DevelopmentX

Does anyone know if Uchiko pull out of this project? Drove by this afternoon and see the For Lease signs Affixed to the rounded showcase restaurant apace along Post Oak. Hope this hasn’t fallen through- maybe just a poorly placed leasing sign for the office space. ?????

Apologize in advance for misspelling as I was typing quickly in between conference calls lol. Additionally: I am interested to see the new Zadok Jewelers flagship boutique (2 stories, 20,000 sq. ft.) off Post Oak. They hired Michael Hsu to design a beautiful small luxury mixed used development and their boutique will be designed to feature watch and jewelry boutiques for individual luxury brands- similar to what you might see in Zurich or the Middle East. This will put pressure on the fine jewelry departments at Neiman Marcus (which is seriously struggling financially), Saks, Deutsch, Lewis and others. One final point: I believe the addition of luxury and/or boutique hotels near mixed used developments is important. ROD has forthcoming Equinox Hotel as well as at least one additional hotel nearby. Highland Village might be working on a new RH flagship with a hotel component similar to what they've done in NY and Dallas. The twin Westin Hotels were a big part of the appeal for international visitors over the years. People and to stay at certain hotels over and over and explore that neighborhood. I wish ROD had gotten the Ritz Carlton deal done prior to opening because it would have added another 250 people a day of a certain demographic to its restaurant and retail landscape.

The truth is not quite as dramatic as some here have expressed. The Galleria is still the retail behemoth for the area of the State. However, security issues and the nature of a shopper population that might just walk the mall to escape bad weather or to celebrate a Quincenara is not the target market for most of the exclusive brands. Simon, which owns the Galleria still has deep pocket books and has actually "poached" Tom Ford and Akris from not only ROD but also their sister property in Atlanta - Buckhead Atlanta- by opening the check book and building new stores and offering free or discounted rent. I have spoken to sales staff and management at both stores as well as several other luxury stores that opened in the Galleria over the last two years- no one wantsa to be in the Galleria. Unless you're luxury business is based upon perfume, sunglasses and handbags- the majority of the clientele (including international visitors) are not focused don high-end clothing. The mega holding groups (LVMH, Kering, Richemont, etc...) are still investing in retail as a marketing expense even though more and more profits are driven via e-commerce. IN order for a brand to be desirable, consumers still watch which shopping bags are in high demand at traditional retail. ROD is an important development in that so many of the brands that are targeting specific consumers do not want to dal with the security issues at the Galleria. CHANEL actually puts at least one good customers purchases in an HEB shopping bag to try and disguise them as customers have been routinely followed home- even form valet parking outside Neiman Marcus and help up at gun point in their driveway at home. Apple has been dealing with this issue for quite some time- there white plastic bags make it easy for thieves to estimate whether it is an iPhone, MacBook or iPad by size of the bag. The challenge from what I've heard about luxury brands weighing whether to open at ROD or The Galleria has to do with "conversion" rates. What % of consumers who visit a shop at ROD convert into an actual sale vs. stores at the Galleria. The Galleria still wins this battle- primarily because it is the established game in town. Business travelers form overseas know that they can pick up a luxury watch at the Galleria easily. One stop shopping. The brands at ROD have worked hard to establish their own clientele. Obviously, HERMES is an excellent example of a brand that does not rely upon foot traffic. True destination retail. That is what ROD does best. Security is also much more controlled at ROD. I think the success or failure of brands at both ROD or The Galleria depends upon the strength of the brand. Stores like Golden Goose, Gianvito Rossi- even Balenciaga- most likely will not be big players however Simon needs to make sure no space stays empty and they are cutting deals to bring in brands that are not strong enough to generate significant sales on their own. Most of these brands are not even major players at Neiman Marcus and/or Saks but still if Simon opens the check book- many will use it as a test to try and build their brands. Golden Goose was flirting with an IPO so they are just looking for revenues to pump up a stock. As for restaurants, ROD is the clear winner and offers a glimpse at the future of luxury trends in Houston.ROD has many of the Top restaurants in both liquor and restaurant receipts. Steak 48, Le Colonial, Toulouse- all powerhouse when it comes to liquor receipts. Ouzo Bay, Loch Bar, Bisou and MAD are all strong as well. Other than Del Frisco's- which long ago was overshadowed by Steak 48 and then Mastros- the Galleria's attempts as a fine dining destination have struggled. Yauatcha was one of my favorite restaurants- they did good business on the weekends but lunch business and weeknights were softer. Nobu is struggling, Fig and Olive is about to be re-branded. What is frustrating is that had any of these restaurants opened at ROD- they would all be doing significant numbers. No one I know in Houston wants to deal with traffic on Westheimer or parking (Yauatcha valet was $15) when they can get into and out of ROD easily and feel much safer. I hope ROD continues o focus on brands that have strong clientele that works for destination retail. The experience is much nicer. Only suggestion is that I believe the Tom Ford, Dolce and Gabbana side of the development would benefit from more free parking. If I were Simon- I would purchase ROD and co-market the two properties and own the market long term. It happened in Atlanta- remember Phipps Plaza which was the luxury competitor to Lenox Mall. Simon took them over and formatted accordingly- driving traffic between properties. Long term it makes the best sense. Or JP Morgan strikes a deal for Simon to manage property at some point. I know of at least 6 luxury stores that would exist the Galleria ASAP and move to ROD is they could and if they could increase conversion rate of foot traffic.

Am I the only frustrated by some of the land deals that adversely affect some of these impressive new developments? 1) Asia Society- Yosio Taniguchi had to change the entire orientation of his first ground-up structure in the US due to the fact that the house adjacent wouldn't sell and then they went ahead and sold after the museum was completed. 2) Rice Village- This old house owned by Allied Home Health wouldn't initially sell in Rice Village which is why Randall Davis couldn't initially build-out the corner in his failed development that eventually became Hanover's.. 3) Beck's Prime- first of all - greta burger but dumpy outdated restaurant building. They have help up the site lines for this beautiful development by not selling the land. Honestly, these real estate problems leaves so many of these developments looking hodge podge.

Does anyone have the name of any high-end retailers and/or restaurants slated to open in this development other than the aforementioned Pinstripes bowling/restaurant concept on the 2nd floor? The spaces have great street visibility however I have heard from several high-end furniture showrooms that contacted the leasing people that they don't return phone calls which is very odd.??????

Two months ago, I met two chefs from India while eating with my son at Shake Shack and they told me they were in town to take in the local dining scene in preparation for opening a fine dining Indian restaurant called The Spice Market (no relation to the Jean Georges Vongerichten restaurant in Meat Packing District tin NYC) that was opening near Nobu and Fig & Olive. I was surprised that Galleria marketing has not announced. If the deal wasn't signed- why would they fly the chefs over to tour Houston food scene??? They had been to the new Kiran etc... They said the company has other restaurants in India but I believe the ownership was from Nigeria.

I spoke with someone very close to the project and they gave me the following details on the sale of 6 acres to Apache: All areas to the left of Blvd. Place Ln. (which runs through the center of the property) with the exception of Building #6 (which is where RDG, Philippe & Hermes are now located) have been sold to Apache. This means that Buildings #4, #5 and the South Garage as illustrated in the renderings on the Blvd. Place website are no longer a part of Ed Wulfe's project. What this means? Hermes which had signed a lease for a 2 story flagship location in the Northeast Corner of Building #4 facing Post Oak Blvd. has lost their long planned space. There is no word on what this means for the French luxury boutique which has flourished during the recession. Additionally, other retailers "penciled in" for Building #5 were rumored to have been a new 20,000-25,000 sq. ft. Bloomingdale's location. It makes one wonder how cohesive the development will be with Building #6 off on its own next to the Apache office tower. As for the rest of the development, Hanover is breaking ground on a nice high-rise rental building and of course, the Whole Foods location will break ground late summer/early fall 2012 which a planned opening of February 2014. The sale of the southern side of the development to Apache allows Wulfe to break ground on buildings #1,#1N, #1W, #2 & #3. Unfortunately, the only leases of note in the new buildings are: Pinkberry Ocean Prime seafood an Aveda salon These developments really leave me wishing that Houston could shed it's 1985 "Boom to Bust" reputation and attract the type of deep-pocketed investors who have the national and international reputation to secure a mix of "high end" and destination retail. One has to wonder why the local leasing team has been unable to secure any high-profile leases after marketing the project for almost 6 years. It's a shame as a prime parcel of land like this only comes into play once in a generation. I'm pleased about the Whole Foods location, however at 48,500 sq. feet it now has the footprint of many of the suburban locations that the chain is building. Where of where is Gerald Hines and his vision and international reputation when we need him? Oh, that's right. He's developing a large commercial warehouse project near IAH. Things have changed so much. Development X

Sunday's Houston Chronicle has a story focused on the success of Discovery Green. They mention that the development of the 22 -story Embassy Suites is on hold as the developers look for new financing due to the credit crunch. Development X

More on the rumors of Whole Foods abandoning Ed Wulfe's BLVD Place. Evidently, retailers across the street are telling people that Whole Foods has pulled out of the deal. If true, then this is a major blow for Ed Wulfe. Without Whole Foods, he has no new retail anchors on which to pull in all the high-end retailers needed to lease out the square footage. If all of these rumors are true, then this might explain why the Ritz Carlton deal has still not been publically announced- 4-5 months after Wulfe suggested it would be disclosed. The schematics of Whole Foods are no longer on Wulfe's website. Hoping that someone can verify these rumors. For my part, I hope this is not true. I was the most vocal supporter of 2727 Kirby when naysayers insisted that the "plug had been pulled on the project" and look at it now. I'd like everyone to check in with their contacts and clarify this issue ASAP. Thanks

DEVELOPMENT X heard a rumor earlier today that Whole Foods is exiting the BLVD. Place project. I, for one, hope this isn't true. As a strong advocate for this project, I think Ed Wulfe needs to announce the Ritz Carlton project ASAP as well as a new timetable for the Hanover apartment tower. Ed- please tell us that Whole Foods is not leaving- in fact, I keep hoping to hear that they will increase the size of the flagship from 78,000 sq. ft. to 89,000 sq. ft. Also, aggressively sign a mix of exclusive, destination, high-traffic retailers like: H&M, Tootsies, Ralph Lauren Flagship (I've heard they are looking at sites in Highland Village)- maybe you should offer them a high-profile, architecturally interesting space to drive traffic; Barneys New York Flagship (I've heard they are scouting locations as well); maybe an upscale cinema similar to the Arc Light or the Bridge Cinema de Luxe from Los Angeles- with bar/lounges included in the theatres. Think Big but start making announcements before the rumors drive potential deals to other multi-use projects coming on line in 2009-2010.

Tootsie's is about to announce that they are vacating Highland Village and opening a new, amazing expanded 2 level store in BLVD. Place.

I agree with KinkaidAlum- I think the homeowners should think long and hard before launching a billboard campaign against the developer. I personally have fought against billboards for years and coupled with the ruling this week about Houston's sign ordinance- I think they run the risk of clouding their intent and drawing others into the squabble. That being said, I storngly oppose the location of this new tower.

San Antonio is still tops in Texas when it comes to tourism. Dallas' tourism numbers are traditionally commiserate with Houston with the exception possibly being when they include Arlington (Six Flags Over Texas) in the Dallas-Fort Worth Metro data. That being said, the Houston metro area includes Galveston which has been experiencing record growth. Houston and Dallas are corporate travel destinations tied to the fortunes of the energy and finance industries, respectively. Although both make claims of being first tier convention cities, the facts show that Chicago, Orlando and Las Vegas are far ahead. I do believe that Houston will have the edge over Dallas in the next 10 years as Discovery Green and Houston Pavilions have a Chicago-esque feel about themselves. From a tourism perspective, the Houston metro area numbers will greatly benefit from the booming local cruise industry. High Rise potential: Houston's international population is significantly larger than Dallas' international population. International buyers often prefer the security afforded by highrise living- especially when it comes to second homes. Turnburry, the proposed Ritz Carlton Residences, and 2727 Kirby will all have greater impact in the national real estate community than either The Cosmopolitan or The Titan. Randall Davis' most impactful development will prove to be Sonoma. (for a number of reasons to be discussed later.) The facts speak for themselves. Houston deserves the attention of the major residential development companies working on innovative projects in other markets. (Atlantic Station in Atlanta, City Centre in Las Vegas, Victory Park in Dallas). My gut tells me that Houston is still plagued by the negative history of the energy "bust" of the early 80's. Hines is the only local firm that has the potential to simultaneuously change the course of local development while garnering the attention of other more interesting property developers. If they throw their hat into the game, then all bets are off. (Financing the Manhattan and the Empire don't count.) Let's just hope they don't need to go into partnership with a Quiznos or a Whataburger franchisee in order to make the numbers work.

Luxury Residential Tower with a McDonald's at the front of the property!!!!!!! I was perusing the latest issue of Travel & Leisure last night and saw an ad for the Museum Tower in Dallas. This development, combined with the recently completed Robert Stern-designed Ritz Carlton condo development (2 towers), the recent W condos and under-development Mandarin Oriental Residences (both at Victory Park) all in Dallas have me wondering: are Houston developers not able to secure the level of financing required to bring world class residential towers to market? Hillwood is spending $3 billion on Victory Park in Dallas yet Ed Wulfe has still not been able to secure a commitment (at least a signed commitment) from Ritz Carlton to develop the tower at BLVD. Place. The total value of BLVD. Place is listed as $500 million- six times less than the Victory Park development. I am not a fan of Dallas (too white, too small townish, too insecure- thus, the rehearsed snobbery), however when I look at what is happening in Chicago, Atlanta, Las Vegas, Miami (and yes, I know they have overbuilt) I am left with the feeling that Houston is getting second-tier projects where local developers (with the exception of Hines) lack the foresight or capital to execute first class projects that appeal to the type of out of town investors that insure solid financial returns. Will every project be predicated on bringing in fast food operators as partners (in exchange for land)? Bring on projects from the Related Co., Yoo by Starck etc...

At one point or another over the last year, I have been told that each of the tenants listed were looking at BLVD Place. If you believe that I'm "throwing things against the wall to see if they stick" then you will be proved wrong. My post was intended for individuals close to the deal. If you have no connection to this project, then don't feel obligated to reply. P.S. My intention was to draw an emotional reaction from "informed sources" although I find the responses from the "outsiders" humorous as well! Development X