Gatehouse Capital CEO Marty Collins remembers when people would pray their car did not break down in Uptown Dallas. Now the area has thriving developments in all of the major asset classes, and developers in the submarket have more perspective on what makes their projects work, and what they would do over again.
“High density mixed-use works in Dallas, and it’s taken a long time for people to get that,” Cityplace Co. President Neal Sleeper said at Bisnow’s Construction & Development Forum on Thursday.
It helps that the cost of land is driving more concentrated uses, Collins said. C
Cityplace development started 28 years ago with 130 acres in what is now Uptown. Though Cityplace has been transformed into a more than $1B development with only five acres left to develop, Sleeper remembers the days when people would complain that the McKinney Avenue Trolley would prevent drivers from going 50 miles per hour on McKinney Avenue. Now it is fun to see people waiting in line to ride on the trolley, Sleeper said.
“Having the proper mix of uses is important. Retail is often the most difficult use, but it’s the most important,” Sleeper said.
Determining the best tenants is a fluid process. Mixing tenants with cult-like followings (SoulCycle, for example) and new-to-market food and beverage users is important.
Much of that understanding in retail tenants comes down to knowing the renter demographics that make up a neighborhood’s residential pool.
“Millennials are the largest renter pool in DFW, so you have to understand their needs,” Stoneleigh Cos. Vice President Ryan Swingruber said. Stoneleigh recently delivered its 198-unit tower One Uptown, which is about 65% leased today.
Those millennials demand certain amenities. Mill Creek Residential Trust Senior Managing Director Rick Perdue, whose company develops multifamily properties under the Modera name, joked that he does not like to be too pioneering with amenities, but three offerings have stood out.
“Our package lockers have been a slam dunk,” Perdue said. “Uber is another one we know is real. We design that [designated pickup location] space very early on and also get it geocoded to where the Uber will pick up [residents]. Co-working is another demand we see. We’re mimicking that a bit in all our communities.”
Swingruber has also found that some amenities have become non-negotiable.
“Our renter profile across the board has become much more sophisticated and knowledgeable about the product,” Swingruber said. From Stoneleigh’s One Uptown project to its development in the suburbs, Swingruber finds that renters are shopping around more for apartments and expecting fixtures that were once considered luxury, like USB ports in walls and backsplashes.
Perdue also sees demand from baby boomers.
“I’ve been reading forever that renters are split between baby boomers and millennials, but I just wasn’t seeing that in our data,” he said. “Finally within the last 18 months, I’m starting to see that shift to baby boomers.”
Stoneleigh acknowledged that multifamily concessions are increasing and rent increases are slowing. Swingruber said the company is exercising more caution, but Phase 2 properties are still forthcoming on many of its parcels in DFW.
Understanding market fundamentals drives successful developments, De La Vega Development CEO Artemio De La Vega said. De La Vega is behind the will-be 1.4M SF mixed-use project on Central Expressway and Haskell Avenue.
“Expect change. Developers must incorporate flexibility into design and legal documents,” he said. “Flexibility is Development 101.”