Don't Kill the Vibe

Gentrification in Dallas Neighborhoods

Kennedy is a partner in Space Between Design Studio, an urban design and landscape architecture company. He is on Dallas Area Rapid Transit board and teaches master’s classes in sustainable development at the Southern Methodist University. He resides and owns property in Bishop Arts.

Hetzel is a partner with Madison Partners, a local real estate development manager and brokerage and long-term holders of primarily infill property. He is president of the Deep Ellum Foundation, which manages the Public Improvement District, and chair of the Deep Ellum tax increment finance board.

Ragan is president of Wildcat Management, involved in the revival of the Dallas West End, the oldest downtown neighborhood.

Eudaly: These neighborhoods have gone through lots of changes in the last four or five, six decades. When change happens, it often brings great positives but also challenges, affecting an area’s vibe. Talk about your neighborhood over the last decades.

Hetzel: Deep Ellum is always changing, going back to the 1800s when it was a freedman’s colony, through its industrial period (Ford built cars there from 1915 to 1970), the grunge rock of the ’90s, and the downswing in the 2000s. It has a lot of history that needs to be preserved and maintained — particularly cultural history around blues music and arts. Deep Ellum has the issue of getting stuck in a boom-and-bust cycle, and a lot of that has to do with being too intensely focused on one use. In our case, it was entertainment.

It is the inverse issue that downtown areas have experienced when they were too heavy into office and didn’t have a proper mix of other uses. So those neighborhoods peaked during the day and had nothing going on at night. Deep Ellum was the exact opposite. And every 10 years or So things get a little too wild and crazy, and people are scared to come down.

Ragan: The West End, throughout the ’80s into the early ’90s, was known specifically as an entertainment district. The West End had an identity crisis when it went from an entertainment district with little to no residential, no office, and a place that thrives on tourism to a shift in the early ’90s, when there became safety concerns.It reverted to a bit of a sleepy neighborhood and became much more dependent on that tourism.

In the last seven years a lot of young people have moved to Dallas, and we’ve seen explosive growth downtown with a residential population. Our downtown — previously sleepy after 5 o’clock — became active. Before, there were only a few property owners holding real estate that had been in their families for decades. We are now seeing a lot of investment in this neighborhood with new owners, young owners like me, local people, but also institutional investors that bring a lot of capital and opportunity to pump investment into the neighborhood. There’s a lot of character in this neighborhood that you don’t see in other parts of our city or even downtown.

Kennedy: In Oak Cliff, the story begins in the 1910s and 1920s. Bishop Arts started as Dallas Land and Loan, the neighborhood’s original name. It was built as a streetcar suburb, with a private streetcar. The neighborhood really changed in the 1970s during busing, which led to white flight and disinvestment through the ’70s and ’80s. This neighborhood and Uptown were probably two of the roughest areas in Dallas in the 1980s. Some of that disinvestment meant that there was opportunity for repopulation, so there was a pathway for, largely, Latinos buying affordable homes. Now family homes that were $20,000 or $30,000 are selling for almost 10 times that. In the meantime, in the early 2000s, the city led a streetscape effort, which added brick sidewalks and street trees.

People like Jim Lake and Dave Spence bought up some of the old retail buildings to fix them up and preserve them, which was fortunate because we probably would have lost them. Then the area went through parking reform, to eliminate or drastically reduce the required amount of parking for a business, to get some businesses and restaurants into those buildings. By doing so, they didn’t have to knock down the buildings next door to have off-street parking. In 2011, the entire area went through a rezoning and essentially created the Wild West where you can do almost anything you want that’s under four stories. Since then, there’s been a lot of demolition and reconstruction. So we’re seeing residential start to come in, which is needed. The area has worked as an incubator for local businesses, similar to Deep Ellum, where once the businesses are successful here, they franchise out, such as Emporium Pies. And the next big development in Collin County will want the Emporium Pies or whatever else, which means we get fewer business and visitors coming in from afar. We have to replace those customers with more rooftops nearby. That’s slowly starting to happen.

Eudaly: On Bishop Arts, you mentioned that people bought these houses for $20,000 or $30,000, and now they’re appraised at 10 times that, which is great if you’re selling. When your property taxes increase so significantly, how can you maintain diversity without forcing out long-term owners who can’t afford the higher taxes? Talk about the changing demographics and mix of Bishop Arts.

Kennedy: The rising assessments are a big issue. And those that were empowered through their homeownership benefit by this rising tide. Those in low-income apartments are the ones displaced. That’s the negative side of gentrification; we don’t have opportunities to relocate those people to stay in the neighborhood, into affordable housing. I think the intent of the rising tax credit and tax rates is to densify the neighborhood, and that’s why it’s been rezoned for up to four stories. When we bought, we thought there was going to be fixer-upper, missing middle housing coming in. We see some of that, but we didn’t expect entire blocks to be taken down by one buyer. There’s a lot of that happening. That becomes one of the challenges we’re going to have as a city because we need a lot more investment and reinvestment into a number of neighborhoods. We’re in a good place being sort of behind on the timeline, compared to Austin or other cities on gentrification. Hopefully we’ll get the policies in place that ensure everybody wins. From a demographic standpoint, obviously, it’s higher-income buyers coming in; we’ve got townhomes going for $500,000-$700,000. In a way, it’s like the middle class and upper middle class coming back to a neighborhood they left long ago. But how do we maintain the diversity we have now both from a customer base and a residential base?

Eudaly: What percentage of Deep Ellum is now residential, and how is that changing? And how is the boom cycle in Deep Ellum impacting the mix of demographics as well as retail, residential?

Hetzel: In Deep Ellum I wouldn’t say displacement is a non-issue. But it’s certainly not as big of an issue as in areas like Bishop Arts. Residential population has been, over the last 50 years, fairly low in apartments and not in any real risk of being torn down – they’re either newer ones or historic buildings. Deep Ellum is experiencing a rise in rental rates, but that’s true of anywhere in infill Dallas. It’s a hotter neighborhood than your average bear. But because we do have higher-end multifamily development going on, it’s sucked some of the pressure off the existing residential stock. So those who want the highly amenitized high-rise units have those available.

But we also are mindful that as a neighborhood, some part of the energy and the vibe that was so important is the fact that we did have bartenders and artists and people of that sort living in Deep Ellum, and we would hate to lose that. It would be negative for the area and negative for the city. There are a couple things to consider when we talk about housing affordability: transportation and income. When you compare affordability, you must not only factor in rent, but the cost of car ownership. Somebody is living and working in Deep Ellum, they might be able to afford higher rent because they’re walking to their job. So that is a good side of densifying your city.

What do we do to help boost incomes? What do we do to have more walkable urban neighborhoods where a car’s not necessary? If we have hundreds of thousands of people moving here every couple of years, you have to build the housing supply or it’s going to raise prices dramatically for everybody else. We only have a couple of truly walkable, mixed-use districts. And when everybody wants to be in these couple nodes that are already zoned for mixed-use, have streetscapes done to be pedestrian-oriented, of course, prices are going to be insane. As a city, we need to think about what do we want to do.

Ragan: To add on to what Jon was stating, there’s this interesting dynamic in Dallas, and I can say that because I’m a transplant. It’s my home now. Dallas seems to have this mindset that things are a certain way, and this is how you’re going to like it, and you’re just going to take it. And then you’ve got young people moving to the city or coming from other parts of the country that have their own expectations. And they’re saying, well, I don’t want to have a car. I like taking DART and living someplace like West End. This is cool; there are all these historic buildings, there’s character, I can walk outside my door and have this new park and restaurants and bars. That is a challenge with some of these areas we’re discussing today. A difficult conversation is the idea of perception, but also in really understanding and listening to what people moving to our downtown clearly are saying they want.

The West End is a perfect example of that, being known as a tourist destination or an entertainment district; We flash forward to today, and it is truly a neighborhood with a growing residential population. And that population, they want to work in the area, they want to live in the area, they want to play in the area. To Patrick’s comments earlier about Bishop Arts, it really takes people coming to the neighborhood who are willing to put the money behind improving transportation and improving lighting and security and safety. And I know that those are programs that have been put in place with all with all three of our neighborhoods. They’ve been incredibly successful and impactful in changing the direction of our neighborhoods.

Eudaly: We’re talking about this concept of vibe and kind of is somewhat intangible but reflects all these things we’re talking about. So back to Jon for a minute. In Deep Ellum, describe the vibe back in the 80s 90s and how it has developed in the 21st Century. What impact did the Great Recession have, and how would you describe the vibe in Deep Ellum today?

Hetzel: Sure, today, the vibe is obviously very different than it’s been in the past and I think most people would consider it a good thing. Obviously, there are those that really enjoyed when Deep Ellum was a ghost town and there were a couple of grungy bars. They could go to find a parking space easily but today it is still, the core Deep Ellum is still the old historic stock of one to two story buildings. Very, very few of them have been torn down in the last 20 to 30 years and that that was intentional. And that was largely done through zoning code, we made it so if you kept an old building, that you didn’t have a parking requirement, so we were encouraging people to activate old buildings without tearing down other buildings to do so. But if you build something new, you would have a parking requirement, you’d have some pretty strict design point standards. We didn’t want to stop development but we needed a better mix of uses, more density, but we wanted to do a carrot/stick approach to encourage people to use their old buildings. So if you walk down Main, Commerce and Elm you’ll find 90% of the businesses are locally owned and with a much higher mix of retail than in the past. You know, in the 80s and 90s and early 2000s. It was mostly empty building, bars, empty building, live music venue, empty building, bar, bar, bar, live music venue, tattoo parlor, and tattoo parlor. Now you might have a pie shop next to a pizza place next to soft goods store next to a barbershop next to a barber college. It’s similar to Bishop Arts, very much an incubator neighborhood, though as rents go up, that’s been trickier to accomplish with the development happening in what I call kind of a bowl pattern.

The vibe is still if you come down here on a Saturday night, you’re going to find a lot of people looking to have a good time — that part hasn’t changed. But the big difference is coming down here in the middle of the day, on a Thursday or a Saturday, you’re going to find moms with strollers walking around, which was a new thing Deep Ellum. Now it’s much more there’s something here for everybody, not just partygoers.

Eudaly: Patrick, what about Bishop Arts over the same timeframes. How’s the vibe? How would you characterize it from the ‘90s through today?

Kennedy: Knowing the history of the neighborhood, my guess — I didn’t live here in the ‘90s — is that there wasn’t much of a vibe at all. There wasn’t really any activity; there were many businesses in retail buildings. But that’s changed, and the scene is largely music based, which is evolving. It’s very new, but it’s one of the few places in town where buskers will set up on every single corner, and you’re going to hear different music as you walk down the street. I sense that it’s something that’s going to stick.

The other really interesting thing is a lot of the new business owners are also moving in as residents, they walk to work, which is fun. And it means you get to know the business owners really well because they’re also your neighbors. We haven’t been like Deep Ellum, where it’s gone through phases with different sorts of personalities to the neighborhood. It’s pretty exciting to be part of it evolving into a complete neighborhood where we’ve got every need covered within walking distance. It’s probably going to be here very soon since grocery stores are eyeing the area.

Eudaly: Tanya, describe the changing vibe in the West End.

Ragan: Seven years ago, you had a situation where buildings that had been owned by property owners for decades had a high level of vacancy. You had property owners who, frankly, had seen the district thriving during the entertainment years and more recently just didn’t want to stick a dime into their properties. So they sat there, they declined, we had a lot of chain restaurants and really focused solely on tourism.

The last five years, there has been an incredible transformation where you’ve seen new property owners, both institutional and local, make incredible investments in the neighborhood, a tremendous amount of improvements to these buildings, bringing in residential population, additional offices. We’ve seen a number of local businesses open in the neighborhood, where you walk through our streets, you don’t see all these chain restaurants. What’s happened organically over the last few years is a real collaboration between all the stakeholders, and it’s been just incredible to experience and watch the neighborhood become cohesive, collaborative. That is what’s led to the live-work-play evolution where you have residents who live in the neighborhood and who work in the neighborhood.

You have a growing innovation district, a smart cities neighborhood. We have area Wi-fi, we have a new park that’s completely green. We have young startups and companies that want to be in a very collaborative environment. West End was experiencing the revival, but we were still really in the midst of an identity crisis. Well, we are historic, we are touristy, we are innovation. But you know, we didn’t completely understand it. With COVID, what we saw happen behaviorally, organically was the tremendous amount of movement in the neighborhood. Pre-COVID, it was difficult to bring people over from Victory or American Airlines or from the core; they didn’t see the vibe over here as attractive enough or interesting enough. What took place over the course of COVID is, suddenly, we began pulling people from these other neighborhoods to support our small businesses; they were coming over with the new park. And it’s been so interesting to see not only the vibe change in the last five years, but over the course of COVID.

Now those behaviors are engrained where people walk over with their dogs or people come over with strollers to go to the park. And there is a level of movement as a neighborhood with a true neighborhood vibe that, frankly, didn’t really exist in this way, pre-COVID. To go one step further to talk about perceptions or identity crisis: We’re much more solid with where we’re going as a neighborhood.

Eudaly: Let’s talk about how the city of Dallas and other municipalities can help your neighborhood grow and develop in a positive fashion?

Kennedy: There’s a number of things we’re going to need City Hall’s help with from an investment standpoint and a policy standpoint, one of which is going to be managing the curb. We don’t want to be completely invaded by cars looking for free parking. Pricing and parking will be a big thing. I think the minimum parking requirements and eliminating those because parking is defining all of the residential construction and design, too, and it would allow us to have creative infill housing. And then we’re going to need public space. It’s an issue in any of the hot neighborhood markets that every investor and developer is going to want to maximize their square footage. Preserving opportunities for public space will be important. Someday maybe we end up closing some streets to do that.

And lastly, I think delivering mixed-income housing. The real opportunity is where we already have public land, which is schools and libraries. So instead of being single-purpose school with students and trailers, maybe the market will build a new school with further rights to do 250 mixed-income units on top of that or a library with mixed-income units on top.

Ragan: One challenge, with the number of relocations and companies looking at moving their businesses here, Dallas has a real disadvantage with customer service with being easy to work with. This isn’t politically correct but is something that as a city, we need to figure out. Less layers of red tape, less difficulty getting answers, and more assistance with moving some of these conversations forward.

We need less of a one-size-fits-all approach. What works downtown and what works in North Dallas isn’t the same as what should work in South Dallas — they’re all completely different. So whether that’s transportation, whether that’s going through economic development, how the incentives are structured, whether it’s working hand in hand with local developers to spur development, we need to revisit our policies.

Things they’re doing a good job on regards safety. We’ve worked very, very closely in this neighborhood with the city on policing, on lighting, on replacing lighting around DART, and safety perception issues revolving around public transportation in the area. We need more communication that crosses jurisdictions — we’ve got the city, we’ve got DART, we’ve got city police, we’ve got DART police. We’ve come a long way in the last few years, but we’ve got more work to do.

Hetzel: I couldn’t agree with Patrick more about managing the curb. Deep Ellum instituted the first consolidated rideshare pickup/drop-off zones in the city. The street congestion from double parking, particularly with us going two way in narrowing our streets, was causing massive issues. The more we can manage the curb properly, the better a neighborhood is going to function, particularly as it becomes more pedestrianized.

City land is a huge opportunity. It’s hard for private developers to build affordable housing when they’re doing condominiums and high-rises. Just the cost to construct the units are $200,000 to $400,000 a unit and you cannot lease that cheaply enough to make it worth the cost to build it — not even factoring in land prices. But when you have city land, opportunities open up, particularly in Deep Ellum. There’s Patrick’s baby, I-345 potentially coming down or being decked. Can’t forget about transportation, particularly for neighborhoods like Deep Ellum, hugged by major transportation on all our sides. Green space.

Eudaly: Look out 15 to 20 years and what do you hope your neighborhood will look like?

Hetzel: A better version of what it is today. We retain our historic core, and the culture is still there. And that we make sure it continues to develop as a dense, walkable neighborhood.

Ragan: We continue to see the diversification happening over here with people living and working and playing. It has so much potential from what you can pay for rent over here, whether it’s office, whether it’s for living, it’s very affordable. Organically you see that happening now. But in 15 years, even more so.

Kennedy: I suspect this neighborhood will live up to how Jon describes the future of Deep Ellum, which is a dense, walkable neighborhood. I look at the Ballard and Fremont neighborhoods in Seattle, and that is we’re headed toward in growth. I hope we can achieve those goals in diversity of housing, diversity of demographics. I hope it’s really a better version of what it is now.

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