More Heads In Beds Closing Grocery Store Gaps In Southern Dallas

Residents of Southern Dallas have spent decades pleading for better access to healthy food. Now, with the addition of thousands of housing units helping to mitigate the risk for grocers, city officials and developers are finally making good on that wish.

A trio of grocery stores is on the way in the area south of Interstate 30 as population growth from a spate of nearby housing projects triggers demand for more retail. Meanwhile, the city, in partnership with private developers, is supporting the growth by offering incentives aimed at righting historic wrongs.

Dallas City Council approved a $5.8M incentive package in early April that will bring a 50K SF Tom Thumb to the newly redeveloped Shops at RedBird. The deal marks the end of a multiyear quest to add a full-service grocery store to an area previously overlooked by investors due to high concentrations of poverty.

“Attracting a grocery store to RedBird has been a priority since the inception of this development,” Terrence Maiden, CEO and founder of Russell Glen Co., said in a statement. “Southern Dallas deserves access to quality retail and grocery options, and we are excited to have an opportunity to show up in this way.”

The news of Tom Thumb’s addition at RedBird — a $200M mixed-use project that has brought much-needed housing, services and amenities to an underserved area of Southern Dallas — follows a wave of grocery store announcements to make headlines in recent months. 

H-E-B confirmed in November it acquired property just outside of Duncanville for the development of a future store. The location would be H-E-B’s first in Dallas County, though the company told the Dallas Observer a groundbreaking date has not been set. Mabrie Jackson, senior director of public affairs for the chain, told Bisnow that strong population growth in the southern sector helped drive the purchase.

A couple months later, a new grocery store, Food Basket, opened in place of the Save U More in Highland Hills. The 15K SF store is the only full-service grocer within a 5-mile radius, according to the Dallas Morning News. There are several new apartment complexes either open or in the works around Food Basket, including a 300-unit multifamily development slated for the 22-acre parcel off Simpson Stuart Road.

Mark Allen, managing partner of Onyx Legacy Group, is brokering the sale of that parcel as well as the Homes of Persimmon, a 180-unit complex adjacent to the site. He said activity in the Interstate 20 corridor, an area buzzing with industrial development, is driving demand for more housing and services in Southern Dallas. 

“Dallas as a whole has worked really hard to make sure this district is receiving the best,” he said of the area south of Loop 12. “Councilman Tennell Atkins and his office have done a great job making sure that people who live there are getting the best developers to come in, [and] they’re getting quality grocers.” 

Southern Dallas hasn’t always been the center of the city’s attention. A history of redlining, discriminatory policies and disinvestment have stifled prosperity to the point where the region makes up only 15% of the city’s tax base but houses 45% of its population, according to the office of economic development.

In a bid to correct those injustices, the city has implemented several new tools meant to kick-start investment in the area. In January, the city council approved the creation of an infrastructure investment fund that aims to spur economic development and job growth south of I-30 by mitigating costs associated with installing sewer lines, sidewalks, WiFi and more.

“We’re hopeful that the new tools and streamlined processes will generate more interest from small and midsized developers looking to invest in Dallas,” Robin Bentley, director of the office of economic development, told the DMN.

Southern Dallas is home to several food deserts, but the city is hopeful more density will close those gaps. One way to drive retail is by incentivizing the production of more mixed-income housing, said Debra Guerrero, senior vice president of strategic partnerships and government affairs with The NRP Group, a San Antonio-based developer active in Southern Dallas. 

“We hear from those in retail and the service industry that they need rooftops, but they also don’t need a concentration of low-income folks — they need a concentration of mixed-income folks,” she said. “The more types of housing you have in terms of demographics and income levels, the more variety of services and amenities you will have.”

Grocery operators have a hard time opening stores in food deserts largely because they lack data from nearby competitors, said Christy Lara, director of communications and public relations for Albertsons Cos. In other words, it’s hard to justify opening a new store when companies have no baseline for how it might perform.

In the case of RedBird, that risk was minimized by the amount of traffic generated not just by the influx of nearby residents but also by visitors to businesses that have recently opened.

“There’s multifamily housing, so there are people who need groceries,” she said. “In addition, there’s other businesses that are also part of RedBird. You’re not alone in a shopping center — you’re coming to a location where there are other things attracting people to the area.” 

The city’s incentive was a “game-changer” in getting Tom Thumb to Southern Dallas, Lara said, but it wasn’t the first time council tapped public funds to bring in a grocer. Back in 2016, the city spent $2.8M in taxpayer dollars to get the Save U More up and running, per the DMN, all with the goal of spurring future growth in the area.

Incentives are also being funneled toward housing. The Ascent at Mountain Creek, a 324-unit mixed-income community the NRP Group is developing in South Dallas, is financed through the city’s Public Facilities Corp., which incentivizes the development of mixed-income housing by providing a 100% exemption on property tax and construction materials sales taxes.

Without this type of lift, South Dallas’ extremely low incomes can cancel out the potential for new housing, Guerrero said.

“The Ascent at Mountain Creek was all about the city using a tool where they could be a true partner in a priority they had, which is to get market rate into areas where private investment has not necessarily chosen to go because they tend to be risk-averse,” Guerrero said.

“How do you mitigate those risks? How do you prove to the private markets that they can get market-rate rents in certain areas? This was really about proving out those rents.”

Affordable housing developer LDG is working on three mixed-income projects in Southern Dallas — The Terrace at Southern Oaks, The Ridge at Lancaster and Meadowbrook Apartments. Jake Brown, the company’s development manager, said building mixed-income housing is difficult in the best of times, but recent economic turmoil has made penciling projects all the more challenging.

“When we started construction on these projects, it was a totally different world,” he said. “If we tried to close the same deals again but implemented the interest rates and costs of today, there’s no way we could do it.” 

Public-private partnerships have always been a factor in affordable housing, but coordination between the two sectors is even more critical today, Guerrero said. Without incentives to help offset rising costs, many developers can’t make the math work. 

The same ethos can be applied to retail, said Sam Eshaghoff, managing principal of New York-based West Egg Development. Developers may need encouragement to build retail at a time other types of properties are much more profitable, he said. 

In New York, a program called FRESH allows for more density and provides tax breaks to developers who lease ground-level space to a full-service grocery store operator. Eshaghoff said a similar solution could work in Dallas.

“If each individual property owner is inclined to build multifamily because they feel like that’s going to make the most money for them, but cities have an interest in bringing in fresh food and groceries, they have to make policy decisions that incentivize that sort of investment and that sort of behavior,” he said.

It may also be that brick-and-mortar stores aren’t the answer to closing grocery gaps. Some argue a delivery model makes more sense in areas where profits aren’t guaranteed. This was the thinking behind the development of a 350K SF fulfillment center that Kroger is preparing to open in South Dallas. The project will not only create 400 jobs, but also provide surrounding residents with better access to healthy food. 

“The fulfillment center provides hundreds and hundreds of good-paying jobs to the Inland Port, and they have already hired many of our neighbors in the community,” Atkins said in a statement. “The center means that more people can get fresh and healthy groceries delivered right to their door quickly.”

There is still plenty of progress to be made in improving the quality of life for residents south of I-30, but Brown said he hopes projects like what LDG has in the pipeline will spur more activity and help make Dallas a more equitable city.

“When you have new development paired with a high concentration of people in an area, that’s really when retail development starts to uptick,” he said. “I’m hopeful that those developments will act as a catalyst for those areas.”