Ask Kathy Stewart about retail development in Lake Highlands, and especially in the center of the neighborhood, and she can offer various perspectives. There’s the perspective of a 24-year Lake Highlands resident. There’s the perspective of the president of the White Rock Valley neighborhood association, which includes the intersection of Walnut Hill and Audelia. And then there’s the perspective of the co-owner of the Highlands Café restaurant on the southwest corner of that intersection.
“Do we need neighborhood shopping centers? Yes, we do,” says Stewart, who has run the café for the past two years with co-owner Anita Siegers (and with the financial backing of 20 Lake Highlands families). “We need centers with a bank and a dry cleaners and a grocery store. And then we need to figure out what else we need.”
And how to get it. And this, despite much good news over the past couple of years, remains the most perplexing issue facing retail and residential development in Lake Highlands. Yes, there has been progress on the neighborhood’s periphery, including the Park Lane project near NorthPark Center, and a good amount of renovation on Northwest Highway and northward along Skillman. But is all of this enough to jump start development in the rest of the neighborhood, in the strip centers with their empty storefronts along LBJ, up and down Abrams, farther up on Skillman, and at Walnut Hill and Audelia in the heart of the neighborhood?
Equally as important, where does the proposed town center on Walnut Hill, between Skillman and White Rock Trail, fit into this? Is there enough momentum to make this project — currently on its seventh developer — work?
“The middle is still the problem,” says former Lake Highlands resident Chris Kelly, a principle with Bedrock Mfg. Co. in Dallas, which funds real estate development projects. “There are still a lot of apartments there, and until the problems those apartments present are addressed, you’re going to have difficulty developing the middle.”
What’s going on?
The good news is that the redevelopment situation in Lake Highlands is not nearly as bleak as it was just a couple of years ago, say residents, local officials and developers. A lot of storefronts that were empty then, especially in centers on Abrams and Skillman, have tenants. The development of what had been a largely vacant shopping center at Walnut Hill and Skillman is complete, bringing with it top-rated tenants. In addition, the neighborhood has been recruiting local developers who understand Lake Highlands’ unique needs and problems, and are more willing to work with the community than out-of-towners who are more concerned with the bottom line.
“If you look at the view from 50,000 feet, we’re making tremendous progress,” says Susan Morgan, who oversees development issues for the Lake Highlands Area Improvement Association. “It’s just slow work. And even if we aren’t where we want to be, we’re still leaps ahead of where we were 10 years ago.”
The bad news is that the situation then was very bleak, which means there was a long way to go. The Weitzman Group, which tracks retail occupancy rates, says the occupancy rate for the Northeast Dallas submarket is 88 percent at the end of last year. That doesn’t sound too bad, especially compared to the overall city rate of 89.6 percent. But that figure includes East Dallas and Lakewood, where the vacancy rate is probably in the low single digits. This means the real number in Lake Highlands is probably closer to 80 percent than it is to 90.
Also important: The quality of the tenants occupying those spaces. Though that has improved as well, Morgan says, it’s still not where the LHAIA thinks it can be. For every big-name tenant such as L.A. Fitness and Mi Cocina at Walnut Hill and Skillman, there are dollar stores, coin laundries and thrift stores in what used to be prime real estate. At the Compass Bank center at Skillman and LBJ, which has been the best-managed development in the neighborhood for at least a decade, the tenants include a tanning salon and a cash advance store.
“A lot of developers just can’t see the forest for the trees,” says Mike Cothern, a life-long Lake Highlands resident who is an associate at broker Revere Commercial Realty. “We have the families, we have the stay-at-home moms, we have the active PTAs and the mother’s day out. But it’s a hard sell. You have to sell it to the corporate guys, and they’re numbers driven.”
And, as Lake Highlands residents have been hearing for years, we don’t have the numbers — not enough income, and not enough people with enough income.
“We need a plan with specific goals and objectives for the entire neighborhood,” Stewart says. “We know this is not a good location for big box stores. We need to find creative ideas.”
Which is where, say local officials and developers, all of the activity on the fringes of Lake Highlands will make a difference. The process, they say, works like this: Park Lane and Walnut Hill-Skillman will do well, so the next wave of retailers will want to be close to them. That will spur redevelopment in those areas, replacing low-income apartments with high-end single family homes, quality retail and upscale townhouses. Then that will spur the next round of development, which will do even more of the same thing.
“It will be like a firestorm,” says Lake Highlands’ Jerry Allen, who represents Dallas on the DART board and is running for the Lake Highlands seat on the city council currently held by the retiring Bill Blaydes. “When all is said and done, the entire area will be primed and ready to go for development.”
Perhaps. But if it happens, several developers say, it will happen later rather than sooner. Kelly mentions a 10- to 15-year timeline, and Cothern compares the pace of development to what happened in Lakewood. In the early 1990s, there were empty storefronts, high crime, and little quality local or national development. Today, there are national chains such as Carraba’s and Whole Foods, high-end specialty shops, and competition among developers to do deals. Even the older grocery store centers are becoming fully leased.
The wild card in all this is the town center. If it’s built — and almost everyone in Lake Highlands, it seems, is more than cautiously optimistic that will happen — then the neighborhood will get a boost that it hasn’t seen in decades. At last report, the project was to include more than 2 million square feet of homes, shopping and commercial space connected by pedestrian walkways and a DART station. The Jackson Branch of White Rock Creek, which runs between the development site and the DART line, would be improved into park and green space.
But there are a number of questions about the town center that remain to be answered:
• Why will developer Prescott Realty Group succeed where six other developers failed? In 2004, for example, The Dallas Morning News quoted city and DART officials as saying they had a developer who was ready to start building the project. Prescott chief executive Jud Pankey did not respond to e-mail and telephone requests to be interviewed for this story, but Allen says Prescott has the character and the vision to do what the others weren’t able to do.
• Where will the money come from? The project could cost as much as one-half billion dollars, according to published reports and estimates from several commercial real estate experts. Currently, there is $10 million from DART to build a train platform, a chance for limited funding from the North Central Texas Council of Governments and the City for infrastructure improvements, a part of the 2006 bond package, some money from the Skillman tax increment financing district, and even cash from the parks department. But will Prescott be able to make up the difference (still in the hundreds of millions of dollars) from private sources?
• How firm is DART’s commitment? The lynchpin of the town center is, according to reports, the DART presence, which will make it possible to raise money for a Mockingbird Station-like project. But Jack Wierzenski, DART’s director of economic development and planning, says DART reserves the right to withhold the $10 million — which will only pay for a platform similar to what’s at Park Lane without the parking lot — if it decides the center is not what the agency calls a transit-oriented development. That means it must not only be a destination for DART riders, and not something like a Home Depot, but that the developer has to find the money to build something more than just the platform. And, Wierzenski says, DART officials remember that neighborhood opposition scuttled a plan to build the station in the mid-1990s.
Nevertheless, Morgan says: “I believe it will be built. I can’t tell you when, but there is momentum for the project, and you can see it in the area.”
In this, she is not alone — not just for the town center, but for redevelopment from LBJ to Northwest Highway and Central eastward.
Says Allen: “In three or four years, you’ll need to wear sunglasses.”
