Unlocking the Building Potential in Dallas: Existing Vacant Land Could Hold 100,000 New Apartments

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Dallas is facing a serious housing crisis. The city has the largest homeless population in Texas, as well as a severe shortage of housing units. As such, roughly 19,000 apartments should be built annually to fill the gap, particularly for low-income families. But what is the building potential in Dallas? The pandemic, the winter storm and the rising cost of living have only exacerbated the problem, leaving thousands of people without a safe and stable place to call home.

Housing shortage is a common problem for many big cities, not just Dallas. This is the first article in a new RentCafe series that will explore vacant land and housing potential in other places across the country.

Dallas has a hidden treasure that could solve its housing shortage: untapped vacant land. There are 475 unused plots already zoned for multifamily that cover around 76 million square feet and could become vibrant communities with up to 100,000 new apartments (half of which would be located in the heart of the city). That’s more than the total number of apartments built in the city since 2000.

By using those 76 million square feet (almost 6% of the city’s existing building space) to create homes, Dallas could make life better for everyone who rents, especially low-income families. And that’s just the tip of the iceberg: Through strategic rezoning, the city could unlock even more potential for affordable and diverse housing options, that would not only alleviate the housing shortage but also drive Dallas towards a more equitable future.

To get a clear view of the areas with the most building potential in Dallas for more apartments, we inspected vacant lots and zoning restrictions across Dallas and uncovered the top zip codes that could house the most rental units.

Stepping up the construction would also increase affordability and temper rent increases. In fact, building 10,000 apartments annually would slow down rents in the next 10 years from an estimated 123% increase with the current pace of construction and growing migration trends to between 47% and 85% in the ideal scenario.

In addition to zoning, another major hurdle that contributes to the housing shortage crisis in Dallas is the slow permitting process for apartment construction. “Process uncertainty is the largest Dallas-centric inhibitor here,” said Phil Crone, executive director of the Dallas Builders Association. Developers often face monthslong delays in getting their projects approved by the city.

Downtown Dallas’ remarkably untapped housing capacity: 50,000+ apartments

Our analysis shows that the most promising areas are the city’s downtown and the neighborhoods to the south and west of the city’s core. Maximizing downtown Dallas’ great housing potential comes with valuable benefits. Here, renters have easy access to transportation, shopping and entertainment options. Plus, the area’s high walkability would contribute to a greener city.

Zip codes 75201 and 75202 (making up the city’s downtown) have a total of 50 vacant lots covering more than 2.7 million square feet. Overlapping the western side of Dallas’ central area, zip code 75202 allows for the highest number of new apartments to be built on its 34 empty parcels — nearly 34,500.

This is more than double the building potential in zip code 75201 (16,400 apartments for rent), which covers the western side of downtown Dallas and includes 16 vacant plots. Here, roughly 6,600 apartments were built in the last 10 years, nearly six times more than the 1,140 units that opened their doors in zip code 75202 in the same timeframe.

The third-most promising is zip code 75241. More than 10,800 apartments could be built on the 23 parcels in the area south of Cedar Crest and overlapping parts of the Lancaster and Hutchins suburbs. The vacant land in this zip code covers a sprawling 13.3 million square feet, the most out of all the zip codes we looked at. This is a growing area, with nearly 14% of the population having moved here in the past year, according to Census Reporter data. In this case, the more affordable cost of living draws in renters to this suburban neighborhood, which could benefit from more rental apartments.

Next is zip code 75207, just west of Dallas’ downtown and overlapping the Design District. In this area, more than 5,000 apartments could be built on the 16 vacant lots we found, which is double the current number of apartments for rent. This zip code is already an established renting district known for its fine-art spots and sleek shops. The area could benefit from a larger supply, especially because it constantly draws in new residents from other areas in the metro, but also from out of state.

Zip code 75216 is Dallas’ fifth most promising in terms of housing potential, with just under 4,000 apartments. We identified 39 vacant lots that allow multifamily construction in this zip code, which overlaps Cedar Crest almost entirely.

The 20 zip codes in Dallas with the greatest housing potential could house almost 100,000 new apartments, giving renters more choices. Although some of the vacant land is owned by the local government, it could nevertheless be leveraged through public-private partnerships.

How more housing density would affect rent growth in Dallas

In the next decade, rents in Dallas are expected to rise along with incomes as part of the city’s anticipated economic growth. We looked at two scenarios for rent growth in Dallas by considering population growth and migration trends, as well as the pace of apartment construction.

The first scenario looked at rent evolution assuming the rate of multifamily development in the city stayed the same at 4,000 rental apartments each year. In this case, we would expect rents in Dallas to increase by 85% to 123% in the next 10 years.

The second looked at the effect of incentivizing apartment build-out on vacant land through rezoning and increased housing density on rent growth. In this scenario with a faster pace of construction — around 10,000 new apartments per year — rents in Dallas would rise by only 47% to 85% in the next decade.

Rezoning could increase the wave of new rentals far beyond 100,000 apartments

Construction work on 100,000 apartments could begin as soon as tomorrow on the 475 vacant lots in Dallas that allow multifamily projects. However, Dallas’ construction potential would be 6.5 times greater if we included other types of zoning as well. That's because, in total, Dallas has more than 494 million square feet of vacant land scattered around 3,152 parcels that could be used to build more housing.

Municipalities could also encourage construction by showing more flexibility when it comes to rezoning. One way to do this would be by allowing for more apartments to be built in areas with vacant land that now forbid it.

Doug Ressler, manager of business intelligence at Yardi Matrix, explained that only in the U.S. is the detached single-family house "considered to be so incompatible with all other types of urbanization as to warrant a legally defined district all its own where all other major land uses and building types are outlawed."

Referring to University of Georgia Professor Sonia Hirt's book Zoned in the U.S.A., Ressler continued: "It’s clear from Europe and some older U.S. cities that these (single-family home districts) can be perfectly compatible with and even enhanced by well-designed multifamily buildings." 

Dallas is already taking some (slow) steps in updating its zoning plans:

First, the city has been in the process of simplifying and updating its development code (last updated nearly four decades ago) by gradually revising each of its components, starting with the more "confusing" ones, according to city officials quoted by local media. Second, the city is also creating a new future land use map. Dubbed ForwardDallas and initially adopted in 2006, the renewal process is in its early stages.

Third, in April, the Dallas City Council approved a new affordable housing plan to make housing accessible to low- and middle-income residents. However, the document appears to be quite vague, with no budget or goals yet in place. The new policy aims for a collaboration with communities throughout the city to identify the areas where affordable housing is needed and then investing there "in a comprehensive manner."

The interactive map below highlights vacant lots in Dallas as well the type of land parcels that surround each plot.

Of course, these are all works in progress for Dallas. So, a more immediate solution for developers who plan to build, but are restricted by policies, would be to file for a zoning change. The process is estimated to take about three months (though developers report more than double the time) and includes two public hearings, according to the Dallas City Hall.

Builders call for updated zoning, streamlined permitting

Building more affordable housing in Dallas would not only benefit the homeless (Dallas has seen a 90% rise in chronic homelessness), but also the city as a whole. Namely, it would reduce the demand for emergency shelters and services, save taxpayers money, improve public health and safety, and foster social and economic inclusion. It would also make Dallas a more attractive and livable place for everyone, regardless of income or background.

So, why is one of the country’s largest job hubs not building more? Well, the main reason seems to be the bureaucratic hurdles of getting a project off the ground.

"Process uncertainty is the largest Dallas-centric inhibitor here," Phil Crone, executive director of the Dallas Builders Association, told RentCafe.

Recently, Crone met with several affordable housing developers in the city who recalled the many delays and unnecessary regulatory burdens they faced as they tried to start construction. Currently, the City of Dallas has a backlog of about 1,000 Planned Developments or PDs — a rezoning request to legally change the zone district designation to allow different kinds of developments than existing ones.

"If we could cut their number in half, we'd really be making some progress," Crone added.

The permitting crisis in Dallas began as the more expeditious in-person approval process was shut down due to the pandemic and replaced by an online system. So far, it was met with poor results, Ressler said.

In addition to permitting delays, developers are also discouraged by the high fees. Dallas Cothrum, president of Masterplan — a land use services firm assisting developers from project kick off to final approval — compared the Dallas City Hall to a restaurant with slow service and high prices.

"The most common complaint I hear from clients is that the City fails to treat people like customers. In the end, many of our clients vote with their wallets and decide to do business elsewhere," Cothrum told RentCafe.

However, the solution is on its way. House Bill 14, filed in March, allows applicants to hire a third party to perform the necessary reviews for them and sign off on their permits if a city doesn't act on a development application or conduct a necessary inspection within 15 days of state-set deadlines.

"The bill is part of a package of zoning reforms that would make already-affordable, development-friendly Texas an easier and cheaper place to build," Ressler added.

Another solution for alleviating the uncertainty Crone mentioned as well as accelerating the construction of more apartments for rent would be updating current zoning regulations.

"As the city looks to address this issue (permitting crisis), they need to increase the number of projects that can be done by right," Crone said. "I'd like to challenge each councilperson to find as many areas in their district as possible where you could build a three or fourplex instead of a single-family home. This is how you get density and development without displacement in neighborhood."

Methodology

RentCafe.com is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the U.S.

For this study, we extracted vacant lots larger than 0.5 acres or 21,780 square feet that are likely suitable for construction and added development restrictions according to the Dallas Development Code.

We then manually checked and removed parcels that weren't vacant. Additionally, cemeteries, parks, forests, some areas in the floodplain and parcels in the Dallas Floodway were removed from the vacant land list.

Average rent and completed apartments for each zip code were extracted from the Yardi Matrix database and cover the last 10 years. Median income and median home prices are from Census ACS 2021 one-year estimates.

For the rent forecast, we used regression analysis and considered several metrics: average rent, median rent, renter income, apartment occupancy, home prices, and inflation.

In order to calculate the building potential in Dallas and number of rental apartments, we referred to restrictions and metrics from the Dallas City Hall’s official zoning plan.

For the purpose of this study, the number of estimated apartments has been rounded up.

The maximum buildable floor area was calculated as such:

  1. If there was a floor area ratio (FAR), then we multiplied FAR by total land area by 80%.
  2. If there was no FAR, then we multiplied total land area by lot coverage by maximum stories allowed by 80%.

The maximum number of potential units was calculated as such:

  1. If there was a maximum dwellings per acre, then we multiplied maximum dwellings per acre by total land area.
  2. If there was no maximum dwellings per acre, then we multiplied maximum built-up area by percentage of residential permitted and divided by 849 (average square footage for an apartment).

Mentions:

* For multifamily, the minimum area per dwelling unit differs by each type of apartment. We took the average of the two-bedroom unit configuration to determine the average floor plan size.

* Where there was no maximum stories limit, a 20-story limit was added manually.

Potential Zoning Changing

* Zoning for community retail vacant parcels can be reclassified to residential use based on previous local ordinances, with potential unit estimates similar to Multifamily District 2.

* Zoning for duplex district vacant parcels can be reclassified to Multifamily District 1 based on previous ordinances.

* Zoning for agriculture district vacant parcels can be reclassified to single-family 10,000 square feet based on previous ordinances.

Fair use and redistribution

We encourage you and freely grant you permission to reuse, host, or repost the research, graphics, and images presented in this article. When doing so, we ask that you credit our research by linking to RentCafe.com or this page, so that your readers can learn more about this project, the research behind it and its methodology. For more in-depth, customized data, please contact us at media@rentcafe.com.

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Alexandra Both is a senior creative writer with RentCafe. She has more than six years of real estate writing experience as a senior editor with Commercial Property Executive and Multi-Housing News. She is a seasoned journalist, who has previously worked in print, online and broadcast media. Alexandra has a B.A. in Journalism and an M.A. in Community Development.

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