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    Firefly Park connects office and residential destinations with retail, dining, and entertainment along a 45-acre park. - image courtesy Wilks Development

Four years after workers shifted out of downtown, investment trends have followed and seek a stronger thesis. A slew of urban office tower projects ended in foreclosures or borrowers turning in keys. Some real estate portfolios—in both the multifamily residential and office sectors—are pending  behind-the-scenes negotiations as investment partners and their lenders discuss loss mitigation. Three Texas cities lead the nation in office vacancies by total leasable square footage. Houston, Dallas, and Austin—in first, second, and third place, respectively—cumulatively offer 54.5 million sf of office space for lease and another 5.7 million sf for sublease in 300 buildings. Despite its high vacancy count, Austin also has one of the highest office occupancy rates in the country, at 60 percent—but these data are skewed considering office workers come into the office just a few days a week. Downtown, rents are soft for residential spaces, and retail rents match core adjacent locations. Unstable rents lead to high capitalization rates, and in a high interest rate environment, new construction does not make financial sense. As a result, financing for downtown projects has nearly ceased. Downtowns are not back to normal, and we don’t know when they will be. 

Downtown retailers now have less daily foot traffic from office workers, who are no longer hanging out after work to meet other friends for dinner, happy hours, or networking events. Workers instead travel to their neighborhoods and eat at restaurants with more affordable rent and therefore more economical offerings. Some consumers seek a more organized, better programmed destination—like Austin’s Domain—where a carefully crafted mix of retailers, office space, multifamily residences, restauranteurs, daily programming on green lawns, and weekly events like farmers markets provide reasons for customers to visit outside of shopping. Retailers thrive on this steady daily foot traffic. It’s an optimized capital exchange between visitor, retailer, property owner, and investor. 

When the investment community sought new opportunities outside of volatile downtown markets, developers of Allen’s Watters Creek Village sold their 52-acre mixed-use project for top dollar in 2022. With $200M in development costs and support from the Allen Economic Development Corporation at the project’s inception, the property transformed from farmland along a highway to a beloved mixed-used destination. Bennett Partners master-planned the “resort-style” development and designed one of the area’s first LEED-certified buildings. Office space and apartments line the perimeter of the site, and a running creek and landscaping connect a retail village in the core. Daily programming with local music has become a consumer favorite; consequently, Watters Creek yields strong retail sales, including the top-grossing P.F. Chang’s in the Dallas–Fort Worth metroplex. The project’s execution illustrates that developers can successfully “placemake” anywhere to achieve high occupancy and strong rents that create stable and predictable cashflows for their financiers. 

Today, large-scale investors prefer mixed-use, multifamily developments with a strong placemaking retail core. Developer-led placemaking is a complete creation of an urban environment. Instead of the organic piecemeal improvements that downtowns typically experience, developer-led placemaking requires a great investment for the infrastructure and land purchase. The utility build-out, street paving, building pad preparation, entitlement process, design, construction, and lease-up may span a decade or more. Complete control over the tenancy, phasing, programming, and operations can yield a seamless product, making it easier to manage the property and to control problems when they inevitably arise. 

Placemaking creates quality places where people want to live, work, play, and exchange. To achieve these goals, the project should include synergistic mixes of program, quality public spaces, internet access, multimodal functionality, multiple housing options, preservation of historic structures or uses, community heritage, public art, recreational spaces, green open space, and daily programming. These are common features of urban design guidelines, with added features that address safety and programming beyond buildings—that is, activation that draws people to the effective new town center. Quality places need to be large in scale, have a high density of people to support the ecosystem of uses, and, simultaneously, be connected through walkable human-scale exterior spaces—essentially defining a minimum size of 20 acres for a new placemaking project. Ultimately, successful placemaking creates a connected, welcoming, authentic experience that is an equal opportunity for and invitation to all.

At Watters Creek, the life cycle from opening to exit spanned 14 years with stable, predictable cash flows for the ownership. The first phase was completed in 2008, and placemaking components including a 4.5-mile trail and bridge over the creek were added in 2018. Highland Park Village co-owner Ray Washburne purchased the asset in 2022 with a vision to enhance the already successful project into the “Knox Street of the North.” Allen Economic Development Corporation executive director Dan Bowman remarked, “Watters Creek is our premiere mixed-used development. It serves like a downtown where our community gathers.” Watters Creek has indeed become the new town center, spurring more private and public adjacent investment—including a new $90M convention center just north of the site. 

In Austin, developers Barshop & Oles and  Lionstone Investments are entitling redevelopment of the 37.6-acre Brodie Oaks Shopping Center, located in Southwest Austin. The project will include 13.7 acres of open space, 1.26M sf of office space, 1,700 residential units, restaurants, retail shops, a grocery store, and potentially a hotel. A 491-foot high-rise was approved as one of several high-rises popping up for the first time outside the downtown boundary. Lionheart and DPZ CoDesign are coleading the simultaneous planning and placemaking efforts. The project is located along the Imagine Austin South Lamar Corridor and will be one of the first Imagine Austin activity centers for redevelopment in a sensitive environmental area. A trailhead will connect to the Barton Creek greenbelt, tying into existing active urbanism infrastructure. Economic development was not available for the project, leading to a slower project start as market fundamentals continue to shift. The project mix may continue to change with dynamic trends in rents and occupancy, but the development team’s focus on place, connection, ecology, climate, and community will create a strong placemaking project.

Frisco’s Firefly Park is the next generation of retail-focused placemaking development in Texas. The Frisco Economic Development Corporation and Wilks Development announced their partnership on April 25. Wilks Development purchased 159 acres of land in 2015, running multiple studies and scenarios to reach final agreements and announcements almost a decade later. The partnership is critical for expediting the delivery infrastructure and contributes 59 acres of land for a total of 242 acres. The program components are three to four times the size of Watters Creek and will serve the visitors of adjacent PGA Championship golf courses. “The heart of the development will be a 45-acre signature park and open space featuring a chain of lakes, an illuminated and immersive outdoor art walk, miles of hike-and-bike trails, fountain views, and family-friendly playgrounds,” notes Kyle Wilks, CEO of Wilks Development. “This park ensconces each retail space. Storefronts and elevated patios face remarkable water features and all the action of the park.” Firefly Park is a resort-style village with additional program beyond that of Watters Creek, including a Dream Hotel, lock-and-leave townhouses, 1,200 hotel rooms, a 3,000-guest amphitheater, and a wedding chapel.

A playground with natural materials and a rock climbing wall looks across a water feature toward a PGA golf course. – image courtesy Wilks Development

To secure the financing to build the projects in the first place, developers continue to iterate with program and placemaking, competing for the top destinations where consumers want to spend their time and money. Not all new town centers succeed, and partnerships with local economic development corporations reduce the financing risk and time for infrastructure build-out. Ultimately, the new developments yield great tax revenue for their cities when the projects are completed, paying dividends on the economic development partnerships. While it’s not impossible to incorporate placemaking into existing urban environments, it requires visionary leadership to unite disparate owners, tenants, and building operators. Until we understand how the work-from-home movement and new market fundamentals will shift how we occupy our downtowns, we can expect to see more new town centers across Texas for the next decade.  

Jen Weaver is an architect and developer in Austin.

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