What’s Valuable in Richardson? The Anatomy of a First Ring Suburb

A final project for an advance GIS class required us to do something with either 3D or raster images (i.e. photo or heat map type images). I was inspired by 3D images such as those in Poor Neighborhoods Make the Best Investment to analyze my city and see what the most valuable areas were and whether they are paying for themselves.

For context, Richardson, Texas is immediately north of Dallas with a population around 110,000. It has 4 DART light rail stops and a large economic base for its size. Texas Instruments headquarters is on our border and they drove the founding and growth of the University of Texas at Dallas where I study. Richardson is highlighted below in red:

Richardson is just north of Dallas highlighted in red (credit: Google Maps)

Economic development staff told me these things a few years back:

  • Richardson has a daytime workforce of about 100,000.
  • 80% of the Richardson population works outside the city.
  • The highest value real estate to the city are its many data centers (more than in all of Canada).
  • Until just recently we had the greatest accessibility to tech workers in DFW.

Some other things that are noteworthy:

  • A major highway bisects the city into east and west (US 75).
  • A horizontal county line bisects the city in the north (Dallas and Collin counties).
  • Last October, USA Today named Richardson the #3 best city to live in the country.
  • There is a significant arts culture for a city this size. There are 2 major arts and crafts fairs and a large music festival each year that draw people from all over.
  • There is very little walkability (Walk Score 42 for the city) and most people couldn’t tell you where downtown (Walk Score 78) is. There’s not much to do there besides grab lunch and do a little boutique shopping. But that’s fairly par for DFW suburban downtowns.
  • In listening to neighbors, I’ve found strong opposition to new apartment development. Given that DFW is one of the top real estate markets and specifically north Dallas (i.e. Richardson, Plano, Frisco), we have high demand for our residential inventory.

If you want to see an economic development video on the city, it’s here (12 minutes long):

I wanted to see what’s the most valuable. Is it the data centers? Is it downtown? Are apartments that bad? Or is there something else going on?

Apparently Plano to our north doesn’t want apartments either

I downloaded the GIS data from Dallas and Collin counties. Not knowing where a specific break point is, I did natural breaks in 9 groups. I was later told by Kevin Shepherd of Verdunity (a community development, planning, and engineering consultancy) that their preliminary research was showing that cities in general need to generate at least $6,000 in sales and property tax per acre to maintain it. Obviously that has many caveats attached depending on the development patterns.

The City of Richardson tax rate is $0.625 per $100 of assessed value. That’s the same for both counties which have different tax rates themselves. The metric I’m using is income per acre to the city.

For example, Zillow says today that the median home value for Richardson is $275,000. Richardson doesn’t allow for a homestead exemption so you would be taxed on the full assessed value for city purposes (other deductions notwithstanding). Divide by 100 and multiply by 0.625 and you get a tax income to the city of $1,718.75. Assuming a quarter acre lot, that is $6,875 per acre which is just over break-even.

In this map, red and dark orange are less than $6,000 per acre.

Richardson Income per Acre (red is low, green is high)

After I found out about the $6,000 mark, I redid the map only showing those that cross that threshold. Keep in mind the general observation here that only the green areas are self-sustaining. Look again at the map above keeping in mind the city is pretty well built out.

Richardson Parcels > $6K/Acre

And here is the inverse. This map shows the areas under the $6K threshold (i.e. NOT self-sustaining). A few of these are city parks but most are private property.

Richardson Parcels < $6K/Acre

I did some density analysis (heat maps) for income value but they didn’t show anything you don’t already see above. Going to 3D though, I reclassified to show colors by parcel size. Parcels are how land is divided up and are often called lots.

The classification scale here is logarithmic to make the smallest and next smallest parcels stand out. The scale goes grey, green, blue, and everything bigger is yellow. Green is a typical sized residential lot at 5,800–18,000 square feet (0.133–0.413 acres). Grey is less than that; blue is more.

Richardson Parcels by Parcel Size (Grey, Green, Blue, Yellow)

When going to 3D, I multiplied the size by the income per size to get relative income values. The volumes are then directly related to the total income. I did have to scale the values linearly for readability.

Richardson Parcels by Income Colored by Parcel Size

To answer a few questions you might have, the blue spike on the right top side is a hospital (not including its surrounding parking lot). The huge yellow spike at the center top is the State Farm development. It’s an ongoing development so I don’t go into the numbers on it. It looks like it will dwarf almost all of the city. The rest of the spikes we’ll look at in detail.

Caveat: the data was messy as data is. I had to exclude a small number of parcels that were clearly left over, artifacts of manually drawing parcels in a GIS. Small slithers would turn into huge income per acre numbers even if there wasn’t a building there. I may have missed a few of those as I was doing it mostly by manually sorting and reviewing the use and whether the parcel was occupied or not.

We’ll walk through the blocks of higher value geographically going from south to northwest to northeast. In the south we have this:

Richardson Taxable Income

I’m mostly interested in the biggest spikes. Let’s look at those. In the south there is a

  1. Grey spike surrounded by a medium sized yellow block in the middle.
  2. Taller grey spike next to a taller yellow block on the left.
  3. Mix of things just above that.

Here they are numbered in 2D:

Value areas in South Richardson

Number 1 is the first of what could be called mini McMansions — large homes on small lots. These homes are in the neighborhood of half million dollar homes on an average of 6,500 square foot lots (0.15 acres). This was the first surprise to me. I have seen this type of dense single family development around but I didn’t realize how many of them there are now. This particular subdivision was built around 2008 and is 83 parcels on 12 acres generating $14,030 per acre of taxable income. This first map shows which houses I highlighted. You can see some of the grey slithers I excluded.

Houses in South Richardson Highlights

And then a Google Earth view of the same:

Houses in South Richardson (credit: Google Maps)

Traveling a little northwest is #2, the Brick Row development. This is a mixed use, transit oriented development. I think it’s more built out than what’s shown here. The apartments and town homes both generate $36K and $33K per acre respectively. It’s right next to the DART Beltline Station (light rail).

Brick Row Mixed Use Development

Number 3 is actually downtown. Here is a 2D map of it showing which parcels I included. These parcels generate $9K per acre. Recall our cutoff for self-sustainability was $6K per acre so we’re still good here too. It’s the least value producing area in this study.

Downtown only consists of a few blocks separated by 5 wide traffic lanes (on Main Street) where people drive 40 mph if they can (posted speed is 30). If you know about cars hitting pedestrians, 40 mph is about the range where a fatality is more likely than not. It’s not fun to walk on a narrow sidewalk next to traffic of that speed.

A road diet is in order if the city truly values the area and wants to see it flourish as a place to stay and not just drive through. It’s not that it needs more bike lanes to nowhere but slower speeds would help the walkability, retail values, etc. The area clearly has potential that’s not gone unnoticed especially now that it’s a planned development zone.

Richardson Downtown Parcels Highlighted

Here’s the Google Earth view:

Downtown Richardson

What’s not shown on this satellite view is a set of three story town homes on the south edge of downtown built in 2015. It seems like appropriate density fitting of a walkable downtown. The current tax data has them each generating around $28K per acre. If you’re wondering, parking is in the garage behind accessed through the alley.

Downtown Richardson Townhomes (credit: Google Maps Streetview)

I’m not sure whether the tax assessed values are up to date yet reflecting their completion. If I recall, the original listing price was over $400K. Now I’m seeing a listing for $361K. At that price the tax income would be $80K per acre which would be the highest value in this study. As a comparison, the townhomes near Brick Row were going for mid to upper $200s a few years back. At $400K, most Millennials who are said to want more walkable urbanism are priced out.

The listing I found is for 220 E Kaufman if you want to google it later. It’s 2,359 square feet with 3 beds and 3.5 baths on 0.028 acres. The floor plan is laid out well so that 3 roommates (or family members/couples?) could each have their own space with a common half bath as a backup and for guests. Of course that could end up with 6 or more cars and there are only two garage parking spots.

At current mortgage rates with 5% down, the payment including tax and insurance would be around $2,300 per month. For rent you could probably charge $800-$1,000 per room. So two roommates would pay most of the mortgage. The only hangup would be making sure the owner could finance the purchase without roommates or else they would have to co-sign.

The only thing missing in my opinion is the ability to convert the ground floor into a live-work office/retail space. I suppose it could be done but you’d have to share your kitchen with your customers if you were okay with that. And a 3rd floor balcony would have been nice too.

I don’t know whether this was profitable to the developer or not. I certainly hope so because it would be great to see more like these downtown. Kudos to that developer.

Speaking of developers, one note: a few years back I was looking at the Brick Row development as a case study and was told by a sales agent that the first developer went bankrupt and committed suicide trying to make the townhomes work out financially.

I can’t verify that story but I wanted to highlight that these kinds of projects are difficult to complete. Most large developers don’t do them because they’re too small and many smaller developers wouldn’t have the expertise and/or financial backing to do them. They definitely aren’t entry level projects.

On that happy note, moving on to Northwest Richardson we have this:

Northwest Richardson Parcel Tax Income

Ignoring the block in the middle (UTD — Collin County records their tax exemptions differently than Dallas so it shows tax value when there really isn’t any), I wanted to look at both of the grey spikes in this map. The one on the left is the Lennox International area. The one on the right is a subdivision shopping area near Lookout and Custer.

Here’s the Lennox area:

Townhomes near Lennox International

Interestingly enough, this might be one of the more walkable places in Richardson though you can’t tell it from this picture. Aside from the pond to walk around, to the east is UTD and to the west are the main grocery stores for this area as well as some restaurants, Home Depot (top left corner) and Target. These town homes generate $27K per acre and were built around 2013.

The Lookout and Custer subdivision is here:

Richardson near Custer and Lookout

Just to the left of this image is a retail area that includes a coffee shop (not very many in Richardson!) and a couple of restaurants and neighborhood retail like dance and martial arts. The interesting thing about this place is that it seems like it has a European design aesthetic on top of US suburban development. Yes, it’s mini McMansions again but there’s a central pocket park and no sidewalk. It’s generating $37K per acre.

Moving to central north we have the main business corridor (2D then 3D):

Central North Richardson
Central North Business Corridor, Richardson, TX

Do you see the data centers? Probably not unless you’re familiar with the area. They are the yellow blocks near the bottom slightly to the left. Aside from downtown, they have the lowest income per acre of anything we’ve looked at so far. But they cover 40 acres so the total is much higher — second only to Blue Cross Blue Shield. They come in at $22K per acre and were built in two phases — half in the late 60s and the rest in 2011–12. In fact, the building in the top left (image below) has a higher per acre value as an office building. Here they are:

Richardson Data Centers

The second highest value per acre block on the map is just north of the data centers. It’s called Eastside and is another mixed use development. For whatever reason it doesn’t have a light rail stop. The office buildings there are from the 80s but the apartments and retail were built in 2007 and generate a total of $39K per acre. The apartments by themselves generate $53K per acre.

Eastside Development

The companies to the north of Eastside provide solid value too. I didn’t total them because there is so much variety but the area looks like this (oriented north to the left):

North Business District, Richardson, TX

The most notable parcel in the north here is Blue Cross Blue Shield (aside from State Farm). They are the highest value per acre at $79K per acre (not counting the apartments which are also high value). Incidentally, the area includes a large hotel, a performing arts center (with 450 events a year including the music festival) and a light rail stop.

Blue Cross Blue Shield at the top

There’s a development further north than that, the State Farm development which at the time it started was the largest development in DFW. It’s still being built out though it’s much further along than what you see here:

State Farm development

Moving further east we have this:

Northeast Richardson

I already mentioned the blue spike is a hospital. Once you get away from the highway it’s mostly residential. More mini McMansions. But these are different than what we’ve seen thus far. Let’s look at these two:

Northeast Richardson Areas of Interest

Starting with the top one we find 110 townhomes built around 2004. Incidentally they do have some walkable amenities such as a park and pool, a pharmacy, a sandwich shop, and coffee right next door. This area comes in at the same value as the data centers at $22K per acre.

Finally, we have a subdivision built around 2011. Look closely and see if you see anything strange:

Subdivision in Northeast Richardson

This subdivision comes in at $22K just under the townhomes above. Judging by the individual tax values, the market values are probably all well over half a million dollars. Did you see the strange features? It’s not the turn-around cul-de-sac thing.

Princess Towers

They have princess towers! Or wizard towers if you prefer. So rather than mini McMansions maybe they’re mini castles? On 5–6K square foot lots. No disrespect intended, they’re kind of cool. I heard once that some circular spaces feel better than square ones. I guess this was a one-off since I haven’t seen this before.

If you want to see the summary numbers, here they are. Med Year is median year and STD Year is year standard deviation (if there is more than one parcel).

Richardson Value Analysis

What does it all mean? Where’s the value?

In talking to residential developers, land has gotten so expensive that these mini McMansions are all they can build in single family zoning. A few developers are trying out missing middle housing types with townhomes and row houses as you’ve seen. The numbers show they’re just as valuable as the data centers at a minimum with the possibility of their being the most valuable residential pattern.

Affordability will continue to elude us if all that can be built are mini McMansions or luxury apartments. Even luxury townhomes are beyond the median income. I’ve heard neighbors come out against duplexes or apartment home style fourplexes.

An apartment home could look like this:

You can’t really tell from that picture but The Chestnut Hill has 28 units and was selling for over $9M near Boston. It’s mostly one bedrooms but has some studios, 2BRs and a 3BR duplex. That could potentially accommodate residents of all ages. To me, it looks better than any apartments I’ve seen and most homes.

There’s a huge squeeze trying to accommodate the student population at UTD too. Most of it has to commute because nearby housing is either unaffordable or rundown. They are building apartments (and a mixed use residential development) as quickly as they can wherever they can.

Some residents are opposed to multifamily but what I’m not sure everyone realizes is that it’s here whether we formally zone for it or not. Multiple university students live in single homes. Inter-generational living with grandparents and grandchildren is happening too.

How do I know? Drive around in the evening and see how many cars are parked on the streets. Mostly that’s a failure to appropriately price on-street parking. Here is a comparison of ways to price it.

It seems challenging to say that we shouldn’t do missing middle housing because we want to maintain a residential character. Mini McMansion development would seem to create the same issues that apartments do: more traffic congestion and higher burden on public services. And seniors who were original owners end up with too much house on their own and get priced out of anything else nearby.

Due to residential zoning, our houses are pretty much fixed as they are. Yes, you can upgrade (or update) your kitchen or bathroom but we’ve painted ourselves into a corner. If your 2000 square foot home is too big for a single person or a couple without kids, you can’t modify it into a duplex. And as far as I know you can’t add an accessory dwelling unit either if you want a child or a parent close but with some independence.

The single family residential areas seem fixed at the time they were built and currently aren’t able to evolve with changing demographics. Downtown recently got zoned as a planned development so anything aside from industrial uses are theoretically possible. Hopefully that will provide a little more diversity in our housing stock and help ease the pressure on single family homes. The rest of Richardson is mixed use development and single use areas (office, retail, institutions, etc.)

Time will tell if all this means we are preserving our oasis or slowly evolving into a large rental inventory of multifamily single-family homes.