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UPWARD BOUND

Investment pouring into long-neglected Dallas downtown

By Debra Hazel

Stone Street Gardens, a thoroughfare linking Main and Elm streets, is a centerpiece of the revitalized downtown, offering retail and entertainment.

For decades “downtown Dallas” has been almost an oxymoron, at least as far as retail is concerned. With the exception of the flagship Neiman Marcus, there was little in the city’s downtown to draw shoppers. Few people lived in the area, and there was a dearth of stores, restaurants and services even for the office workers nearby.

That, finally, is starting to change. Over the past 18 months, the not-for-profit Downtown Partnership, working with various developers to revitalize landmark buildings, has brought residents back to downtown. Retail is starting to follow in a project that could see the area transformed by 2005.

“Several really exciting things are going on,” said Gerald Sampson, president and COO of Neiman Marcus Stores and chairman of the Downtown Partnership.

Though Neiman Marcus has been located downtown for all of its 95-year history, the neighborhood around it has fallen apart, hurt by the consolidation in the banking industry and the state’s economic woes of the 1980s. Many businesses and most retail fled to the suburban regional malls that have helped extend the metro area as far north as Frisco. Former mainstay department store Sanger-Harris, acquired by Foley’s in 1990, operates a Foley’s unit outside the Downtown Partnership’s area. In 1987 Joske’s was acquired by Dillard’s and now operates under that name, but has no downtown stores. In time the downtown area essentially shut down after 5 p.m. as the office workers left.

The city and local businesses decided that enough was enough. In 1996 they formed a tax increment financing, or TIF, district to provide financial incentives for the development of residences and retail in the area.

“Their focus was to bring a living, breathing element to the downtown, focusing on converting ‘B’ and ‘C’ office buildings to residential,” said Richard Lake, managing principal of Washington, D.C.-based Madison Retail Group, a consulting firm specializing in downtown redevelopment.

Over the past three years, more than 3,000 residential units have been completed or are under construction, providing a basis for a retail district. In 2000 the Downtown Partnership was formed to re-create the area bounded by Elm, Commerce, Harwood and Field streets, with Main Street running right through the center. The area is not far from the West End Historic District, which has been redeveloped into a retail and entertainment district.

“The first year was total planning, putting programs together with the TIF board for our city,” recalled Nancy Hormann, the Downtown Partnership’s executive director. Madison Marquette, Madison Retail, Roadside Development and RTKL were retained to create a master plan for the area, and they had their work cut out for them. For starters, the downtown area is not geared to pedestrian traffic — a series of underground tunnels connecting various office buildings meant that workers didn’t need to walk the streets at all. Bus patterns were focused more on getting people to and from the suburbs, not on moving them around the downtown area.

“We had to take hold of the infrastructure so it worked in concert, and re-create a district that we could bring retailers into,” said Lance K. Josal, a senior vice president of RTKL, Baltimore. Tunnel use is now being restricted to service retail, which will not compete with the street level. Stairways and escalators have been created at both ends of Main Street to bring tunnel users above ground.

The completed master plan created about 400,000 square feet of streetfront retail over 10 blocks. The idea was to tell the Main Street story in a way that would attract retail and restaurants around Neiman Marcus and to organize the existing occupied buildings into their various uses while finding uses for the unoccupied buildings, some of which had been vacant for 15 years.

“You had very sophisticated property owners next to unsophisticated owners,” Madison Retail’s Lake said.

The six months since the plan’s finalization have been a whirlwind of development, despite the challenge of requiring multiple developers, including Crescent Properties, Post Properties and Trammell Crow, to coordinate their efforts.

“Madison saw a divergent, diverse group of owners that didn’t speak with one voice,” Josal said. “Largely, we’ve been able to get the large developers to sign on to the Madison plan.” This, he added, helps them get TIF money.

The group held multiple meetings with local property owners to learn what was needed by way of transportation, parking and other amenities. The rapidly expanding Dallas Area Rapid Transit line is now making downtown more accessible to outlying areas. In addition, a central valet parking service with multiple drop-off and pick-up points has been created to encourage people to walk. Owners can even leave their cars at one location and pick them up from another.

Several projects have now been completed. Residential development was the first priority for creating a 24-hour presence in the area. The Kirby Building, formerly Sanger-Harris, was the first to receive TIF funds; it has been converted to 156 apartments with 10,000 square feet of ground-floor retail, including trendy restaurant Jeroboam. Conversion of the Jackson Street Lofts building, formerly offices, has also been completed. A bus terminal has been made into 205 loft units, while the Magnolia Building, which used to be offices, is now a 330-room hotel with 5,000 square feet of retail.

“In a three-year period, we’ve gone from nobody living here to over 1,000 people,” Sampson said.

Ironically, the economic downturn that has hurt many retail developments is helping downtown Dallas by making property more affordable than it has been in the past.

“There are buildings to be had, and now is the time to do it,” the Downtown Partnership’s Hormann said.

Stone Street, a small connector between Main and Elm streets, has been renamed Stone Street Gardens, and is a centerpiece of the downtown’s revitalization. Sidewalks are being refurbished throughout, as are the buildings on both sides. The Mercantile building is being converted to 412 residential units with 117,000 square feet of retail. Stone Place is getting 9,800 square feet of retail. On nearby Elm Street, meanwhile, a former office building is being turned into 66 apartment units. And other projects are in the approval stage.

Thus far restaurants, including Jeroboam, nightclub Umlaut and, of course, Starbucks, have taken most of the new retail spaces. “It already has started to be the place to eat,” Hormann said.

Still, more needs to be done. Though the young urban professionals and the empty nesters who have taken the bulk of the new apartments and lofts like to eat out a lot, the area is crying out for a grocery store, planners say.

“Our No. 1 focus is to bring a food store, one that also has prepared foods, to downtown Dallas,” Lake said. A pharmacy is a major focus too, and the group is generally seeking small tenants that will not compete with the suburban malls.

“There’s no sense competing with a NorthPark Mall if you have the same thing,” Sampson said, referring to the high-end suburban Dallas mall. “We have to distinguish ourselves. We’re looking for a great Western store, a great antiques store.”

One already successful tenant is Mike and Larry’s Stuff, an entrepreneurial venture that sells items for the home, particularly geared toward the area’s loft and apartment dwellers. Other tenants can also appeal to the students at the nearby Universities Center at Dallas.

“We’re trying to bring all these elements together,” Lake said. “Ultimately, I can see fashion taking hold.”

Other sections in and near the city’s central business district are also seeing some development. City approval has been granted for Victory Dallas, a mixed-use project near the American Airlines Center that will combine 500,000 square feet of retail, 600 residential units and office space on 65 acres.

Things are humming in the suburbs, too, said Clay Smith, managing director of retail services at the Southwest division of The Staubach Co., a Dallas-based real estate services firm. The Dallas North Tollway, a freeway, continues to draw office and retail construction, but growth is occurring throughout the metro area.

“Our growth is pretty dynamic everywhere,” Smith said.

Lake predicts that he’ll be halfway through the retail leasing process in another year to 18 months.

“In three years, you’ll see it and say, ‘Wow!’ ” he said.

But no one involved in the project believes that downtown Dallas will ever be completed. Cities just don’t work that way, they explain.

“Cities take a while before they turn into what you want them to be,” said Josal.

But they clearly believe they’ve made a good start.

“It’s happening,” Sampson said. “It’s really going.”

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