Friday, June 20, 2008

Deep Ellum may get back on track after DART stations open

On Malcolm X Boulevard north of Elm Street, residents are moving into more than 300 apartments in a rental housing and retail building.

The just-completed project, the Ambrose, sits next to a new light rail station and is the biggest investment in decades in Dallas' Deep Ellum district.

Just a few blocks away at Good-Latimer Expressway, vacant storefronts line Elm and decaying buildings neighbor another DART train station that opens in about 18 months.

The contrast of new development and empty buildings represents the difference between the future and past in Deep Ellum, real estate brokers and property owners say.

"I think the day the train rolls through will begin big changes for Deep Ellum," said Barry Annino, a longtime real estate broker in the area who's head of the Deep Ellum Foundation. "Everything revolves around the train coming."

The pending start of DART rail service also could bring big profit for investors who own blocks and blocks of Deep Ellum. Four investment groups own more than 90 properties in Deep Ellum – including many of the largest.

The biggest owner, Westdale Asset Management, holds the deeds to more than 10 blocks in the district.

"I think Westdale will probably stay the course, but some of these investors will see this as an opportunity to make a move and sell," Mr. Annino said. "There are calls being by made by people interested in properties.

"It's the kind of fishing you do right before the fish start biting."

The entertainment and residential district east of downtown Dallas took off in the 1980s when old commercial buildings were converted to art galleries, loft apartments, restaurants and clubs.

Hip 'hood
By the 1990s, Deep Ellum was one of Dallas' hottest nightspots, with dance clubs and music venues.

But along with the throngs that were attracted to the clubs came a spike in street crime and violence. And the 2001 recession added to the district's woes.

Deep Ellum went into decline and has languished as Uptown and nearby downtown areas have taken off. Many longtime retailers and restaurants shut down.

Some owners in the area have used this downtime to acquire more real estate. Early this year, Westdale, a privately held Dallas-based real estate firm, bought three of Deep Ellum's biggest loft apartment buildings.

And other big investors in Deep Ellum, Don Blanton, Don Cass and Al Jernigan, have made additions to their holdings since 2001.

"I bought two buildings last year and another this year," said Mr. Blanton, who owns about 17 properties. "I've been working in Deep Ellum for 30 years, and the prospects are as bright now as ever.

"I think the resurgence is right around the corner."

While Mr. Blanton said he doesn't plan to do a large development in Deep Ellum, "I own a lot of property and would sell someone a tract to do it."

"There is an opportunity for developers."

Preservationists fret that Deep Ellum – which still has blocks of early 20th-century buildings – will be bulldozed to make way for new construction.

"Deep Ellum has a lot of historical stuff that people want to keep," said Mr. Cass, who began buying real estate in Deep Ellum in 1983. "Some of the old buildings will stay, and some will go."

Mr. Cass said the DART train service and Deep Ellum's location between the growing Baylor Medical Center and downtown ensure the area will redevelop. High gasoline prices are another incentive.

"If I was 30 years younger, I'd be pouring money into the place," he said. "But I just had my 71st birthday, and it's time for me to slow down.

"I've already sold a bunch of stuff to Westdale."

Westdale turned the historic Adam Hats building into loft apartments in 1996. The investment firm also owns the Continental Gin, Murray Lofts at 3401 Commerce and the Farm and Ranch Building and Futura Lofts building in Deep Ellum.

Recently, Westdale has attracted attention because of its ownership of the historic Knights of Pythias building on Elm. The vacant landmark and adjoining land are just a block from DART's Good-Latimer station.

While the property is considered one of the most attractive development sites in Deep Ellum, it has remained boarded up for years. City officials recently demanded access to the landmark from Westdale due to concerns that it was being allowed to deteriorate.

Westdale officials didn't return phone calls to discuss their plans for Deep Ellum after DART service begins.

What it needs
How quickly and to what degree Deep Ellum will benefit from DART's new rail line remains to be seen.

"DART isn't the golden key, but it certainly helps," said Mike Turner, whose firm J. Elmer Turner rents buildings in the area. "The DART line coming out from downtown will allow people on the north side to come to Deep Ellum easier."

But Mr. Turner said the area needs fewer owners or investors that can oversee a systematic redevelopment.

Broker Newt Walker agrees.

"Deep Ellum has the fabric with the location and the buildings but not the master planning," Mr. Walker said. "Someone has to assemble a big portion of it and come up with a solution for parking."

Deep Ellum has suffered at the hands of its large number of investors and landlords, Mr. Annino said.

"If there is a negative, it's that everyone down there couldn't get together to make things happen," he said. "They've invested in the buildings, but not the neighborhood."

By STEVE BROWN / The Dallas Morning News