The news that Aldi, the discount grocery store chain, was opening a store in Lake Highlands caught a lot of people by surprise. It was even more surprising that the store was going in at Forest and Audelia, which isn’t on the radar when most of us think of retail development in the neighborhood.

But we shouldn’t be surprised. Over the last few years, retail development in Lake Highlands has mostly consisted of waiting for the Town Center to be built. Even the development controversies last year were about one-off projects, and few saw them as part of more comprehensive, neighborhood-wide efforts.

But that may not be the case today. Several parts of the neighborhood that aren’t the Town Center also are attracting developer and retailer interest, and the Lake Highlands of 2015 could differ significantly from our neighborhood today.

It’s no sure thing, given the recession and several contradictory trends in retailing, which seem to work against in-town neighborhoods like Lake Highlands. Still, some retailers and developers have started to approach their business differently, and several parts of our neighborhood could be poised for important growth because of that.

“I think, in five to 10 years, you’re going to see dramatic changes” in several parts of Lake Highlands, says Tom Leuder, who represents our neighborhood on the city plan commission.

And when’s the last time anyone used the word “dramatic” to describe changes around here?

New Urbanism
The centerpiece of whatever happens in Lake Highlands is the Town Center. Yes, nothing much has happened since developer Prescott Realty leveled the 80-some acres at Skillman and Walnut Hill 10 months ago, but Prescott officials say all is on schedule to give the community a 20-acre park, 300,000 square feet of retail, 1,700 homes and 50,000 square feet of office space, connected to the rest of the city via a DART light rail stop.

Prescott had hoped the center would have an anchor tenant in 2008 and that construction would start early this year, but neither has happened. Still, few people in the development community are concerned, and almost everyone interviewed for this story was confident the center will be built.

“No, I’m not surprised by the delays, not the way things are going in the economy,” says Leuder, who also is a commercial lending specialist for Colonial Bank.

“It’s not just that Prescott is having difficulty, if they are, because everyone is having difficulty.”

If and when it gets built, the Town Center is the magnet that officials expect to draw new development to Lake Highlands. This new development is expected to follow the guidelines of what’s known as “New Urbanism”, which emphasizes retail and residential development that focuses on density in cities instead of sprawl in suburbs, and where the projects are designed so people don’t need cars to use them.

Developer Robert Bagwell, who built West Village, calls these projects “pedestrian villages”; urban planners call them “traditional neighborhood developments”, because they mimic the best features of older development from 40 and 50 years ago.

New Urbanism, says Tre Jordan, a research associate with the American Planning Association, requires older neighborhoods that are close to the city center, where the street system was laid out before cars were commonplace, and the buildings are best suited for re-developing up instead of out.

More practically, think of New Urbanism as the Old Town shopping center reconfigured for the 21st century. That means small but dense developments that are a dozen acres instead of a hundred, and an environment that is walkable, without massive parking lots and the stores that need them, like the Fry’s/Sam’s Club center on Northwest Highway and Jupiter. The retail mix leans heavily toward casual restaurants and services like banks and dry cleaners, things people need to get through the day.

In fact, says Ken Hughes, who developed Mockingbird Station, even something the size of the Town Center, with its 70 acres, could be too much for an urban neighborhood.

“The baby boomers and the Gen Ys want something else, so development is going to be different, without a doubt,” he says.

Back to the city
New Urbanism dovetails with the trend that has seen high-demographic consumers moving back to in-town neighborhoods like ours because they’re tired of long commutes and suburban sprawl. Their need for gated communities has been replaced by the appeal of a corner restaurant, which is a 10-minute walk — and not a 30-minute drive — away.

This helps explain the city’s emphasis on what’s called “form-based zoning”, which reflects many of the tenets of New Urbanism. The city council must still reach a compromise on the specifics, but few disagree with the principle behind it: that Dallas retail and residential development needs to be more like Manhattan and less like the intersection of the Tollway and Highway 121.

This sort of approach could work in several parts of Lake Highlands, the experts say, and one of the most adaptable is the intersection of Walnut Hill and Audelia. Not only is it in a neighborhood with enough density to make redevelopment cost effective, but it’s in a residential area that meets several of the New Urbanism requirements. People can easily walk to the centers, for example, and the shopping areas on each corner could be redone with smaller parking lots, smaller storefronts and more height. Think Mockingbird Station on a micro, neighborhood level.

But developers are also looking at the Medallion/Timbercreek area at Northwest Highway and Skillman. Preliminary plans called for JCPenney and Walmart to anchor a new shopping center on the site of the old Timbercreek apartments, and Penney’s, apparently, is still committed to the project. Timbercreek, meanwhile, may be the focal point of an effort to remake the Northwest Highway corridor east of Central, including the empty Steakley Chevrolet site and apartment redevelopment in back of Medallion Center.

Vaughan Miller, who oversees retail leasing for Henry S. Miller, one of the leading independent commercial brokers in the country, says this is one of the hottest properties in Dallas.

There may also be interest in the Royal, Skillman, Audelia and LBJ intersection, which has seen a hodgepodge of development over the last 20 years that made sense at the time, but makes less so today. Parts of the area are neighborhood friendly and might fit a New Urbanism approach, but some of it is decidedly 1980s, with centers with large parking lots and big storefronts that aren’t necessarily economically feasible anymore.

Complicating redevelopment here is the road design, with Skillman and Audelia being one of the most confusing intersections in Dallas. That makes it even more difficult for the shopping centers to attract customers, and Leuder says city officials are discussing reconfiguring the intersection. But even then, he says, it’s difficult to do much in terms of development because of LBJ. Interstate highway exits like that one lend themselves to fast food restaurants and gas stations by their very nature, and that would make it more difficult to bring more upscale development elsewhere in the area.

Overcoming the economy
Yet, as wonderful as this all sounds, there are obstacles. The biggest is the recession. Two leading national consultancies said at the end of last year that retailers will close tens of thousands of stores i
n 2009, and some will file for Chapter 11 bankruptcy protection. How does that apply here?

Generally, says Thompson & Knight attorney Misty Willcox, if a developer hasn’t started construction yet, don’t expect to see construction anytime soon. Developers borrow money in two stages — for land and for construction. They may still be able to get land loans, though equity requirements have increased, but “it has to be a special, special project to get the interest of lenders and tenants,” Bagwell says. The one exception to this is apartment construction, which generates enough cash to meet the new lender requirements.

In addition, the smaller, mom-and-pop retailers who should benefit from New Urbanism may not have the financial wherewithal to withstand the recession. These operations are traditionally undercapitalized and survive on cash flow. If the cash dries up, they won’t have money in the bank to pay their bills and might be forced out of business.

Which leads to a bigger, and potentially more divisive, issue. There aren’t a lot of mom-and-pop retailers left, especially in Dallas. Over the last 15 to 20 years, one goal for national retailers was aggressively eliminating small local and regional competition, says SMU professor Ed Fox, a leading authority on U.S. retailing. Walmart came in, and the corner drug store left. Home Depot arrived, and the hardware store closed. That’s one reason why the definition of neighborhood retail has changed so much, from bookstores and drug stores to dry cleaners and restaurants.

This presents developers with a dilemma. If they build a center that’s too small for Target or a 75,000-square-foot grocery store, where are they going to find tenants?

There also are potential challenges from technology, which has made the video store, long a staple of neighborhood retail, increasingly obsolete. It may do the same for something like Radio Shack. And then what will fill those spaces?

Finally, developers, because of the nature of what they do, tend to take the path of least resistance, and that often means tearing down an old strip center and putting up a new one that is exactly like the old one, New Urbanism or no.

Says Leuder: “I think it’s going to take a generation for [New Urbanism] to become the norm. It could be a long process.”

Plus, Fox says, “retailers are still going to be looking north, where they’re going to see growth rates. I’m not trying to be negative, but you aren’t going to see a lot of new retail inside LBJ because the retailers don’t yet see any reason to be there. They might, but that’s a long time away.”

In the end, much of what happens will depend on the Town Center and the economy. If the former is built in a timely fashion and the economy improves sooner rather than later, the quality retail development that Lake Highlands wants — and has been waiting on for a decade — will come here.

Otherwise, we’ll have to wait a little longer.