Adaptive Reuse Fueling Population Growth In Downtown Dallas
More Dallasites are making downtown their home base as a spate of adaptive reuse projects bring more options to the submarket.
The number of residents in the Central Business District now totals 14,528, up from 14,000 at the same point last year and a massive jump from the 200 people who lived there in the late 1990s, according to new data from Downtown Dallas Inc.
There are currently 9,413 housing units downtown, which were 90% occupied at the end of 2022, per DDI. More than 20 active construction and development projects are underway downtown, some of which will turn defunct office space into apartments. By 2025, DDI estimates those projects will add another 1,097 multifamily units to the supply.
“Downtowns across the nation right now are looking at what they can do as a lot of the stock built in the commercial office boom begins to age,” DDI Vice President of Planning and Policy Evan Sheets said during a Friday presentation. “A lot of those assets need some form of repositioning.”
Turning defunct office space into apartments has proven to be effective in both reducing vacancy in older buildings while also boosting foot traffic to struggling retailers. Downtown Dallas’ 33M SF of office space was just over 72% occupied at the end of 2022, and absorption closed out the year at -169.7K SF, per DDI.
The five office-to-resi projects currently underway downtown are expected to knock 6.5% off the CBD’s vacancy rate. Woods Capital’s conversions of both Santander Tower — a 50-story, 1.4M SF skyscraper from the 1970s — and Bryan Tower — a 40-story, 1.1M SF structure from the 1980s — will add close to 600 residential units to the CBD.
As the population downtown grows, so will demand for services and amenities, said Doug Prude, DDI director of economic development and opportunity. The CBD lacks a full-service grocery store, but that could change as operators feel more confident in the foot traffic that comes with more residents, visitors and office users.
“As these new developments get deeper into planning, we should see more interest in grocers coming into downtown,” Prude said.
Several major projects are poised to transform the downtown area. The $2B Kay Bailey Hutchison Convention Center upgrades, approved by voters in November and set to break ground in 2024, will open up 30 acres of land occupied by the existing structure to private development.
Already, Ray Washburne’s Charter Holdings has begun to aggregate property around the convention center. The real estate magnate purchased Founders Square in early March after paying $28M for the former Dallas Morning News headquarters in 2019.
He now controls the northern arch above the convention center, he said at an April 20 Real Estate Financial Executives Association luncheon, and plans to replicate the San Antonio Pearl District by bringing in more retail and restaurants.
Executives at DDI said they plan to work closely with developers like Washburne to maximize development around the convention center by redeveloping vacant space in the hopes of creating a more connected downtown.
“With the freeing up of this land, we’re actively working with adjacent developers and potential development interests to reposition that in partnership with the city as an entirely new neighborhood, both linking downtown and the Cedars and linking the front door to the convention center into the heart of downtown,” Sheets said.