Framing the Objective and the Market
Where are you trying to succeed and why? A good question to ask oneself on the outset. Is this your first business? An expansion? Also a different frame depending on the answer and the associated risk. As always good to have an objective measure of success and a timeline to get there (see more about SMART goals).
Dallas is a fastly growing market. According to the Office of Economic Development of the City of Dallas, the Dallas-Fort Worth saw a 3.9% compound annual growth rate from 2013-2023. Compound! The city of Dallas that many grew up with isn’t the one it is today. I remember my uncle who grew up in Plano told me it all used to be farmland. Now Plano is one of the most in-demand places to live in the country. There is immense opportunity!
This all makes Dallas a very exciting place to live. However, it’s a misnomer to believe the entirety of the market is homogenous. There are different sectors that have a different look and feel and each has a different kind of populace who have different values. To win means to align to what these people are looking for. We’ll do our best to provide a breakdown of each sub-sector but remember if you want an exact model – only performing market research (asking questions to the exact people) can provide deeper insights.
Downtown Dallas/Deep Ellum and a Frame of Reference
Downtown Dallas is fun. American Airlines Arena. The AT&T Center. The famous Giant Eyeball. There are a lot of attractions and a lot of events downtown. That’s the major thing to keep in mind about it. Are tourists and/or conference/event attendees part of your target market or a group you believe you can win? This market comes in waves and spurts tied to these conferences or events (games, concerts, speakers, etc) or designated times (a field trip to Perot Museum for example). Are you an event holder or an attraction? Are you a hotel where guests stay to attend events? Are you a restaurant where the market can dine with you before or after the event? Those are some of the big questions that should be asked before considering the area.
Similarly, Deep Ellum is an adjoiner although it’s differentiated. The way the two are similar is that Deep Ellum is an events driven market and tourist market too. Like Downtown Dallas – it doesn’t really have the commercial commuters nor residential populace to sustain outside of event driven periods. Downtown Dallas is better by office standards but still, if you have ever lived in another city, you know that Dallas is virtually a ghost town in comparison to the general average or norm. Events and through traffic are at the heart of Dallas.
The way Deep Ellum is different is that it is the arts and culture epicenter of Dallas. It’s a territory of artists/performers. The Dallas Comedy Club. Trees. The Bomb Factory. These are special venues that folks come to see their favorite music artists, comedians, poets, etc perform. There are great restaurants that complement the venues including famous barbecue – Pecan Lodge and Terry Black’s. If you’re considering opportunity in this lively area, see it both on a weekend day and a random Monday/Tuesday. You’ll see they are different panes of the same subject. Most of the businesses that survive in Deep Ellum are passion projects that are able to source their own entertainment. Not even Sweetgreen could survive. There’s a lot of turn and burn in this market. If you’re passionate, it can definitely be worth it but the power of your brand is all the more important (becoming an attraction/destination).
According to SquareFoot, the average monthly rental cost per square foot is $35.83 for Downtown Dallas. To give you a sense of the study – Grand Prairie/South Irving is the cheapest at $18.07 and Uptown is the most expensive at $53.68. The overall average across 13 markets they have captured is $31.63. Here are all 13 markets: Uptown, Dallas Central Business District, Downtown Dallas, East Dallas, Far North Dallas, Grand Prairie/South Irving, Las Colinas, Lewisville/Denton, North Central Expressway, South Dallas, US 75 Corridor, Preston Center, Stemmons Freeway, and Suburban Dallas. We will not being tackling all of these markets but more so featuring the ones that are highest growth and grouping where appropriate. One more thing to note with this study is that it uses data from 2021 or earlier. The rates of rent have increased! We will use this data as a frame of reference for how much more expensive/cheaper compared to other districts and not exact pricing. As you can see for Downtown Dallas it is $5 above the average making it one of the more expensive areas to open up shop.
Uptown/Preston Center
The historic jewel of Dallas. When people in more rural Texas talk about people in Dallas and their fancy cars, they are talking specifically about Uptown and Preston Center for the most part. According to TexasInsight.blog, Highland Park, University Park, and Preston Hollow are 3 of the wealthiest neighborhoods in Dallas. All 3 are within Uptown/Preston Center market. Traditionally, if you were looking for a bullseye, Uptown/Preston Center would be it. However, it ain’t all a breeze, baby. This area is also one of the most established markets with longtime players/destinations. Conversely, it’s an area of resounding sophistication that’s continually seeking a new flavor while meeting the expectation for luxury and high quality service.
Are any of these things mentioned so far starting to sound like you and your brand? Opening up shop in this market is high risk and high reward. Folks that succeed in this market are typically larger, even national brands who have the brand awareness as well as risk tolerance to create an original and vibrant experience for the market (high capital investment). The rates too are the highest according to SquareFoot’s data (1. Uptown – $53.68 and 2. Preston Center – $46.73). And so if you’re a bootstrapped but burgeoning business in Dallas, you may want to be careful in the way you approach this market but, rest assured, it’s plenty valuable. This market tends to skew older. According to D Magazine, the median age of Preston Hollow is 57 years old. Again, stately sophistication is the vibe here and one that you’ll want your brand to be or at least connect to if you want to resonate.
Knox Henderson/Lower Greenville
Continuing on our market journey Knox Henderson and Lower Greenville are great markets with high residency (consistency of traffic is high and not event driven like Downtown/Deep Ellum). These are both awesome destinations for a younger crowd with money. According to Point2Homes, the median age of Knox Henderson is 31. That’s pretty young. While the majority of folks are in their 30s both of these areas get considerable traffic from folks even younger, especially college kids coming in from SMU or others nearby.
Do you have brand appeal to a younger/more hip audience? That’s a big factor to consider if you want to win. If you feel like it’s the right fit, this a fantastic market to win as it is central and high traffic (lots of brand exposure). There are some really iconic spots like Truck Yard that have been woven into Dallas culture. Although not quite as expensive as Uptown/Preston Center (technically this area would be considered East Dallas, according to SquareFoot’s data – $36.06) it’s still pretty high up there (and growing) so you’d want to do some careful planning before making a big capital push.
Old East Dallas/Lakewood/White Rock and Garland
This group is a growing sector bolstered by many family residences. Lots of homes. Lots of schools. Lots of day-to-day living. And there’s a lot of complexion and variance providing opportunity. For example in Old East Dallas there’s a street called Columbia that could be considered poorer and yet two streets over is Swiss Avenue, one of the wealthiest streets of Dallas. It’s a more complex market with more types of buyers and strong family support throughout. According to Point2Homes, Lakewood has a median age of 39 comprising of families, young professionals, and longterm residents.
Old East Dallas/Lakewood/White Rock is a great market because of its combination of strong buyers who are present consistently and the barrier to entry/costs are lower compared to Uptown/Preston Center (with exceptions). The Dallas Arboretum on White Rock Lake is also one of the most beautiful parts of Dallas if you’ve never been. The Lake itself draws a lot of attention and traffic. The Lake divides roadways as well – Loop 12 cuts across its north and 76 to its south getting a lot of passersby and routes of convenience for consumers given the limited options in that area. Overall solid era with a lot of growth on the horizon.
Garland is a very interesting opportunity and probably where the stakes are the greatest longterm. Let’s face it – Dallas is rapidly expanding. Areas like Addison, Plano, McKinney, etc have developed their cities and they are complete with entertainment, healthcare, strong schools, very safe, etc. There’s a betting chance Garland is next if not already there. Garland is a big place as well. According to City of Garland, TX, the surface area of Garland is 57.26 miles. Also the population grew 8.4% between 2010 to 2020. That’s solid growth. The population of Garland already ranks 13th in Texas and 93rd in the country. What this all means is you have a place that’s a good mix of residential and commercial and has solid population growth -> so more people in that density needing things like healthcare, good schools, etc, etc. If you’re a business looking to get the biggest bang for your buck through a longer period or if you’re capital conservative and need to start somewhere lower risk and lower cost, Garland is that place with a lot developing pockets of high value / high cost (comparative to some of the best places in Dallas). So, choose what makes sense for you as it is overall a great market longterm or short. Garland also has many incredible parks including: Central, Ablon, and Holford (very family friendly).
South Dallas/Oak Cliff/Bishop Arts
This grouping presents a similar opportunity to the last – high population growth with a lot of accessibility and upside. According to SquareFoot’s data, South Dallas is $24.02 per month per square foot, one of the cheapest options in Dallas. Now keep in mind – this data is from 2021 or before and it is focused on the area immediate south of Dallas which is quite commercial and industrial. There are pockets of opportunity to be in found but remember – it’s not really residential. You could find a good rental rate but the more important piece is to have a strong brand/consistent following as you will be a destination (somewhere where people have to go out of their way to get to). Lee Harvey’s is a good example of a longstanding business in this area that understands how this works. Potentially a good area to test a concept before going broader or into bigger markets.
Oak Cliff is very comparative to Lakewood with more racial diversity. According to D Magazine, the median age of Oak Cliff is 35.6 with an average household size of 2.88. Obviously you can’t have .88 of a person but what this goes to show is the presence of a strong, growing population. The rental rates will vary. Like Garland there are lot of pockets in Oak Cliff which are some of the nicest in Dallas and the costs reflect that. That being said, opportunity still abounds for businesses looking to serve these communities. This is a fertile area for a new business or someone seeking to expand into an area that has no ceiling longterm for growth.
Bishop Arts is hip. If you live in Dallas, you already know that. It’s a happening sector with a lot of natural pull from the entertainment, shopping, and dining it offers. Are you in any of those industries? Could be a simple fit to plug in and try to acquire some of the existing foot traffic. As opposed to Deep Ellum, Bishop Arts appears to have a bit more consistency with not having to rely on only weekend nights or large events for engagement. What’s important to remember about Bishop Arts is that it is hip even chic. Is that your brand? Is that something your brand can connect to? Those are the questions to answer before popping up shop in this fun, growing cultural hub of Dallas. A special shout out to Taco y Vino and Revelers Hall – my two favorite destinations there.
