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Dallas Light Rail Sparks Development Boom
© Light Rail Progress - 18 April 2000
Light rail transit (LRT) has the potential for stimulating and shaping adjacent real estate development at its transit stops and stations. This process both builds in ridership (e.g., trips by people living near the stations or traveling to the nearby activity centers) and raises the tax base (by increasing land and property values).
Dallas LRT: Major real estate impact
This is demonstrated in Dallas, where the new DART light rail system has apparently kicked off an explosion of adjacent real estate development less than 4 years after being installed. Here - adapted from material on DART's website (00/04/04) - is a quick look at recent and ongoing projects, and what the experts are saying. Dallas's experience should give a clue as to how light rail can help mold and shape Austin's future growth.
The investment in DART is paying off. Through early 2000, more than $800 million in private funds has been invested in development along DART's $860-million, 20-mile Light Rail Starter System. Throughout the DART Service Area, investors and developers are following DART rail lines for the fastest track to successful developments.
Economic impact of DART's light rail system
A new study by Dr. Bernard Weinstein of the University of North Texas's Center for Economic Development and Research determined that "Values of properties adjoining DART light rail stations are 25 percent higher than for similar properties not served by the rail system. ... Proximity to DART light rail stations appears to be a plus for most classes of real estate, especially Class A and C office buildings and strip retail."
Average occupancies for Class A buildings near rail increased from 80 percent in 1994 to 88.5 percent in 1998, while rents increased from an average $15.60/SF to $23. Strip retailers near the stations registered a 49.5% gain in occupancy and a 64.8% improvement in rental rates.
Dr. Weinstein found that DART counts when it's time to decide where to develop. Dallas developer Ken Hughes, president of UC Urban, said, "The proximity of the DART station and growing ridership made the Mockingbird Station project attractive and doable - and we're not doing it half-way."
Hughes' project includes the renovation of a former Southwestern Bell telephone warehouse and office tower that fronts on Mockingbird Lane and North Central Expressway. The existing structure is being converted to retail and 220 loft apartments, with plans for additional mixed-use development on the property including an 8-screen movie theater complex, restaurants, office space, a music store, and a future hotel.
"DART helps attract tenants, especially relocating companies. With the coming of DART and housing downtown, it makes for a lot better environment, and companies can't help but recognize this" said Dallas real estate broker Jerry Fults.
Thomas Garner, regional manager of Chicago Title Company, added, "The rail line runs right in front of our building [Bryan Tower], and it was a real selling point to our employees when we said we were moving people from LBJ to downtown. They can leave their cars at DART's Park Lane Station and come downtown without worrying about where to park."
Downtown Dallas development boom
The Central Business District of Dallas is experiencing its hottest growth and development in more than 20 years. The trend that started in 1996, the same time DART opened its first rail operations, has seen the renovation of a number of empty buildings.
For the first time, many of the renovations are for residential uses. A recent survey by M/PF Research, Inc. showed the in-town apartment market grew from 4,300 units in mid-1997 to 6,900 units in mid-1999. Loft condominium construction is also in full swing. With the help of light rail, Downtown Dallas is rapidly becoming a mixed-use area that will enjoy improved livability, property values and attractiveness to newcomers.
- West End
The West End, downtown Dallas's first entertainment district, was one of the first downtown locations to experience residential development. In 1996, developers converted a 6-story former saddle factory built in 1901 at Elm and Houston into 29 loft condominiums, from 700 to nearly 2,600 square feet. "Our location is great, with the West End and DART just outside the front door" says listing agent Paige Compton of Coldwell Banker. "What more could you want?"
- South Side on Lamar
investors who bought the historic Sears, Roebuck and Co. warehouse complex south of downtown say DART is the ticket to renovation of the blocks of empty buildings. Matthews Southwest, which set up the partnership to buy the Sears Lamar Street complex, is investing more than $150 million in the neighborhood to create South Side on Lamar, with 460 loft apartments, entertainment facilities, office and retail space and a hotel.
"From that transit station across the street, we have access to downtown, to the medical center and all the way up to North Dallas" said Pete Coughlin of Matthews Southwest. "The critical factors in the decision to purchase that property were DART's Cedars Station and the proximity to the Central Business District and Convention Center."
Matthews Southwest also plans a 165,000-square-foot Gilley's nightclub in the neighborhood, and recently donated land across the street from the Sears building for a new police headquarters.
Downtown Dallas commercial properties
- West End Restaurants
Two weeks after the trains began running in 1996, most West End restaurants reported a boost in their lunchtime business - some by as much as 40%. At Sonny Bryan's Smokehouse, meat consumption doubled because of the crowds. Lunch sales at Hoffbrau Steaks increased about $1,000 a day, said Greg Schooley, the restaurant's general manager. "The rail line has made it possible for people to get away without parking or walking in the hot sun" said Mr. Schooley. "it's been exceptionally wonderful."
- Adam's Mark Hotel
The HBE Corp. Invested more than $150 million converting the former Southland Center into a new Adam's Mark Hotel, one of the most costly real estate projects in the central business district. The hotel opened in fall 1998. But the St. Louis hotel company would not have invested a dime on the deal if the DART rail line didn't run by the new hotel's front door, officials say.
"DART is the reason we did the project" said Stan Soroka, general manager of the 1,900-room hotel, the largest in Texas. "That light rail line is our life blood - our connection to the Convention Center. It also gives our guests direct access to the West End and NorthPark."
- Bryan Tower
The Spire Realty Group is nearly finished with a $30 million renovation of the 40-story Bryan Tower, located on the DART rail line near the Pearl Station. A key architectural feature was opening the ground floor to the street by replacing brick and concrete walls with glass.
- Office Leasing
in mid-1999, advertising giant Omnicom Group decided to leave the Crescent complex on Cedar Springs and move downtown, taking its 1,000 employees to 200,000 square feet of space in Harwood Center. The company had planned to move to a large suburban campus, but changed its mind due to the attractiveness of downtown, especially the urban environment with good public transit.
Blockbuster Entertainment, one of the area's largest relocations, cites DART as major factor in establishing its headquarters in the central business district, across from DART's Akard Rail Station for its 1,000 employees.
- Other Downtown Development
Within two blocks of the rail line, developers have renovated the historic Magnolia, Wilson, Santa Fe II and Kirby buildings for hotel, restaurant and residential uses.
South Dallas development booms
- Lancaster Road
New banking and retail establishments are cropping up around DART rail construction along Lancaster Avenue. New businesses include Chemical Bank, Bank of America, Fiesta Mart, Minyard Food Stores, Walgreen drug store and Weiner's department store.
Affordable Housing Corporation is proposing a 160-acre senior-housing and single-family development close to Dallas Southwest Medical Center, near DART's Kiest Station. "There's a great demand for this type of housing that's near the hospital, shopping and has DART access," says AHC's Brian Potashnik.
North Dallas development skyrockets
- Mockingbird Station
Across the tracks from DART's Mockingbird Station, developer Ken Hughes' UC URBAN and a group of investors are renovating a former Southwestern Bell telephone warehouse and office tower that fronts on Mockingbird Lane and North Central Expressway.
They are converting the existing structure to retail and 220 loft apartments, with plans for additional mixed-use development on the property including an 8-screen movie theater complex, restaurants, office space, a music store and a future hotel.
Also at Mockingbird Station, Phoenix Property Company recently opened a 500-unit luxury apartment complex called "The Phoenix" on the former Dr Pepper Bottling Company site. "Given its location near downtown, the proximity to North Central and the new DART line, it's a highly desirable tract" said Roger Albright, Phoenix attorney.
An eight-story office complex, 6060 Central, is located within walking distance of Mockingbird Station. The property is connected to the Radisson Hotel. A multi-million-dollar renovation features an updated exterior and improved interior lobbies and common areas providing more convenient access between the two properties.
- Cityplace Station
DART will complete an underground station below the Cityplace office tower at North Central and Haskell in late 2000. Cityplace Company developers are planning 230 adjoining apartments, a 300-room hotel and a 43-story office tower in the area, and Cityplace Company's Neal Sleeper says "DART is a very key factor in all that development. We think DART is going to be a tremendous catalyst."
Across the expressway from Cityplace, Urban Partners and Phoenix Property Co. are developing the $50-million West Village, 7.5 acres with 6 buildings to house townhouse lofts, retail, and a theater. The project will benefit from an entrance to DART's Cityplace Station on the west side of the expressway, which will also be served by the McKinney Avenue Trolley [an historic electric streetcar line]. Nearby, McCaslin Development is building the $23-million Quarters at Cityplace, a 244-unit luxury apartment complex. Developers say they'll market the fact that the DART station is within walking distance of their project.
- NorthPark East
On Park Lane just west of the DART stop, a Canadian investment group has acquired two of the NorthPark East building and is studying plans for more. "They've made a major play at two stops, and the rail head was the impetus for that" said real estate broker Jerry Fults. "These people are from an area where mass transit is a way of life and it is a real important issue for them."
- Telecom Corridor
DART, private developers and the City of Richardson are participating the Galatyn Park project - an expansion of the Telecom Corridor that could rival downtown Dallas in employment and add another transit mall to the region. Jobs in the Telecom Corridor will grow from 70,000 to nearly 127,000 by 2010, according to the North Central Texas Council of Governments.
The Galatyn Park project, which involves prime property east of North Central Expressway between Campbell and Renner roads, will be centered on future rail stations. Don Dillard, Hunt Petroleum vice president of real estate, said the complex will include a performing arts center and an office conference complex on 27 acres adjacent to a new DART station, an open-air public plaza, and build-to-suit opportunities available through Galatyn Properties, Ltd. Ground has already been broken on a new Marriott Hotel.
Plans have been developed by the City of Plano for a 40-acre mixed-use development around the future Parker Road Rail Station opening in 2003. City officials expect the development to include residential, entertainment and office/retail space.
Plans are being developed by the City of Garland to lay the groundwork for new transit-oriented development in downtown Garland around the downtown Garland rail station and at the Forest/Jupiter Station opening in 2002.
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