The future of downtown Dallas is on pause as the pandemic drags on
Two women in masks watched their children run through a mostly empty Main Street Garden park under the noon sun on a recent workday in downtown Dallas.
To the east, the old municipal building that now houses the University of North Texas at Dallas law school still sports plywood on its windows, placed there after protests turned destructive in early June. To the west, the now temporarily closed Day of the Dead-themed Mexican restaurant Wild Salsa is also boarded up, the words “Love will win” painted across one of the panels.
Across the street, Dallas Chop House, usually brimming with business clientele at lunch, sits empty and dark. Only about half of the restaurants occupying an underground food court beneath 1700 Pacific’s 49-story skyscraper are open. Benny’s Bagels owner Naim al-Aassad, who’s watched his weekly sales plummet more than 80% from pre-COVID levels, said workers have yet to return to the corporate offices above.
In recent months, downtown Dallas has looked like 7 o’clock on a Sunday morning all the time. Life halted by a pandemic has sent downtown’s 135,000 employees retreating to their homes to work, and its roughly 12,000 residents have been encouraged to stay inside.
As every major metropolitan area in America is contemplating a return to life in the city, Dallas business leaders are planning to draw on the will that transformed downtown once before and gives the heart of the city an edge today.
The state of downtown now is reminiscent of 2002, said Kourtny Garrett, president and CEO of Downtown Dallas Inc., a nonprofit that oversees the central business district.
Vacant buildings and empty skyscrapers weren’t uncommon in downtown Dallas in the early 2000s. A building boom transformed the city from a workday town into one that boasts 12,000 residents today.
(RYAN DONNELL / 174530)
That was a soul-searching year for Dallas, as leaders worked to revive the city’s image after losing a spirited competition for Boeing’s headquarters to Chicago. Dallas was criticized for a lack of life on its streets and ugly parking lots in place of inviting green spaces seen in other cities. Only a couple of hundred people lived downtown in the Manor House.
“When you walked down Main Street … boarded-up storefronts … 40 vacant buildings. It was a very, very dark picture after five o’clock when people went home,” Garrett said of downtown Dallas’ former self.
But Garrett sees downtown bouncing back from the pandemic stronger than ever.
“I really think we’re sitting in a temporary situation,” Garrett said.
Temporary or not, the situation became very real for all of Dallas on a hard-to-forget Friday the 13th in March.
Garrett was en route to Galveston that day for a planned family vacation as Mayor Eric Johnson declared a state of emergency, Dallas County officials began limiting in-person gatherings, and business leaders worried about the economic impact of virus mitigation.
From the car, Garret convened a phone call with some of the most influential names in business — Dallas Regional Chamber CEO Dale Petroskey, Dallas Citizens Council chairman Fred Perpall and CEO Kelvin Walker.
“We were just talking, you know … where do we need to go?” she said.
Downtown Dallas Inc. CEO Kourtny Garrett surveyed damage in downtown Dallas after racial justice protests in May led to damaged storefronts.(Juan Figueroa / Staff Photographer)
In the following days, Garrett would gather input from Dallas’ architects, major tenants, museum officials, property managers and owners, and reorganized her team at Downtown Dallas Inc. to focus on how it could assist companies through the pandemic.
“They were either on regulation research and information or stakeholder outreach,” Garrett said.
Naturally, downtown businesses needed money. But they also needed to be able to operate in a more efficient manner, Garrett said. And the city’s central business district needed a plan.
Before the coronavirus, downtown was coming together.
Stakeholders spent two decades giving the highway-hemmed-in urban core a major makeover. The progress made to turn it into a livable place was recognized when it became the region’s finalist in Amazon’s fierce nationwide competition for its second headquarters.
Since the early 2000s, Dallas has rolled up its collective sleeves and commenced to build too many things to list. The Arts District added the AT&T Performing Arts Center and Klyde Warren Park. The Omni Hotel and a dozen others opened, including the totally restored Statler. Every 1960s, 1970s and 1980s skyscraper, some sitting empty for years, was modernized into new office and high-rise living.
Neiman Marcus anchored Main Street for more than 100 years, waiting for others to catch on. Developer Tim Headington started buying real estate downtown in 2003 and over the next decade opened the Joule Hotel and several businesses around it on Main and Commerce streets.
In addition to Klyde Warren Park, which linked Uptown with downtown, the city center added Main Street Garden, Belo Garden and Pacific Plaza.
More green spaces are in the works in the West End, where a tech hub for Sam’s Club is rejuvenating the area. Another park will link the east side of downtown to Deep Ellum. They are among 10 new development projects downtown totaling $4 billion that are still moving ahead as planned.
The list includes 1401 Elm, the last major downtown skyscraper to be redeveloped. The $450 million project and downtown’s largest redevelopment deal has been renamed The National. It will house apartments, hotel rooms, retail and offices.
AT&T Discovery District, an outdoor space that includes a 104-foot-tall media wall in downtown Dallas on Monday, August 10, 2020. (Vernon Bryant/The Dallas Morning News)(Vernon Bryant / Staff Photographer)
All that momentum has been, at least temporarily, replaced with caution.
The pandemic delayed the opening of AT&T’s more than $100 million Discovery District entertainment plaza between Commerce and Akard streets, with its 104-foot-tall media wall and 30-foot-tall digital globe sculpture.
Dallas-based AT&T, a major downtown presence with 5,500 local office workers, has been working on the project for three years and planned to open in May with 65,000 square feet of restaurant and retail space. Together with a renovated Adolphus Hotel, it’s expected to alter what had been a sleepy end of Commerce Street.
As scientists race to roll out a COVID-19 vaccine, the uncertainty of the pandemic is pressuring businesses to make drastic changes now in order to survive.
More than two-thirds of CEOs leading large companies plan to downsize physical office spaces, according to a global survey by consulting firm KPMG.
But HKS CEO Dan Noble is still bullish on the future of commercial real estate downtown. The Dallas-based global architecture firm is urging clients to patiently consider changes to their office environments.
“Intuitively, your first response would be to say we don’t need as much real estate, and that may well end up being the case,” Noble said.
But the real estate that companies do have is going to change, he said. And those companies may require more space to establish more distinct social settings for collaboration. Open office plans could also be rethought.
Most of HKS’ employees are working from home, but the office is open with a strict check-in policy.
Noble said all the reasons that fueled demand for space downtown are still here.
Low rents compared with competing cities and a short drive to neighborhoods with lawns and patios will continue to draw businesses, he said.
Stream Realty senior vice president Sara Terry said when she arrived in Dallas in 2013, there were still fully vacant buildings downtown.
Terry has been going to her office in the Trammell Crow Center on Ross Avenue throughout the pandemic. But she said the more than 16,000 people who typically work within a block of the tower are largely absent.
“We started seeing some people back working in the offices in June, but we’re not at full occupancy,” she said. “The high-density floor plans have not returned to work. Some are coming back with flexible schedules.”
Overhead view of the second-floor space where CallisonRTKL’s employees will work in a hoteling office. All workspaces are now unassigned and employees will use an app that allows them to reserve workspaces. Photo shot on 08/26/2020. (Robert W. Hart/Special Contributor)(Robert W. Hart / Special Contributor)
Architecture and design firm CallisonRTKL was a pioneer the last time downtown was trying to come back from the 1980s collapse of oil and banking. Then, it was the failures and mergers of institutions that previously made Dallas a banking center that left downtown littered with empty skyscrapers.
“The first couple of months [of COVID], no one was ready to come back,” said Harold Thompson, vice president and office director at CallisonRTKL. “But over time, people have begun to recognize the benefits of being in an office.”
About 250 people are still working from home, but the second of three levels has just been converted to hotel office space. Individuals’ workstations were packed up, things were spaced out and barriers were set up to accommodate a post-COVID-19 environment. Employees also have an app they can use to check in.
“We’ve always had people who worked from home some time. That’s not a bad thing and maybe a silver lining from the pandemic is that we’ve become more attuned to work-life balance,” Thompson said.
But the downtown ecosystem relies on not just corporate employees commuting in for work but also on convention crowds, tourism and residents feeling safe to leave their apartments – none of which can easily coexist with COVID-19 infection rates seen in Texas.
For Kyla Porter, her dream of franchising and expanding her Pink Toes Nail Salon is dependent on employers and hotels downtown returning to some level of pre-pandemic normality.
Concierge workers at nearby hotels would help funnel business to her salon on Ervay Street, and employees from corporate offices made up a sizable portion of her customers.
Dallas hotels are expected to see an almost 60% decline in revenue by the end of 2020 and won’t return to pre-COVID levels for five years, according to real estate firm CBRE.
“There’s nobody downtown,” Porter said. “There’s not a lot of walking traffic during the day – there is on the weekends.”
The 46-year-old downtown resident opened her salon in 2014. She temporarily closed in late 2019 when the salon’s lease was up and intended to reopen a few blocks away. Business had been growing over the last five years, and her ideal location had finally opened up.
By the time March arrived and Porter was ready to reopen, COVID-19 was spreading in the U.S. and health experts warned of a global pandemic.
Dallas and other cities across the country issued stay-at-home orders -– effectively shutting down all business not deemed “essential” by the U.S. Department of Homeland Security. Porter was prepared to launch the new location when Texas Gov. Greg Abbott allowed salons to reopen in May.
But by the early days of June, downtown streets were filled with tear gas, blockades and broken storefront windows as protests sparked by the police killing of George Floyd in Minneapolis spilled into Dallas.
Storefront damage was conservatively estimated at $4 million, according to Downtown Dallas Inc. Neiman Marcus’ flagship store and surrounding retailers were among the hardest hit.
Front doors of Neiman Marcus in downtown Dallas on Monday, August 10, 2020. (Vernon Bryant/The Dallas Morning News)(Vernon Bryant / Staff Photographer)
Since the end of July, when Neiman Marcus reopened, Main Street looks a little more alive. Forty Five Ten, a popular apparel store across Main Street from Neiman Marcus, is open again for appointment shopping. Other shops also owned and operated by Dallas-based Headington Cos. are back in business, too. The hotel shop is open and so is bookseller Taschen. Men’s and women’s apparel boutique Traffic LA is also open by appointment.
When Porter finally reopens her salon in the next month, she’ll do so with fewer employees due to the decreased demand.
“We’ll have probably a steady stream of guests that’ll come in, but we don’t expect it to go back to the way it was for the past five years,” she said. “I’d say until at least next summer.”
Downtown Dallas Inc. came up with a recovery plan that emphasizes public policy advocacy, safety and cleanliness, forming collaborative partnerships and “redefining” the downtown economy.
Working with City Council member Chad West, the group proposed revisions to city regulations at the start of May that included staggering the implementation of certain city fees, moving permit processes online and easing restrictions to allow vendors to adapt operations for open air environments in places such as roadways and parking lots.
Many of the recommendations were either already underway or deemed to be a strain on the city’s general fund, which is facing a deficit, according to a June 10 response from the assistant city manager.
But the plan also emphasized finding new, safe ways for business and life to continue.
“When it’s safe again, people are going to come back,” said Stream Realty’s Terry. “We’re going to recover faster than other regions because of the low cost of living and real estate.”
National firms with local offices have been slower to bring back workers, said John Zogg, managing director of Crescent Real Estate. “We saw 30% occupancy growing to 50% in mid-July and then a push back,” he said.
Zogg and others are keeping an eye on September, optimistically expecting the resumption of in-person schooling to be a catalyst in return-to-office thinking.
For Garrett, downtown has a magnetism that she thinks will draw people back.
“We’re learning that we crave those personal connections,” she said, “and I think that’s where a lot of my belief in downtown comes from as well.”