In 2005, advocates of a thriving downtown were convinced you could not have a bustling core, with a sizable full-time residential population, without giving them a place to pick up a jar of spaghetti sauce or such after work.
So when the established supermarket chains passed on serving downtown’s small-but-growing residential market, Dallas city leaders pumped subsidies eventually totaling more than $600,000 into Urban Market, which began as an appealing food store and restaurant in the Interurban Building.
To the casual observer, the place looked busy enough, but it was never a viable business despite a big dose of civic cheerleading and public money. After it closed in 2012, another group bet on downtown’s growing population and opened in the same location without the aid of subsidies. They too failed because there just weren’t enough grocery customers to make a go of it.
Retailing, in all its forms, has always been a difficult segment, and today it’s become far more fraught for brick-and-mortar operators with the rise of e-commerce and virtual storefronts.
Dallas’ recent commitment of $22 million in grants and loans to the redevelopment of Red Bird Mall—a mixed-use project with a sizable amount of retail—looks a lot like an Urban Market sequel, except with more zeros. It looks to be swimming against the market tide.
A recent Forbes roundtable on the future of commercial real estate had one expert concluding that Amazon and WeWork, the coworking space giant, “are going to be the end of commercial real estate as we know it today.” Several said vacant commercial property needs to be transitioned into housing, especially near large employment centers, because people will always need a roof over their heads even if they don’t need Toys “R” Us.
One Forbes participant saw promise in something similar to what is being proposed for Red Bird: “combining office, living, and shopping space, and by rebranding the ‘shopping mall’ into entertainment centers.”
Peter Brodsky, who bought most of the Southwest Center Mall in 2015, is following that trend in proposing new office space and residential development on some of the mall’s large parking lots. It’s the retail component of his project—which he’s returning to its original name, Red Bird—that seems to be swimming up a fast-moving stream.
Since Macy’s left last year, only a handful of national retailers are left in the aging mall, which currently hosts mostly mom-and-pop stores or bleak empty spaces. It’s not that established “mall stores” have given up on Dallas’ southern reaches. Dillard’s, Dick’s Sporting Goods, H&M and the like are open in Hillside Village, a 615,000-square-foot open-air mall in Cedar Hill. It’s located about 5 miles south of Red Bird, or about the same distance someone in, say, Lakewood, travels to get to NorthPark Center.
Making Red Bird a destination without these types of popular stores as part of the retail mix seems like a tall order.
Red Bird supporters point to the decision by Starbucks to open a freestanding shop there as a sign that national outfits will embrace the project. That ignores the fact that the coffee chain’s decision was part of a national initiative to invest in underserved, minority communities that it ignored in the past when it was only pursuing profits. Finding other companies with similar altruistic values may prove difficult.
Sparking economic development in Dallas’ southern sector is without a doubt a worthy goal, and the unanimous vote in June by the Dallas City Council to subsidize Red Bird shows the city has decided the project deserves a chance.
Even with this boost, success will ultimately be decided by market forces rather than the hopes of elected officials and community supporters. To the extent it’s betting on traditional retail, it has to be considered a long shot given the challenges retail is facing in even the strongest of markets.
Thomas Korosec is an award-winning journalist who specializes in legal and business topics.