Luring Uber Is Just The Start For Deep Ellum’s Biggest Land Owner, Westdale Asset Management. Next Up? Another Epic Tower And A Murky Lizard Lounge Future.
A mere five months ago, no one in their right mind would’ve pegged tech bros as the soon-to-be biggest influence on Deep Ellum’s immediate future.
And, yet, here we are.
After four solid months of rumors about the possibility, the San Francisco-based rideshare giant Uber formally announced on Tuesday its intentions to open up a major operations hub in Dallas. The grand reveal was, as expected, immediately followed by cheers from both local and statewide officials, who had eagerly offered up tens of millions of dollars in incentives to sweeten the deal, which has in turn been predictably championed as a victorious rebound from Dallas’ failed attempts at bagging Amazon’s HQ2.
Specifically, the historically problematic and financially struggling “tech” company has agreed to a 10-year lease on 450,000 square feet of office space within the massive, multi-use real estate development called The Epic, which is still right now being constructed along the westernmost edge of Dallas’ most culturally significant neighborhood. Uber promises that its Deep Ellum facilities — selected over a potential site in Phoenix and coming alongside a similarly sized, just-announced new hub in Chicago — will house 3,000 employees, the bulk of which it anticipates as working within its finance, sales and human resources departments, with salaries it says will average out to $100,000 annually per worker.
If nothing else, the commitment seemingly indicates that the brand ain’t exactly fazed by the recent uptick of violent crime in the area. Perhaps that’s because it plans on kicking in funds alongside its future neighbors to pay for off-duty Dallas police to continue their efforts at better securing the area? Yeah, at least that much, one would certainly hope.
But what other changes might Uber and its notably not diverse workforce bring to the neighborhood? This much we can say for sure: Its arrival will bring additional massive real estate developments to the neighborhood, and it will also put the future of some of Deep Ellum’s most significant landmark businesses in jeopardy.
The former is already set in stone due to The Epic’s property owner, Westdale Asset Management, promising as part of its end of the Uber arrangement to construct a previously unannounced fourth high-rise that will now join the three long-confirmed builds within plans for the city block-wide development it first publicly teased in 2015. This additional skyscraper will sit on the western edge of the property, right along the Hawkins Street stretch where the on-site construction trailers managing The Epic’s other builds currently reside. Because Uber’s lease is for 450,000 square feet at the complex — a good deal more than the 251,000 offered by the mostly finished, 16-story, Jenga-shaped office tower it currently boasts, some of which has already been leased to other tenants (both office-oriented and not), and 170,000 of which is expected to go Uber’s way — the additional project will rise a full 25 stories just to accommodate that need. That places it just a single story shy of the mostly residential tower called The Hamilton that is going up within the complex along Elm Street. Per a representative with CBRE, the real estate company tasked with leasing out the office space at The Epic, the fourth tower is currently slated to boast a whopping 469,000 square feet of office space all on its own.
While Uber has said it will begin moving into The Epic in 2020, the complex’s final addition is not expected to be finished by 2022 — a date that falls conveniently in line with a January 2023 full move-in deadline for Uber that was set by Dallas County commissioners in exchange for tax incentives that will save the company tens of millions. (Additional proposed incentives would fund the establishment of some not-just-yet-confirmed parking areas near the complex — ironic, considering Uber’s main function, and curious, considering that The Epic is located both within spitting distance of the Deep Ellum DART stop and also along a proposed subway route.)
It should be said that this is by no means the beginning of the Dallas-Uber relationship. Dallas was the first city in Texas to offer Uber’s ridesharing services in 2012, and the company has maintained a small office presence in Deep Ellum co-working spaces to oversee those operations ever since. Its UberEats offshoot has similarly held down fort in Uptown office buildings while expanding its area footprint in recent years on that front. In 2017, the company also announced its intentions to launch its flying vehicle-hailing program in Dallas by 2020. Then, just earlier this year, the company worked with Deep Ellum officials to launch a still-ongoing pilot program involving designated pick-up and drop-off spots in the crowded nightlife-centric neighborhood. And, lest we forget, Uber’s also involved in the area electronic scooter game via its Jump brand.
Still, no previous dalliance has been anywhere near this new hub’s scale. And its effects will surely be palpable.
By the time Uber wholly finishes setting up its Deep Ellum shop in 2023, the neighborhood surrounding its workplace is likely to have undergone significant changes — and most assuredly at the expense of the area’s rich cultural history.
A sooner-than-later domino likely to fall would appear to be the legendary dance club Lizard Lounge, which has for 28 years now operated as a nightlife destination on a stretch of land immediately north of its new neighbors at The Epic. Last month, and no doubt in preparation of the then-not-yet-announced Uber lease, Westdale purchased the city block-worth of land upon which Lizard Lounge and a second, long-vacant property sit.
Concern over Lizard Lounge’s future has spread like wildfire on social media this week in the wake of a wildly speculative and substantially inaccurate NBC5 report that aired on Tuesday. Among other issues, that piece erroneously implied that Uber’s tax incentives were tied to guarantees that its employees will all live in Dallas proper. It also stated that the new Uber complex will consist of three buildings more than the two reported by every other media outlet in town.
It gets worse.
After opening with a graphic that reads “exclusive,” a voice-over from NBC5’s venerable reporter Ken Kalthoff states that “The Lizard Lounge is one of the Deep Ellum parcels acquired by ridesharing company Uber for a future campus of five high-rise buildings.” That statement is patently false. For one thing, Kelthoff appears to be confusing The Epic’s hotel and residential buildings as being part of Uber’s lease agreement. (They aren’t.) Secondly, the report liberally quotes Dallas real estate attorney Jim Depetris, due to his being “involved in the [Uber] deal” — a claim DePetris actively denied upon being contacted on Wednesday, noting that he was “surprised” by the implication, and that he only agreed to speak to Kelthoff on speculative grounds, serving as industry expert who had been keeping an eye on the breaking story.
Beyond those other regrettable errors, it’s worth pointing out that Uber has simply leased its space and not “acquired” it; even if Lizard Lounge’s land across Pacific Avenue from The Epic is indeed set to house yet another Uber tower at some point in the future — a possibility DePetris admits to floating in his interview — that much is by no means confirmed.
On Wednesday afternoon, in the wake of widespread concern resulting from the NBC report, Lizard Lounge co-owner Don Nedler shared a statement on Facebook that he hoped would calm some rattled nerves. In that post, he said that his business has been actively engaged in lease extension negotiations with Westdale since being alerted to the purchase of the property in July. Reached by phone, Nedler concedes that he is himself fairly uncertain about the long-term future of Lizard Lounge’s current residence, despite having been in contact with his new Westdale landlords both in advance of and in the wake of Tuesday’s big Uber announcement. Lizard Lounge’s lease agreement is set to expire at the end of 2019, and Nedler says that, while Westdale has told him Uber has not acquired the Lizard Lounge property, he’s not quite ready to rely on that assurance, fearing that Westdale could be employing the same verbal semantic tactics that threw NBC’s report off.
He’s right to be worried: Along with DePetris, several other local real estate sources contacted by Central Track suggested that Westdale is likely to convert at least some of its other Deep Ellum assets into office towers that, if not developed for Uber, will be built to house other businesses that would be attracted by the idea of setting up shop near the tech giant. An intriguing, irrefutable bit of information contained within a follow-up, Wednesday-aired Kelthoff report for NBC5 confirms that Westdale is actively exploring this route: The piece has Westdale Asset Management CEO Joe Beard on video saying that his company has already “had interest from other high-tech tenants” who are interested in Deep Ellum’s “work, live, play” setting. Beard also says in that piece that such lessees would fit in with the “long-term vision for this area” that his company has been preparing for since it first acquired the land The Epic sits on some 20 years ago.
That concession should send a shudder down the spine of every one of Westdale’s Deep Ellum tenants — of which there are many. In addition to prominently owning and operating many of the neighborhood’s largest residential properties (the Case Building, Futura Lofts and Adam Hats Lofts and at least four others), Westdale’s Deep Ellum portfolio is downright massive. Far and away the largest property owner in the area, its commercial properties’ current tenant roster includes the following list of prominent Deep Ellum businesses: The Bomb Factory, Canton Hall, Armoury D.E., Truth & Alibi, Deep Sushi, Uncle Uber’s, Buzzbrews, Pepe & Mito’s, Café Brazil, Club Dada, The Green Room, Fuzzy’s Tacos, Three Links, Café Salsera, Prophet Bar, On Premise and Louie’s Piano Bar. And that’s only some of the more recognizable entities over which it lords.
Already, Westdale Asset Management — which is Dallas-based but the subsidiary of a Canadian corporation simply called Westdale (yes, it’s confusing) — has begun working toward making its nearest properties to The Epic more attractive to a new Deep Ellum guard. As of this week, Westdale is officially in the process of gutting each of four of the properties it owns across Elm Street from The Epic, which combine to make up half the buildings on that side of the block. Among those are the 2548 Elm Street home of the mainstay music venue The Prophet Bar, which announced its renovation plans back in June, and whose owner, Russell Hobbs, says still plans to return to that space in 2020. Hopefully, Hobbs says, it will do so in an environment where it “won’t be down the street alone in Beirut [but] in the middle of all the thick of things.”
It’s unclear at this point what other land-grabs Westdale might have in mind for additional properties surrounding The Epic. On Wednesday, a manager at the cozy nightclub Stars & Spirits, which sits precariously between the direct sight-line from The Epic’s completed office tower and Lizard Lounge, said his spot’s landlord hasn’t alerted him to any possible ownership change coming down the pike. A block up the road from The Epic along Good-Lattimer Expressway — a stretch of road already gearing up for some drastic transformations of its own — a manager at Bottled Blonde similarly pleaded ignorance over any potential coups event though its property is publicly listed at the moment as being for sale (a not uncommon practice in the high-turnover, high-volume nightlife game), and at a rather exorbitant cost, at that.
As for Lizard Lounge, its operators are patiently awaiting their new landlords’ next move. When Nedler and his contacts at Westdale last engaged in their “good faith” talks on Tuesday, they discussed the possibility of using Lizard Lounge’s parking lot as a staging area for the trailers that will oversee the building of The Epic’s fourth tower. Giving up some parking spaces in exchange for some long-term peace of mind is a fair deal in Nedler’s eyes. That’s his stated goal for the club: a long-term agreement.
And if such a deal can’t be struck? While not his preferred course of action, Nedler says that he’s comfortable with the idea taking his business to a new location. He’s already identified two potential new locations for Lizard Lounge should things come to that. Both spots, he says, are still in the vicinity of Deep Ellum, and also on its outer fringe — a trait he’d like the club to maintain moving forward, just as it always has and hopefully will, no matter its address.
One way or another, he promises Lizard Lounge will live on for years to come.
“We’re long-term thinkers,” Nedler says. “We’ll either extend or find another home. We know that we have the brand to sustain a move if need be.”
He mentions The Church, the long-running Sunday night goth party hosted at Lizard Lounge that just celebrated its 25th year running, bringing it up as a sign of his track record of sustainability. He points to the successful new partnership the venue has recently forged with the Emo Nite party brand as a sign that his club is also continuing to find new ways of attracting crowds to its space. He mentions his venue’s concert calendar, with many of its (just as ever) predominantly electronic music bookings already confirmed into 2020, as a means of showing that he intends for Lizard Lounge to keep on keeping on despite what may be in store thanks to Uber’s arrival in the neighborhood.
He’d just prefer it keep happening where it has for the last 28 years. And he’d really like to take Westdale at its word that Lizard Lounge won’t soon be forced out of its home — or at least not in the immediate future, anyway.
Mostly, he wishes he could stop worrying and get back to work.
One problem there. Says Nedler: “I haven’t seen a lease yet.”
But Uber has. And even along with some of the good that The Epic will definitely bring, it’s tough to ignore what the agreement between that building and that brand could likely mean — both for Lizard Lounge’s future and for that of Deep Ellum at large.
Tech bros, man. Who could’ve seen that coming?