Master Planned by Jim Lake Companies

The high-heeled and high-toned guests at May’s opening of the high-end showrooms at 150 Turtle Creek Boulevard are duly impressed. Visitors search out their host, the scion of a wealthy developer and collector, a former high-school football star, whose name appears on the blue-and-white “For Lease” signs next to seemingly ever
y gallery opening they’ve attended lately. But instead of a modern-day Gatsby, they find Jim Lake Jr. looking a bit square in his buzzcut and starched shirt, deflecting compliments and sending them in the direction of his architect, general contractor, and leasing staff.

Alas, the style of the most ambitious individual developer in Dallas’ fashionable Design District is decidedly old-fashioned. These tony digs are built on lessons learned decades ago, in a quaint hamlet of Oak Cliff, where Jim Lake Sr. turned a ho-hum intersection into the widely acclaimed Bishop Arts District. And now Jim Lake Jr. intends to put an exclamation mark on the Design District, where Phase I of the International on Turtle Creek is the first of much to be feted.

The son has reaped what the father has sown. Jim Lake Sr. first set stakes in the dirt of Dallas’ Design District in 1976 when he and his new business partner Mike Morgan bought one of the area’s last pieces of undeveloped land. Understandably undeveloped: It was literally a dump. After extensive clean-up, Lake and Morgan built a 131,000-square-foot office/warehouse complex at the northern end of Manufacturing Road.

As the street’s name implies, what is called the Design District today was originally developed in the 1940s for industrial use. Trammell Crow Sr., following the lead of the Stemmons family, had erected his first industrial building on Cole Street in 1948, but in 1954 Crow changed direction and began building the first spaces catering to designers. By 1980, the district’s conversion to Dallas’ hub for wholesale decorators was complete. When Lake and Morgan teamed up to build two other projects in the area, their focus shifted to the space needs of designers.

Jim Lake Jr. was there for the transition. His introduction to the Design District came in 1976 when he worked on his father’s construction site after his freshman year at Baylor University. The choice of Baylor, with its Baptist sensibilities, unfaddish business education, and pretty girls who still wore skirts, was a natural choice following Jim’s commitment to Christianity at age 14—a commitment that remains operative in Jim’s life. Jim was less committed to the construction industry, however, and after graduation took a job finding tenants to occupy, or investors to buy, spaces that someone else had already built.

THE BIRTH OF BISHOP ARTS DISTRICT
In 1983, Jim, his father, and Mike Morgan became associated with a collection of buildings that would occupy a much larger part of their lives than the investment’s actual value would suggest. Buildable land in the Design District was scarce, so Lake and Morgan looked for properties to renovate in neighboring Oak Cliff. Acting as broker, Jim Lake Jr. brought his father a contract to purchase more than 40,000 square feet of 1920s storefronts that surrounded what had once been a streetcar stop at the corner of Bishop Avenue and Davis Street.

Lake and Morgan found a few scruffy artists using the abandoned shops as studios and, in an act of real-estate hyperbole, dubbed their purchase the “Bishop Arts District.”

During the next few years, Jim watched his father and Morgan implement a plan to revitalize the Bishop Arts District that would later directly transfer to the Design District. To make the area safe, Jim Lake Company donated space on Bishop Avenue to open the city’s first police storefront. Lake cooperated with the surrounding neighborhood to gain listing as a national historic district. That special status persuaded City Hall to adopt “conservation district” zoning, which imposed basic architectural protections while easing parking and land-use requirements. To keep costs down, Mike Morgan’s own construction crews restored the building shells and upgraded services. Finally, Lake recruited design-related and start-up firms as tenants, promising cheap space in an interesting urban setting.

After the Bishop Arts deal, Jim Lake Jr. moved into his father’s offices on Manufacturing Drive with hopes of developing properties in a similar fashion in the Design District. Jim was 135,000 feet into that plan when Congress passed the 1986 Tax Reform Act and annihilated his father’s business. Jim describes the years between 1986 and 1989 (during which he and his wife Stacy started their family) as the toughest and most formative of his career. With nothing to build and not enough owned space to keep everyone occupied, Jim and his father pluralized the business’s name—to “Jim Lake Companies”—and added management, leasing, acquisition, and sale of outside properties to their list of services. Unlike many of their peers, the Lakes and Mike Morgan avoided bankruptcy.

JUNIOR COMES INTO HIS OWN
In 1991, Jim Lake Jr. returned to his ambitions as a developer with the formation of Jim Lake Partners, whose operations would focus on the Design District, an area bounded by Sylvan/Wycliff and the Old Trinity Meanders on the north, Stemmons Freeway to the east, Continental Street on the south, and the Trinity River to the west. Lake’s work as a broker made him privy to dozens more deals than his father had witnessed as a builder, and Lake’s read of the market was that the district would recover. So back when buildings could be had for $10 per square foot, Lake started buying.

Being a broker helped, but so did his mere presence in the Design Distrct. Kevin Bryant of Inwood Bank, a longtime lender to the Lakes, says, “He lives it and breathes it and knows that market. You have to be there every day to grab those deals.” Bryant recalls that Lake rarely bought a property, no matter how cheap, without having tenants lined up. Jim’s rent rolls grew, often because those new tenants came from other Jim Lake properties they had outgrown.

When Jim began, the partnership had no buildings on Slocum or Dragon, the two hottest streets in the district. “Today,” Lake says, “on just about every street we own a property.” In the course of remodeling buildings, Lake learned that he had inherited some of his father’s sense as a builder. The Design District consists of functionally obsolete warehouse buildings—too small and constricted for warehouse space, too cavernous and inaccessible for retail or office. “Each building is a problem to be solved,” Lake says.

As Lake’s holdings in the Design District expanded, so too did his role at Jim Lake Companies. His father’s heart began to fail in 1988, and doctors eventually ordered Lake Sr. to move three hours away from the office to relieve stress. Lake did not attempt to fill the void in operations left by his father, but instead left those details to a loyal staff. “My job is to remain deal-focused and to keep things moving around here,” he says. Lake sums up his leadership style with the acronym WINA: Work hard, Improve every day, Never give up, and Always do your best. More Benjamin Franklin than MBA.

In March 2003 at age 72, Jim Lake Sr. passed away after a brain hemorrhage. He had developed more than 2 million square feet of commercial space throughout Texas, yet the obituary headlined Lake’s achievement of renewing developers’ interest in Oak Cliff through his example in the Bishop Arts District. Jim Lake Jr. and Mike Morgan have sought to apply that same model to the Dallas Design District, a much larger geographic area with exciting potential for urban renewal: have a presence in the area, keep an eye on costs, recruit proper tenants, be involved. So far, it’s working.

HOW NEIGHBORHOODS GET BUILT
Even though Jim Lake’s holdings today in the Design District exceed 850,000 square feet—the equivalent of 15 modern grocery stores or 200 homes in Highland Park—they are dwarfed by the assets of Crow Holdings, which owns and manages 7 million square feet in the Dallas Market Center, more than 1,600 rooms at the Hilton Anatole hotel, and 26 acres within the Design District itself. At the other end of the spectrum are the hundreds of individual owner/occupants of buildings set on the 45-by-150-foot lots into which the district was originally divided. Jim talks sentimentally about this “community of businesses” as if it were a leafy residential neighborhood.

Nearly everyone in that community understands the explosive potential of the Design District. Land along the Industrial Boulevard corridor sells today for $20 to $25 per square foot compared to $60 to $80 in Uptown. The Trinity Association, a nonprofit organization representing Design District property owners and tenants, calculates that lower land prices make development in their district 29 percent cheaper than in Uptown—yet rents are just 18 percent lower.

When Ed Oakley represented District 6 on the city plan commission, he recognized this pattern from Oak Lawn, Deep Ellum, and the Bishop Arts District. As a construction contractor, Oakley also knew firsthand the constraints that plain-Jane industrial zoning would place on upgrades to the district’s building stock. In 1995, Bob Darrouzet, whose company, Trinity & Design District Real Estate, has long brokered leases in the district, suggested the area be placed under a planned development district. A city zoning official laughed at the notion. Oakley was far less dismissive, and together they initiated a five-year series of meetings among property owners and city staff that culminated in August 2002 with the passage of the Old Trinity and Design District Special Purpose District, otherwise known as PD 621.

If PD 621 is not a blueprint for building a neighborhood, it’s at least a handy checklist. Darrouzet summarizes PD 621 as allowing medium-density residential, retail, and office uses; ushering out hard-core industry; making it hard for undesirable uses such as clubs and sexual-oriented businesses to get a foothold; easing parking burdens; protecting the historic architecture; and dealing with miles of structures that are built to the front property line. Oakley, now city councilman for District 3, thinks that removing the necessity of property-by-property zoning changes will open the flood gates to development.

There’s more, particularly the creation of the $33.5 million Dallas Design District Tax Increment Financing District, which was approved by city council in mid-2005. Within the next five years, the city predicts, the district’s tax base will more than double from $115 million to $240 million. And then there’s the Trinity River Corridor Project. How the colossal undertaking will affect the Design District is the subject of speculation, strategizing, and skepticism among property owners. If realized, most of the project’s major components—its recreational areas, park vistas, hiking trails, new traffic routes, and soaring bridges—would benefit the Design District. But no one seems to be banking on it. “Our business plan is not at all dependent on the success of the Trinity River Project,” Lake says.

INTERNATIONAL SUCCESS
The International on Turtle Creek posed more challenges than others chose to deal with, including Ken Hughes of Mockingbird Station fame, who had puzzled over the building and eventually abandoned negotiations. The warehouse that International Harvester had built for its tractor parts in 1950 was impossibly deep for commercial use. Lake’s solution was simple: Cut it in half. With those instructions, David Farrell of Good Fulton & Farrell Architects went to work converting the warehouse into a mall of designer showrooms symmetrically placed on either side of a central vehicular lane, framed overhead by steel girders that once supported the middle section of roof.

Farrell’s partner Larry Good was assembling a master plan for the Design District for Crow Holdings, but Farrell had never worked with Jim Lake Jr. before. He liked him: “Jim doesn’t chip away at the core idea the way some budget-minded developers do, so the project didn’t wind up averaged-out.” And Lake liked Farrell, who was willing to work with Lake’s in-house construction firm Clay Butler Construction to arrive at inexpensive solutions to problems uncovered during renovation.

Though larger in scale and modern in design, the International offers much the same package that worked in the Bishop Arts District—clever adaptation of old space, tenants drawn from the creative trades, an intimate setting amidst interesting architecture, and affordable lease rates. Jim does not consider his work at the site finished. He imagines the two acres he owns behind The International developed as ground-floor showrooms topped with 40 to 50 residential units overlooking downtown and the Trinity River.

The timing of Phase II of The International depends on how the market receives Jim Lake and Mike Morgan’s current construction project, the Trinity Lofts.  “People are watching this project,” Lake says, explaining that Trinity Lofts is a new animal not only in the Design District but in all of Dallas.  Beeler Guest Owens Architects will convert the 1967 Lee Optical building at 1403 Slocum into 64 loft-style apartments sitting atop 26,000 square feet of first-floor showrooms. Two new buildings fronting Dragon Street will house 14 units that combine a first-floor showroom or office with living quarters above. A third floor will feature conventional apartments with unmatched views of Victory and the West End.

Jim Lake Companies, partnering with multi-family pro Stephen Barnes, will be the first to build on a large scale the hybrid of design and living space spread by guerilla developers in the Design District during the past decade. “Trinity Lofts is a major, majorproject,” Oakley says. “It’s exactly what we envisioned in the PD.”

Jim Lake Sr. might well have envisioned it, too.

 

DAVID SPENCE