TEXAS SNAPSHOT, DECEMBER 2008

Houston Multifamily Market

Koepke

During the last 2 years, there was constant talk about the high level of new and proposed multifamily construction in Houston. More recently, the topic has changed to the delay in construction for those proposed projects. Upwards of 20 proposed projects are having difficulty breaking ground in the next 12 months, many of which will undoubtedly cancel.

With more than 21,000 Class A units currently under construction, increases in Class A vacancy rates have occurred. This is likely to persist for the next 12 months, as these projects continue to lease up. However, Class A absorption has been strong, indicating that these units are being filled. This bodes well for those developers holding their breath over construction delays; they may very well see their projects come to life after another year or so.

One project that has succeeded in breaking ground is the Finger Companies’ One Park Place, a high-rise going up downtown (see One Park Place Nears Completion in Downtown Houston.). This development is noteworthy in that it is the first rental high-rise in Houston’s downtown in 40 years. Rents for this project are bound to push the upper limits of the Houston market, with amenities and a park location that are among the most luxurious in town.

The apartments being developed as part of CityCentre and West Ave. are significant in that they are some of the first apartments to be built on top of retail as part of vertical mixed-use concepts. The vertical position of the apartments brings more density to Houston’s urban developments, many of which have struggled to break ground so far. These projects will likely set a precedent for future mixed-use projects.

The majority of new projects going up in Houston are mid-rise, urban-style projects. Several of these developments incorporate loft-style units along with traditional units, and they tend to have hip community amenities such as a cyber-café, wine bar/lounges, cooking classes and spa features that appeal to singles and couples without children.

The areas inside the 610 Loop are experiencing the most new multifamily development in Houston. The Museum District, Greenway Plaza and the Texas Medical Center each have more than 1,400 units under construction. Proximity to work/play areas plays a large role in renter preferences, keeping these areas of town highly desirable for non-family renters, and these properties are able to achieve substantial rent increases.

Additionally, two suburban areas are seeing a lot of construction: Pearland has just over 1,400 units under construction, while the Far West submarket has more than 1,600 units under construction.

— Kathryn Koepke is department director, market research & consulting, for O’Connor & Associates in Houston.

ONE PARK PLACE NEARS COMPLETION IN DOWNTOWN HOUSTON One Park Place is the first high-rise residential apartment building to be built in downtown Houston in more than 40 years. Construction continues for One Park Place, the first high-rise residential apartment building to be built in downtown Houston in more than 40 years. The 37-story, luxury tower is scheduled for occupancy in March 2009. Featuring 346 apartments on 30 levels, One Park Place will total 498,000 square feet of net rentable space. All units will boast spacious balconies; 10-foot-high ceilings; hardwood floors in living areas; designer kitchen appliances; cabinetry and granite countertops; baths with granite vanities; and walk-in closets. The second through seventh levels of the tower will offer 769 parking spaces for residents and guests. The eighth level will have a 1,700-square-foot grand social terrace that overlooks Discovery Green, downtown’s new park. This floor also will include three social rooms with a bar and a caterer’s galley for entertaining; a state-of-the-art fitness center; and a 35,000-square-foot outdoor, resort-style garden terrace with a two-tiered swimming pool. On the street level, One Park Place will have 21,900 square feet of retail space for lease in two sections, plus a 1,000-square-foot outdoor plaza to be used for café seating. Houston-based the Finger Companies is the project developer. D.E. Harvey Builders is serving as general contractor, and Guaranty Bank is the construction lender. — Lindsey Walker

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