An historic Dallas landmark is entering a new chapter as a significant adaptive reuse project moves forward with the support of TX-PACE financing.

Located at 501 Elm Street in the heart of downtown Dallas, the full-block mixed-use property represents more than a century of the city’s architectural and economic history. Originally constructed in two phases in 1903 and 1930, the building includes office and retail space, along with a dedicated parking structure containing 135 spaces. Listed on the National Register of Historic Places and located within a demolition-delay overlay zoning district, the property reflects the importance of preserving Dallas’ historic built environment while adapting these assets for future generations.

The redevelopment of this long-underutilized property demonstrates the role TX-PACE can play in helping communities preserve historic buildings while supporting new economic activity.

The developer, 3L Real Estate (3LRE), acquired the property in 2021 and is undertaking a comprehensive adaptive reuse initiative to transform the building into a vibrant mixed-use destination. Upon completion, the project is expected to deliver approximately 120 multifamily units and 29,321 square feet of retail space, bringing new residents, businesses, and activity to a prominent downtown location.

Joseph Slezak, CEO of 3LRE said, "Being a part of reactivating historic properties has always been 3LRE's focus. Especially when the opportunity is at a premier location in the heart of major downtowns.  This building and its unique history is an honor for us to be doing alongside America's 250 year anniversary.  The opportunity to bring a variety of housing and an active first floor to compliment the area around us, alongside energy enhancements for the new setup,  is a great step forward from its prior chapters as an office property.” 

Prior to the project, the property had experienced more than five years of significant vacancy. Despite these challenges, two longstanding retail tenants remained in place and are expected to continue operations after construction is complete, providing important continuity within the building.

The transformation of the property is already well underway. Twenty multifamily units have been successfully converted, and the previously vacant ground-floor retail space has been leased to the Museum of Money. The museum has begun substantial tenant improvements, bringing new activity to an underutilized portion of the building while creating a unique cultural destination in downtown Dallas.

Like many complex historic redevelopment projects, 501 Elm relies on multiple sources of capital to make preservation economically feasible. In addition to conventional financing and developer equity, the project utilizes Historic Tax Credits, an important incentive that helps offset the higher costs associated with restoring nationally recognized historic buildings while preserving their architectural character.

TX-PACE complements Historic Tax Credits by financing eligible energy and water efficiency improvements that are not covered by the tax credit program. Together, these financing tools allow developers to preserve historic assets, improve long-term building performance, and reduce the amount of traditional equity required to complete transformative redevelopment projects.

“Projects like 501 Elm demonstrate how innovative financing can preserve Dallas’ historic assets while creating new housing, retail opportunities, and long-term economic strength for our downtown. The City of Dallas, through our Office of Economic Development, is proud to facilitate investments that strengthen the future of West End while honoring its past” said Kimberly Bizor Tolbert, City Manager of the City of Dallas.

Through TX-PACE financing, the project will support approximately $16 million in eligible energy and water efficiency improvements, including upgraded lighting systems, HVAC improvements, domestic hot water upgrades, and water efficiency measures. These improvements are projected to provide long-term operational benefits while contributing to the building’s successful repositioning.

"We were thrilled to capitalize 501 Elm Street in partnership with Texas PACE Authority, enabling the sponsor, 3LRE, to reimagine this historic property in downtown Dallas, providing the city with a new state-of-the-art mixed-use property while maintaining its historic legacy," said Christopher Ellis, Senior Director of Originations, Nuveen Green Capital (NGC). "By leveraging C-PACE, 3LRE was able to bridge the gap between the senior and HTC bridge financing while also funding required HTC reserves, meaningfully reducing the equity need. This project underscores how NGC's C-PACE is a powerful tool to cost-effectively fund office-to-residential conversions." 

The project’s eligible improvements demonstrate the flexibility of TX-PACE as a financing tool for complex redevelopment projects, particularly those involving historic properties where preservation requirements, construction challenges, and adaptive reuse considerations can increase project complexity.

Historic adaptive reuse projects present unique development challenges. Preservation requirements, aging building systems, and the need to modernize building performance often increase rehabilitation costs compared to conventional redevelopment. Flexible financing tools like TX-PACE help owners address these challenges by providing long-term financing for eligible energy and water efficiency improvements, allowing traditional sources of capital to be directed toward other critical project costs.

With a Savings-to-Investment Ratio (SIR) of 3.71, the improvements are expected to generate significant utility savings over the useful life of the upgrades. TX-PACE financing will be integrated into the project’s broader capital stack alongside developer equity, construction financing, and permanent financing to support completion of this important redevelopment effort.

This transformation of 501 Elm Street reflects the continued revitalization of downtown Dallas and highlights how public-private collaboration can help preserve historic assets while creating new opportunities for housing, retail, and economic activity.

Texas PACE Authority is proud to support projects that demonstrate the versatility of TX-PACE and its ability to help communities reinvest in existing buildings, preserve important landmarks, and create more resilient commercial and mixed-use properties across Texas.

About Texas PACE Authority

Texas PACE Authority (TPA) is a nonprofit organization and the leading administrator of TX-PACE programs serving 113 cities and counties across Texas, at the time this article was written. TPA works with local governments, property owners, and capital providers to facilitate financing for energy and water efficiency, resiliency, and distributed generation improvements in commercial properties. Through its program administration and market leadership, TPA helps ensure that high-performance building solutions are accessible, scalable, and aligned with the long-term needs of Texas communities. 

www.texaspaceauthority.org