Dallas High-Rise Demographics, Part 3: Where the Walkers Are

In last week’s second of three articles on high-rise demographics, I wrote about Dallas’ youngest high-rise populations. I noted that in those younger buildings, there were usually high rates of non-homestead owners – some as high as 75 percent. I think non-homestead ownership is worth noting because, in addition to owner age and worth, it gives an idea about how these owners react to changes.

Owners claiming a home as a second shelter (subtle, eh?) may be more likely to support (or at least not block) building improvements because they’re less likely to be constrained by wealth (or a lack of it). This may differ from investment/rental property owners who are managing a spreadsheet and are more likely to have a cautious mindset (while still acting to protect their investment).

In Dallas’ oldest high-rise populations, non-homestead ownership is much lower – 13 to 29 percent to be exact. The other difference is building age. The “oldest” of the young buildings were built in the 1990s whereas the “youngest” old buildings was 1984’s Claridge with the overwhelming majority built in the 1950-60s.

In fact, the only buildings from the 1950s-1960s first high-rises not included in the oldest category are those that support a much higher average for non-homestead, rental units. This means the true age makeup of ownership for Preston Tower, “21,” and Turtle Creek North is obscured. I say that these buildings have a high percentage of rentals (versus second home owners) because they have smaller, cheaper units that are easier for smaller investors to purchase.

As of this writing, four of six MLS listings at Preston Tower are rentals. This equates to 67 percent of listings – and that’s just the MLS, other rentals are surely available via other avenues. At “21” the rental listings equal 50 percent.

So where should whist-playing buyers go? How about frisky widowers desiring the pick-of-the-litter of older paramours tussling over who delivers the first “welcome” casserole with a breakfast chaser?

The Oldest Populations

At the polar opposite from Dallas’ youngest building, SOCO Lofts, is the Park Plaza where 76 percent of residents claim both homestead and over-65 exemptions on their property taxes. Coupled with just 11 percent of homestead owners under 65, Park Plaza wins the title of the oldest high-rise population in Dallas. But with these numbers, it may also be the most stable with just 13 percent of units owned by non-homesteaders.

A close second is the Athena, with 70 percent homestead ownership over 65, coupled with 10 percent under 65 and 20 percent second home/rental units. The differences between the Athena and Park Plaza are building size, unit renovation level, and unit purchase prices. With 142 units, the Athena is more than triple the size of Park Plaza. However, Park Plaza units cost about 20 to 25 percent more per square foot than Athena.

But (concentrating) I seem to recall that in the 2001 timeframe the Park Plaza was offering renovated units – almost like a conversion was in process. I recall being told that wood (maybe tile?) floors were only allowed in ground floor units because of the clickity-clack of high heels. It may be the embolism talking, but the only units I recall seeing looked very similar in finish and NOT 1982 finishes. A 15-ish-year-old renovation will command higher prices over a 1966 original, regardless of Highland Park versus Dallas ZIP codes – explaining the cost differential.

All this makes the Athena the best bang for the buck if the raw number of old neighbors is important. Based on my unscientific DCAD counts, female casserole-wielders outnumber aging playboys three to one (now there’s a key party video no one wants to see!). For renovators with patience, actuarial tables, combined with a plethora of outdated units, I feel makes the Athena a building poised for gentrification.

It’s also worth noting that while the Mansion Residences “only” have 42 percent of owners claiming homestead and 65+ exemptions and 8 percent claiming only under-65, a full 50 percent of units are owned by non-homesteaders. Given their multi-million dollar prices, these are almost certainly second (or seventh) homes where owner age likely skews into the 65+ bracket. Also, at 24 units, it’s not a large development. Meaning in actual numbers, 12 units are non-homesteaders, 10 units are 65+ homesteaders and 2 are under-65 homesteaders. A couple of ambulances could quickly change their population ratios.

 

 

All things in Moderation

Goldilocks had to tick off a whole bear family to learn balance is best. In a high-rise, you want exuberance tempered by experience. You want indolence over-ridden by long-term planning. You want problems fixed quickly and cheaply rather than waiting until they become critical and costly.

You don’t want co-owners playing musical chairs with problems, hoping they’ll literally be gone before the music stops playing.

In this grouping it appears that 8181 Douglas takes the prize, but I hesitate to award it. The building has just 14 units and so, as we in the research biz say, it’s not a statistically valid sample. One or two sales could quickly unbalance their balance.

The next three, Preston Tower, Plaza I, and Plaza II all have fairly equal distribution of homestead owners over and under 65. BUT, they also have nearly 50 percent non-homestead owners, so their true balance is unknown. Preston Tower is known to have a high proportion of rental units.

This leaves the last three, Mayfair, La Tour, and Vendome. I would say that these are truly the most balanced buildings in Dallas. La Tour, at 68 percent, has the lowest owner-occupancy rate of the three – and that’s still VERY high. Mayfair and Vendome have 76 percent and 72 percent, respectively.

In addition, these three have selling prices in the high-middle of the high-rise pack. This may have something to do with their balance, appealing to a wider demographic who are able to afford them and feel they are of value. In other words, some buyers stretch to live in these buildings while others don’t feel like they’re “settling” for something under their expectations.

What We’ve Learned

At the ends of the age distribution spectrum, there is a significant correlation between owner age and building age. This means that, like any neighborhood, many high-rise owners age in place. This creates a cycle of attracting new buyers who are aging right along with them. This happens because people tend to gravitate towards similarly-aged neighbors – a desire to be near others at the same stage of life. This is true if you’re 20 or 90 – excluding trophy spouse hunters.

Today, SOCO Lofts has the lowest ratio of older versus younger owners. You might expect from what I’ve written that in another 30 years, it will have become a retirement village. Doubtful. Taking into consideration its industrial loft that style specifically targets younger buyers, I don’t see it aging in the same way more traditionally styled buildings will.

That said, I do see buildings like Mayfair and Vendome attracting a higher proportion of older buyers in the coming decades. I foresee this because younger buyers will be attracted to newer buildings while many current residents age in place.

When Economics are Removed

The other similarity between the oldest and youngest buildings is that they are largely middle-income buildings. The exceptions being One Arts Plaza in the “youngest” category and the Claridge in the “oldest.” Because both ends of the spectrum are economically similar (based on home prices), age becomes more heavily weighted in understanding these building’s personalities.

Younger populations expect new ideas and broader use of technology that is sometimes tempered by their ability to pay. Conversely, older, long-term populations who don’t use technology and who haven’t been exposed to amenities offered in newer buildings, may block improvements because of their fear of expense and an “it’ll do” mentality. This results in differing personalities and sets of amenities needed to attract buyers.

Invariably, people vote for things that have personal meaning. A stellar gym is useless to most 70-somethings while it’s critical to 30-somethings. Meanwhile, flower beds are casus belli for 70-somethings while largely an auto-pilot item for the young.

What About the Newest Buildings?

I’ve purposely not written much about the newest crops of high-rises because their populations are still settling down. Buildings that were built in the run-up to the recession still have very large numbers of units that became economically forced rentals. Units purchased for top dollar that lost value (particularly in Victory Park) were flipped to rentals as underwater owners and sometimes developers moved on. I think in the coming years many of these “forced rental” units will be returned to owner-occupied units.

The exception (there’s always one) being the Ritz Residences, which I think will always attract wealthy multi-home owners who will not claim the Ritz as their primary home for tax purposes. It’s an exception because I don’t believe it currently has many rental units to begin with.

And of course, the newest high-rises, built after the official end of the recession still have too many unsold units to gauge their final population ratios. Based on their asking prices, all we can say is that their owners will be wealthy.

Summary

There are many considerations when purchasing in a high-rise – cost, location, unit size, etc. You shouldn’t buy a home because of the age of your neighbors. But sometimes age needs to be taken into consideration as a measure of attitudes to building maintenance, change and amenities. Owner age is also something to balance against building economics. If there’s a big problem and owners can’t pay for the repairs to be done right, are you setting yourself up for larger and more costly problems in the future?

I suppose I’ve also just published the senior man’s guide to later-in-life dating.

 

Remember: Do you have an HOA story to tell? A little high-rise history? Realtors, want to feature a listing in need of renovation or one that’s complete with flying colors? How about hosting a Candy’s Dirt Staff Meeting? Shoot Jon an email. Marriage proposals accepted (they’re legal now).  [email protected]