walnut Hill Recreation Center (Walnut Hill & Midway)

Remember:  High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. In 2016, 2017 and 2018, the National Association of Real Estate Editors recognized my writing with three Bronze (2016, 2017, 2018) and two Silver (2016, 2017) awards.  Have a story to tell or a marriage proposal to make?  Shoot me an email sharewithjon@candysdirt.com. Be sure to look for me on Facebook and Twitter. You won’t find me, but you’re welcome to look.

by Jon Anderson
Candysdirt.com

No, it’s not a time warp, PD-15 is meeting again. After devolving into immovable factions last autumn, the neighborhood is back at the table … with a difference.  First, the city is guiding the process to ensure information is accurate and decorum is kept. The second difference is that this new group doesn’t contain any of the rabble-rousers from the last time. The hope is for a more balanced conversation and outcome for the neighborhood.

This first meeting was no barn-burner. Planners from the city’s Sustainable Development office led the discussion reviewing the current conditions of the PD-15 area and how things evolved over the years to get there.  Council member Jennifer Gates was also on hand to advise the group on city processes and share her experience with some of the concepts discussed.

I think the air was definitely let out of the anti-authorized hearing camp who had spread propaganda claiming the city would show up with a jumbo development plan to whip the committee into approving.

Instead, senior planner Andrew Ruegg walked the committee through the PD-15 documents and the city’s interpretation of their contents (the scant four pages of text and two diagrams). The reason the city is interpreting at all is because PD-15 is a quite imprecise compared to today’s PD documentation requirements. It shouldn’t be a shock that the 15^th of anything is less good than the 1,000^th … and today the city has close to 1,000 PDs.

The questions were about the level you’d expect and certainly indicative of a group that’s taking their task seriously. For example, the difference between a major and minor amendment to the PD. The most recent minor amendment was in 2010 when Preston Tower removed their second tennis court and used the space for additional parking. Minor amendments don’t require Plan Commission and city council approval. Major amendments – changing building footprint, height, etc. – do require full city approval and the reason they’re at the table.

Another asked whether the Pink Wall itself was changeable. Before the gnashing of teeth, I walk on the outside of the Pink Wall on occasion and its foundations are higher than the road bed and exposed. Changing the wall may be needed to level and improve its stability in the future.

The city didn’t immediately have an answer. However, I recall from my investigations that the Pink Wall west of Pickwick Lane to The Laurel is protected by the deed restrictions covering those parcels (As I recall, The Laurel was able to remove their section because their lots weren’t covered by the deed restrictions). The section running from Preston Tower to the Athena isn’t protected separately as it’s on land owned by the buildings fronting Northwest Highway (whose lots extend to Northwest Highway).

At one point the question came about permissible uses. It was noted that the PD included specific uses for the commercial condos on the first two floors of Preston Tower. This started a discussion of whether mixed-uses should be allowed on a ground floor of a residential building. Few warmed to the idea and the Preston Tower representative pointed out that the type of business suggested (a café or coffee shop) had been tried in the past and that there wasn’t enough foot or car traffic to sustain it.

In fact, waaay back there was a grocery store, pharmacy and even a supper club called Chez Arthur on the eastern end of Preston Tower and a 7 Eleven on the western end. I agree that a lone café within a residential district is unlikely to succeed.

For those reading who didn’t attend, the committee will meet as needed (five scheduled, but may require more) before presenting their recommendations to the neighborhood at a separate meeting. If there’s enough peachiness, it goes into City Hall to be heard and approved (or denied) by the plan commission and city council. Council member Gates indicated that the process from start to final approval could take six months or so.

Also, the sessions are recorded and will be posted online along with a summary of the meeting. You can find them, and all other materials used, at both the Sustainable Development and Council member Gates’ websites listed below.

For those wanting to keep abreast of the situation, here are a few links:

• CandysDirt.com articles on PD-15: https://candysdirt.com/tag/pd-15/
• Council member Gates website: http://dallascityhall.com/government/citycouncil/district13/Pages/PD-15-Zoning.aspx
• Sustainable Development PD-15 website: http://dallascityhall.com/departments/sustainabledevelopment/planning/Pages/pdd15.aspx

Nest meeting: July 11^th at 6pm at the Walnut Hill Recreation Center (map). See you there.

Remember:  High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. In 2016, 2017 and 2018, the National Association of Real Estate Editors recognized my writing with three Bronze (2016, 2017, 2018) and two Silver (2016, 2017) awards.  Have a story to tell or a marriage proposal to make?  Shoot me an email sharewithjon@candysdirt.com. Be sure to look for me on Facebook and Twitter. You won’t find me, but you’re welcome to look.