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UtterlyUrban

Downtown is a residential rental market?

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I am a downtown renter but might buy in a few years..... If there is highrise condos to buy. A friend suggested that Downtown was a rental market and residential properties will tend to be apartments not condos. What a highrise condo? Go to the galleria or med center. Downtown is apartments.

What are your thoughts on this? Will downtown tend to be apartments over the near term? Why're why not?

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isnt One Park Place a condo tower? i know a lot of people own second homes there. will both of the new Market Square towers be apartments? Ritz Carlton was supposably looking around downtown for a site for a hotel/condo tower.

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OPP is apartments.

Commerce tower is condos but is selling a few and leasing many others (presumably because they can't sell them all).

Many (all???) of the other projects proposed or under construction are rental.

Just curious.

Edited by UtterlyUrban

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The only new condo tower I have heard about downtown is the 38 story phase 2 of the Texaco building renovation. However, that is quite a ways from starting so plans can change. Uptown seems to be the only place putting up condo towers right now.

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The only new condo tower I have heard about downtown is the 38 story phase 2 of the Texaco building renovation. However, that is quite a ways from starting so plans can change. Uptown seems to be the only place putting up condo towers right now.

I was told that this was going to be apartments, hopefully, you are correct.

Anyway, it's under construction now. I guess in 18 months or so, we will know the answer!

http://www.houstonarchitecture.com/haif/topic/28162-38-story-residential-highrise-downtown-old-texaco-building-renovation/page-12

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Yeah, it seems odd to have so many high-rise residential projects underway, with almost all consisting of rental units.  The only exceptions I know of are the 2 in Uptown:  Astoria and Belfiore.

 

In particular, with all the apartment construction downtown, I'm surprised at what appears to be a total lack of condo construction.  The last proposed project I can remember was "The Shamrock", which was to be where Hines' 609 Main office building is going up.  

 

 

Edited by ArchFan

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An alternative to consider: midrise Rise Lofts at 2000 Bagby in Midtown, but on the very edge of downtown.  Condos for sale with unobstructed views in a very walkable part of Midtown.  

 

I'm not an expert, but I suspect the lack of condos downtown is probably somewhat related to the lack of unobstructed views because of all the tall buildings around.  When people buy into a high-rise, the view is a big part of what they're buying.  People want to be downtown for the location - proximity to job - and jobs can change quickly, so the market is much deeper for renting than owning.  There's also the corporate rental market.  

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The last proposed project I can remember was "The Shamrock", which was to be where Hines' 609 Main office building is going up.  

 

Don't mention that on here.

 

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Commerce Towers, Hermann Lofts, Bayou Lofts, Capital Lofts, and Keystone Lofts are all condos. I think there are a few more options to own rather than rent.

 

That said, I think the time would be right to market a smaller condo tower that is built out (not lofts). Something in the 15-20 story range with 4 units per floor. I'd place in Northern Midtown, near Dynamo Stadium, or near the bayous to take advantage of views.

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Condos along Buffalo Bayou can have a lot of appeal. If done right, can become as desirable of a trend as it was in Miami and Chicago (Chicago River and Miami River condos surrounding the waterways).

The condo market will probably come back sometime but as of now it seems developers want to steer away from the condo market in this country.

Edited by Sellanious Caesar

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^ that would be nice especially since they are planing to silt the bayou and try to return it to a more natural form.

What about the area they are planing to divert the water to help mitigate food damage. That would be a nice area for condos. It would be a practically new development area kinda like the new developments that are occurring in san Antonio with the extention of the river walk

Edited by HoustonIsHome

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Commerce Towers, Hermann Lofts, Bayou Lofts, Capital Lofts, and Keystone Lofts are all condos. I think there are a few more options to own rather than rent.

That said, I think the time would be right to market a smaller condo tower that is built out (not lofts). Something in the 15-20 story range with 4 units per floor. I'd place in Northern Midtown, near Dynamo Stadium, or near the bayous to take advantage of views.

True. I was speaking of highrises (not "lofts"). Commerce tower is selling (but also leasing). My guess is that Commerce Tower is leasing because sales are not going as well as planned.

I would LOVE to see a new condo tower built in downtown. I hope you're speculation is correct!

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An alternative to consider: midrise Rise Lofts at 2000 Bagby in Midtown, but on the very edge of downtown. Condos for sale with unobstructed views in a very walkable part of Midtown.

I'm not an expert, but I suspect the lack of condos downtown is probably somewhat related to the lack of unobstructed views because of all the tall buildings around. When people buy into a high-rise, the view is a big part of what they're buying. People want to be downtown for the location - proximity to job - and jobs can change quickly, so the market is much deeper for renting than owning. There's also the corporate rental market.

Maybe. But cities like NYC and Chicago sell highrise units with obstructed views all the time.... It is the nature of urban living. ......

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Commerce Towers, Hermann Lofts, Bayou Lofts, Capital Lofts, and Keystone Lofts are all condos. I think there are a few more options to own rather than rent.

 

That said, I think the time would be right to market a smaller condo tower that is built out (not lofts). Something in the 15-20 story range with 4 units per floor. I'd place in Northern Midtown, near Dynamo Stadium, or near the bayous to take advantage of views.

 

Construction of ultra-high-end high-rise condos seems to be pretty hot right now in NYC, driven to a large extent by wealthy foreigners.

 

My guess is that if we see more condos in downtown Houston, they will be mostly in new buildings, not repurposed older buildings.  Also, I think the loft style is passé.  I looked at Bayou Lofts when they were just starting to market them and liked the building in general, but didn't want to live in a condo in which the bedroom is essential open to everything else.  Not very practical for people who need a quiet room to sleep in.

 

I like the idea of condos built in tandem with the Buffalo/White-Oak Bayou diversion canals.  The devil is in the details, of course, but that could be very cool if done right.

Edited by ArchFan

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Maybe. But cities like NYC and Chicago sell highrise units with obstructed views all the time.... It is the nature of urban living. ......

 

Fair point, but think of it this way: a condo tower developer downtown is going to have to pay much more for the land (because it could be used for a Class A office tower) and have obstructed views, and have to compete with towers popping up all over inside the loop with much cheaper land and no obstructed views.  Construction costs are essentially the same.  They will be at a pretty big cost and amenity disadvantage unless the person really wants to be able to walk out their door around downtown - and I'm guessing that's just not a large enough market of people right now.  Or, more accurately, there is a group of people that want that, but they're rootless mobile single 20-somethings that are more renters than owners.  

 

But maybe the downtown amenities are close to a tipping point for older, more mature buyers?

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I've wondered myself about the preponderance of rental development - not just downtown but in much of the city.  I think one factor is that banks are still quite conservative on residential lending, and especially so with condos.  Until residential / condo financing loosens up developers are simply going to see rental properties as an easier bet to make.  

 

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I've wondered myself about the preponderance of rental development - not just downtown but in much of the city. I think one factor is that banks are still quite conservative on residential lending, and especially so with condos. Until residential / condo financing loosens up developers are simply going to see rental properties as an easier bet to make.

To me, unless property ownership begins to materialize in Downtown (the lofts noted above are not enough) it will be hard to sustain its recovery. Housing trends come and go as do renters. Owners have a stake in the ground and that stake helps to create a neighborhood.

Does the $15k per unit incentive from the city (paid over 15 years) have an influence here? Is it somehow better for the developer to build apartments and hold them instead of building condos and sell them? How does that $15k over 15 years work if a developer builds condos and sells them all in 2 years?

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I am a downtown renter but might buy in a few years..... If there is highrise condos to buy. A friend suggested that Downtown was a rental market and residential properties will tend to be apartments not condos. What a highrise condo? Go to the galleria or med center. Downtown is apartments.

What are your thoughts on this? Will downtown tend to be apartments over the near term? Why're why not?

 

Condos:

Bayou Lofts

Franklin Lofts

St. Germain

Capitol Lofts

Commerce Tower

Hermann Lofts

Keystone Lofts

CityView Lofts

 

Apartments:

Post Rice Lofts

Houston House

One Park Place

Lots more apartments being built, though. Finger's, etc.

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To me, unless property ownership begins to materialize in Downtown (the lofts noted above are not enough) it will be hard to sustain its recovery. Housing trends come and go as do renters. Owners have a stake in the ground and that stake helps to create a neighborhood.

Does the $15k per unit incentive from the city (paid over 15 years) have an influence here? Is it somehow better for the developer to build apartments and hold them instead of building condos and sell them? How does that $15k over 15 years work if a developer builds condos and sells them all in 2 years?

 

That incentive applies to any residential, so it's the same for the developer whether it's a rental apt or owner condo.

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A few years ago, I noticed that many developers would build apartments and later they (or whoever subsequently owned them) would (try to) make money by doing a condo conversion and selling them later.  

 

This is just an idle thought.  But, I'm wondering about why so many developers seem to want to build rental units, not condos.  Is it mainly because that's what they can find financing for, as opposed to for condos?

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I don't think the lack of owners Downtown is a bad thing. NYC has millions of renters (many even renting closets) and they have vibrant neighborhoods.

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That incentive applies to any residential, so it's the same for the developer whether it's a rental apt or owner condo.

Ok, but since the incentive is paid out over 15 years (in the form of reduced taxes, I think), how does the developer of a condo complex get that money when he no longer has a property interest in the building (i.e. After selling all the units)?

Also, for those who are suggesting that it is financing, you might be right but I am not sure about that. There are high rise condos being built around the city right now ( and over the last few years). They secured financing.

I'll continue to dig. Any other voices welcome to chime in.

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Ok, but since the incentive is paid out over 15 years (in the form of reduced taxes, I think), how does the developer of a condo complex get that money when he no longer has a property interest in the building (i.e. After selling all the units)?

Also, for those who are suggesting that it is financing, you might be right but I am not sure about that. There are high rise condos being built around the city right now ( and over the last few years). They secured financing.

I'll continue to dig. Any other voices welcome to chime in.

The rebate paid out to the unit owners would tend to make potential buyers willing to pay more than they otherwise would have.

There have really been very few high rise condos developed recently. I can think of only 2 quite recently under construction in Uptown and I cannot think of any others started since the financial markets went wonky back in 2008-2009.

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The rebate paid out to the unit owners would tend to make potential buyers willing to pay more than they otherwise would have.

There have really been very few high rise condos developed recently. I can think of only 2 quite recently under construction in Uptown and I cannot think of any others started since the financial markets went wonky back in 2008-2009.

I am not sure I agree with your first statement for two reasons:

1) it would imply that mortgage companies would finance properties at "above market" purchase prices. I am not sure that they would and

2) does the incentive provided by the city "flow through to" individual buyers and is the incentive "divisible"?

How would that work? Where in the legal structure of this incentive does it allow for the apportionment to individual condo owners? I did not see that part when I read the docs.

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I am not sure I agree with your first statement for two reasons:

1) it would imply that mortgage companies would finance properties at "above market" purchase prices. I am not sure that they would and

2) does the incentive provided by the city "flow through to" individual buyers and is the incentive "divisible"?

How would that work? Where in the legal structure of this incentive does it allow for the apportionment to individual condo owners? I did not see that part when I read the docs.

 

1.  By definition, they would not be "above market" purchase prices.

2.  I have not looked at the docs and don't know how they payments would flow through.  I briefly looked for the information yesterday but couldn't find it. Can you provide me with a link or directions to the docs?

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1. By definition, they would not be "above market" purchase prices.

2. I have not looked at the docs and don't know how they payments would flow through. I briefly looked for the information yesterday but couldn't find it. Can you provide me with a link or directions to the docs?

2. Certainly, there is a huge amount of material online. Google "downtown living initiative chapter 380". Here is a good document to start with:

http://www.downtownhouston.org/site_media/uploads/attachments/2012-08-30/DLI_Final_Application_Materials.pdf

It seems that the tax credit refund is based on a "project" level and I cannot find how that would be converted to or flow through to, individual condo owners.

As to "market price" I disagree. Banks will finance against "comps" and the first condo project will not be able to get "more" of a selling price financed simply because of the credit..... It's comps will be the other condos which are not getting the credit....but, leave that aside.... We can simply agree to see it differently.

The main point here, and the one I am struggling with, is even if the incentive flows through to individual condo owners. If it does not, (or, unless there is a mechanism to let the developer "keep" the incentive over the 15 years somehow) I don't think that any condos will be constructed in downtown while the incentive is in place.

I wish I had a friend who was a real estate attorney specializing in multi family development projects in the city. He/she could answer me in 10 seconds, likely!

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