Dallas’ economy endured the pandemic better than most markets. In fact, according to a recent CBRE study, it is the no. 2 destination for real estate investment in the country. Capital that was singularly focused on coastal cities has shifted interest to Dallas. This is an incredible opportunity to supercharge Dallas’ growth and development – and to make sure that the economic impact benefits everyone.
So, how do we do this?
Investment outcomes must be more predictable. It will be critical for us to do that in order to supply quality jobs to our residents and address our affordable housing shortage. Here are some ways that we can make this happen:
- Controlling Property Taxes. Dallas County Appraisal District must find a way to reduce the burden on taxpayers in 2021, full stop. This relieves both homeowners and commercial property owners. Unpredictably escalating property taxes mean owners have less ability to help the small businesses and residents who need it most. Commercial property owners have been abating rent or deferring collections for the past year, which limits their ability to pay debt and other maintenance costs. Sky-rocketing property taxes are unsustainable for property owners this year.
- Updating Antiquated Code. Our code needs to address the Dallas of today. For example, parking requirements are too cumbersome. Thanks to Dallas’ city leaders for recognizing this and making an effort to improve. Let’s get it done. (For more on this, here’s what I wrote last year: An Overlooked Contributor to the Affordable Housing Crisis: Parking Requirements – D Magazine).
- Expediting City Permits. A slow permitting process, even for the expedited review, puts projects at risk of inflation and encourages people to build elsewhere. Every month that a shovel-ready project can’t start also costs thousands of dollars in interest expenses, whether it’s a home remodel or a larger development, that can’t be recovered. Just a few years ago, Dallas had one of the fastest review periods of any major city in the country, which made estimates for pricing accurate and reliable – projects could be reviewed and approved within a few weeks of their submission. This quick turnaround used to foster predictable investment outcomes. But as Christine Allison writes, the Dallas permitting review time frames are slow and need to be fixed (Will the Most Powerful Man in the City Fix Dallas’ Building Permit Department? – D Magazine).
- Investing in Infrastructure. Dallas must continue to focus on replacing the aging infrastructure in its utility network. We have hundreds of acres ready to develop in downtown and the southern sector if the City could prioritize the replacement of aging infrastructure in strategic growth locations. Additionally, there are a number of approved and funded infrastructure improvements that are ready to start. For example, returning McKinney and Cole to two-way streets was widely supported by the property owners along its pathway and fully funded by Uptown Dallas, Inc., North Central Texas Council of Government, and the 2017 City of Dallas Bond Election, but it still hasn’t broken ground. Dallas will lose investment and tax base to the suburbs if it can’t get ahead of this.
- Supplying Housing. The quest to build formally qualifying affordable housing developments is necessary. Of equal importance to lowering housing costs is to supply more housing and to make the production of this housing cost-effective by limiting unnecessary costs that need to be recouped. Let’s not lose sight of this simple economic supply-demand theory, which is that expediting housing production (by attracting investors and limiting unnecessary risk) will be central to reducing housing costs for people.
While many items on this list are outside of our direct control, we are in local election season and these items should be top of mind for you and your companies. Each of these needs to be addressed with extreme urgency in order to create predictable investment outcomes and continue to attract capital to improve economic opportunities for all Dallas residents.
This should not be misread as a free pass for development. The Code and permitting process should continue to drive investment in ways that align with the City’s goals. Furthermore, developers need to work with the local community to identify and address proximate opportunities, if possible.
This list doesn’t address other risk factors plaguing investors – rising material costs, shipping delays, and increasing insurance costs. In other words, addressing the items on this list does not alleviate risk entirely; it’s merely a way for Dallas to promote investment in a variety of shapes and sizes.
We have all witnessed how COVID-19 has impacted how we live, work and play. The old way of doing things is no longer the right way. We have been catapulted into needing to solve everything with a new lens – groceries, schooling, #WFH, toilet paper, testing, and vaccination creation and distribution. As we solve those, let’s keep our brains turned on to create solutions for these items so we can continue to thrive.
Katy Slade is the founder of Mintwood Real Estate.