If you have been to a commercial real estate panel event lately, there are two comments you’ve surely heard more than once: Mixed-use development is all the rage, and HR departments are leading most corporate relocation decisions. As panelists begin elaborating on the benefits of mixed-use development, what they are really describing is the convenience of walkable places. Similarly, corporate relocation decisions made by internal HR departments are the outcome of heated competition for talented people exacerbated by a national unemployment rate hovering around 5 percent.
However, if you are like me, it was only recently that I heard the conversation that Dallas-Fort Worth may no longer be considered a second-tier market. By the use of the term “second-tier,” I suspected speaker was couching the conversation from an investment point of view. But for me, it was all I needed to hear before I began to wonder what was really being intimated about DFW’s future.
If DFW is now considered a tier-one investment market, can it one day be considered a world class destination? Because I believe the answer is yes (pardon the local bias and bravado), I would like to opine on what I believe is DFW’s biggest challenge in reaching that goal: commuter transportation and walkability. More specifically, I’d like to describe how transportation and walkable places are intersecting with talented people and substantially influencing the sustainability and vibrancy of our cities. This is DFW’s WalkUP Wake-Up Call.
(One note: you may notice that I use Dallas, DFW, Dallas-Fort Worth and North Texas interchangeably throughout this piece. That is because I consider each of them one in the same, as it relates to the subject matter herein. I take the position that when considering regional transportation we cannot be limited by 19th century imaginary boundaries, as our sustainable growth and economic strength depend on our collaboration, not autonomy.)
As a commercial real estate leasing professional, I have witnessed the incredibly exciting growth of North Texas first-hand. The region’s economic engine appears poised to continue on a torrid pace in 2016, sending a message that DFW is a powerhouse regional economy and a rising star among cities. I read recently in The Economist that Texas looks a lot like California did after World War II, featuring limited government regulation, geographic room to grow, and a pro-business environment. However, it is the underlining irony of our own success that our public and private city leaders and citizens should be most concerned about.
Aging infrastructure and the lack of well-connected transportation options and walkable places is leading the region toward California-sized congestion and eventual economic gridlock. The development and integration of transportation connectivity and walkable infrastructure not only in the downtown urban core but also in our rapidly urbanizing suburbs like Addison, Plano, and Frisco should be our primary regional focus in the coming years. Decisions regarding what modes of transportation and where geographically DFW decides to invest its scarce public capital resources will significantly influence whether the region continues on a world-class trajectory or ends up fading, oh-so-slowly, into a commuter and economic oblivion (i.e. California).
Designed to Meet Suburban Needs
Standing on the 71st floor of The Bank of America Plaza in Downtown Dallas Inc.’s office recently, I stared across the gorgeous view of DFW. The first thing to catch my eye was the massive highway transportation system that “runs” this region. I wondered how and why such massive transportation project missed the opportunity to simultaneously develop other modes of mobility in concert with the highway system (i.e., train, bike sharing, pedestrian paths, etc.).
DFW is a relatively new region compared to cities like Boston, NYC and DC. Why wasn’t there an effort to mimic parts of their transportation model or the European model or basically any first world country’s model that offers multiple sources of mobility? It has occurred to me that DFW does not have the presence of natural obstacles such as massive rivers and mountains that act as transportation bottlenecks and make highway development excessively expensive. Or maybe it is the fact that building horizontally is much easier, cheaper, and less publicly pervasive than building dense vertical environments.
I have heard countless times that DFW has more metro rail track than any other metropolitan area in the country. And although the size of metro rail is impressive, it does not accurately portrait the reality that DFW has been designed and developed to fit the suburban drivable bedroom community and strip retail center. The current rail configuration often leaves a DART train passengers to call an Uber, wait for a bus or walk an excessive distance to their final destination.
The fact is, consumers in post-WWII America decided the American Dream was the freedom of a Detroit-built car and a bigger home in the suburbs. That being the case, it made a lot of sense to pour asphalt and build highways. And just as the baby boomer families that pushed suburban sprawl across the region and many parts of the country, here comes the millennial generation, poised to do the same for reenergizing and reimagining the urban centers of our cities. And although there will most likely always be, at least in my lifetime, a strong demand for the suburban single family home, studies show there is a tide of demand rising for more walkable places to live, work, and entertain; these areas are also known as WalkUps—or, in commercial real estate vernacular, mixed-use.
A WalkUP is an urban or urban-suburban area normally between 100 to 500 square acres, with 500 square acres being a little less than one square mile. (Normally, the maximum distance a person is willing to walk is 1,500 to 2,500 feet, each way.)
WalkUPs have a variety of real estate offerings, from retail, apartments, office, schools, and medical centers, typically centered around accessible transportation options. A WalkUP is not a term I created or defined, but one I encountered in graduate school at George Washington University from professor and Brookings Institute Nonresident Fellow Chris Leinberger. In May 2010, although I was not consciously aware of it at the time, I moved to arguably the most walkable city in the country, Washington, D.C.—from, unfortunately, one of the most drivable cities, my hometown of Dallas. After about 30 days in DC, a couple dozen parking tickets, a handful of door dings, and the occasionally unfriendly hand gesture for the Hummer truck, a self-transformation was underway.
I quickly assimilated from a gas-guzzler driving, Lakewood McMansion-living 30-something—to a public transportation advocate, living in a small condo along the U-Street corridor, surrounded by small office buildings, retail, restaurants, funky jazz bars, mixed-income housing, and of course, a metro rail stop. U-Street is an area in DC that I would not have lived anywhere near during the 1990s, unless I had decided to join a street gang. What changed? Although a new rail stop opened in 1991, it wasn’t until the early 2000s, when college graduates seeking to live in a walkable, 24-hour environment with mass transportation access decided to settle in the area and ditch their cars.
Operating without a vehicle in Dallas was unheard of 10 years ago, but studies show that might be changing faster than first expected. The City Observatory, a think tank focused on cities, recently confirmed that 25-34 year olds with college degrees are migrating disproportionately toward close-in urban neighborhoods. In other words, the majority of America’s smart, talented, and creative people—who happen to be our knowledge economy—are choosing to live in walkable cities instead of drivable ones.
Future Opportunities in DFW
So, with North Texas having the potential to become a world-class destination, and walkable urban places seeing an ocean of pent-up demand, how do the two relate and intersect in the real world?
First, I should probably set a general definition of world-class city to give some context to my argument. Admittedly, I tried to cheat and Google “world class city” 10 different ways and never found anything coherently reasonable. But I suspect most of us know what a world class city is when we see it. I might propose a world class city is a global business hub, a tourist destination, a city with a commitment to the Arts; one that has prestigious academic and medical institutions, a defined culture and rich history, great food and entertainment; and certainly a city with an excellent transportation system connecting all of the above to a variety of WalkUPs. I might also argue that DFW checks all of those boxes, minus the pesky transportation and walkable area categories.
And let me not forget to mention the most important component: The fabric of any world-class city, its people. North Texans, if you do not already know, are get-it-done, no excuses, GO BIG with a splash of flashy people who rarely get out-hustled or out-shined. Certainly, we know how to build big, far and wide—just ask an office broker who was in the business during the 1980s to explain. However, no matter how many billion-dollar sporting venues, airports, iconic bridges ,and reasonably priced homes are built in DFW, it cannot usurp the fact that corporations are making long-term relocation decisions in cities they can find a sustainable source of talented people. And we do remember where the smart, young, and talented are moving—that’s right, to WalkUPs.
Commercial real estate owners and speculative developers who are interested in how cities will operate in the very near future should check out Chris Leinberger and find out more about his WalkUP Wake-Up Call research. In conjunction with The George Washington University’s Center for Real Estate and Urban Analysis, Leinberger has developed a methodology that, for the first time ever, creates a census of 100 percent of the real estate (office, retail, apartments, industrial, educational, medical, civic, for-sale housing, everything) in a metropolitan area. For those familiar with CoStar, Zillow, and Walk Score, this study will collect and organize the same real estate data, but also identify buildings that are not tracked to give the North Texas region its first real estate census. Leinberger has nicknamed the massive database of the built environment “The Bloomberg of Commercial Real Estate.” So far he has completed a WalkUP Wake-Up Call in metropolitan Atlanta, Boston, recently started Metropolitan New York City, and, I am pleased to announce, has committed to commence the Dallas Fort Worth study in the spring 2016.
Some of the findings from Boston and Atlanta WalkUPs suggest that:
• Less than 8 percent of the entire Greater Boston land mass (3,100 square miles) is defined as a walkable place
• It is projected that 80 percent of the future real estate development in Greater Boston will be built on that 8 percent
• The combined housing and transportation household budget for a drivable suburban household is 48 percent of total income, while for walkable urban, it is 43 percent, due to substantially lower transportation costs.
• Public fiscal benefit is between 6-12 times higher per hectare for walkable urban places, than drivable suburban locations.
• Valuation premiums on a price per square meter basis in Metro Boston for walkable urban real estate is between 40 percent and 134 percent higher than drivable suburban.
The DFW study is important because it will identify where WalkUPs currently exist and where they will likely emerge. Preliminary assumptions suggest North Texas has fewer than a dozen existing WalkUPs, with the need for approximately 20-30 more. Identifying where walkable places are and where they will likely emerge should organically direct both public and private investment into these areas. Meeting the pent-up demand for walkable urban places will put a foundation under the regional economy, take advantage of the existing and future investment in rail transit, and help address the social equity challenges such as affordable housing and more mixed income areas.
Whether it is the redevelopment of downtown Dallas and Fort Worth or the rapid urbanization of the suburbs like Plano and Frisco, walkable urbanism and mobility should be a primary focus of DFW urban planning and sustainability. If our citizens and city leaders want to take the next step in making DFW world class, a WalkUP Wake-Up Call might be the impetus for reaching that goal.