Article In Wallstreet Journal

[mrfootball]

Houston's Midtown Vision Falters

As Redevelopment Project Lags

By Thaddeus Herrick

From The Wall Street Journal Online

HOUSTON -- For two decades, a group of locals have touted the urban promise of Midtown, some 500 acres of homes, businesses and vacant lots that sit between this city's downtown and the bustling Texas Medical Center.

In 1995 they formed the Midtown Redevelopment Authority, attracting a five-block pedestrian-friendly residential and retail project known as Post Midtown Square that was a considerable departure for car-happy Houston. Light rail service gave the area a further boost in 2004, with Midtown getting three stations along the $324 million, 7.5-mile line.

But today more than half of the 475 blocks in Houston's Midtown are yet to be redeveloped. Perhaps more troubling, about half of the blocks along the light-rail line are vacant. "It's not very encouraging," says F. Charles Le Blanc, executive director of the Midtown Management District and Midtown Redevelopment Authority.

At a time when urban neighborhoods across the country are undergoing revivals, often with transit-oriented development leading the way, Houston's Midtown is a notable exception. Mr. Le Blanc says development will come, but not before developers see that Houstonians are willing to embrace a transit-oriented urban culture.

So far, developers are moving cautiously. Perry Homes, after building several hundred townhomes in Midtown over the past five years, has all but pulled out. "The price of land got too high," says Gerald Noteboom, the company's senior executive vice president. "We just moved on."

Developers have also had a difficult time assembling land. Even those with considerable acreage are moving slowly. Camden Property Trust has more than half of a five-acre piece of land along the rail line and says it could move ahead with a mixed-use project. But the company says it isn't likely to proceed for a year or two.

To be sure, Midtown has achieved substantial growth. In 1990 it was home to 450 residents, a number that has mushroomed to 15,000 today. Camden is building a 379-unit project near Post Midtown Square, itself a complex of about 600 apartments owned by Post Properties Inc. Even Randalls, a unit of Safeway Inc., has weighed in with an urban-style grocery store, complete with underground parking.

But Midtown leaders say Houston's lack of zoning has undermined their vision for the area, even while it has been a boon to the city's broader housing market, keeping supply and demand somewhat in balance. "There's no urban cohesion," says Peter Brown, an architect and urban planner who was elected to the Houston City Council last year.

Midtown also has had to contend with competition from a decade-long, $4 billion push to revitalize downtown Houston. Located at Midtown's edge, downtown has added a stadium for the Major League Baseball Astros and an arena for its National Basketball Association Rockets. And the city has begun work on a 12-acre, $93 million downtown park.

Once a prosperous neighborhood with spacious antebellum and Victorian homes, Midtown fell into disrepair amid the suburban growth that followed World War II. The oil bust and the savings-and-loan crisis of the 1980s dealt further setbacks to Midtown and, despite an influx of Vietnamese immigrants, the area became among the most blighted in the city by the early 1990s.

By that time, a group of property owners and the minister of a historic Midtown church sought to stem the tide. Convinced of the area's potential for growth, they persuaded city officials in 1995 to create a tax increment reinvestment zone, which captures tax revenue on development to help pay for infrastructure. With the Midtown Redevelopment Authority covering costs such as sidewalks and street lights, urban-style residential development followed. Post Midtown Square, for example, features apartments stacked above retail with wide sidewalks.

Locals had hoped to see the type of residential and retail mix that is springing up around public-transit corridors in cities such as Dallas and Denver. But land prices along the rail line have surged from under $10 a square foot a decade ago to nearly $50 a square foot today. "Speculators got ahead of the developers," says Dan Barnum, a board member of the Midtown Management District, which has the power to assess Midtown property owners to make improvements.

At the same time, Mr. Le Blanc says Houston's lax land-use rules have allowed automobile-oriented retail to undermine Midtown's urban vision. CVS Corp. located a store with a sizable parking lot across the street from Post Midtown Square in 2004 despite requests for a more pedestrian-friendly approach. CVS says it made some concessions, such as additional windows and enhanced landscaping.

Now CVS is preparing to build another store on a prime block along the Main Street rail line with a drive-through lane between Main Street and its building, angering the Midtown Management District. "We're trying to prevent Midtown from becoming a concrete jungle," Mr. Le Blanc says. Mike DeAngelis, a spokesman for CVS, says the company has made concessions, giving the store a more urban look and agreeing not to surround it with a parking lot.

Email your comments to rjeditor@dowjones.com.

Having lived in Midtown for 5 years (1999-2004), I think this article is a little misleading. Midtown's redevelopment has been nothing short of amazing. I grew up across the street from the gentleman mentioned in the article who heads up the Midtown Managment District. He's a cool guy. He now lives just down the street here in Longwood.

[Guest danax]

Another CVS with a drive-thru off of Main? Ewww. Not exactly transit-oriented development.

This article is a summary of all of the points we've discussed here regarding the Midtown disappointments. The City doesn't want to force developers to build "urban" so without municipal intervention, the style and types of developments will continue to disappoint. The irony is that it sounds like the insecurity that results from such freedom is making developers wary which is the opposite of what such laisez faire policies would be expected to produce.

Things are always changing and what once worked is guaranteed to need tweaking eventually. Maybe the City needs to examine its hands-off approach and establish some design criteria in Midtown and other areas. I know that there are forces at work to create such guidelines and I hope that they prevail.

On the other hand, I think that panic is not in order here. The first wave of development in Midtown was fast and furious and this lull is simply a natural correction and consolidation of that move upwards. Those familiar with technical analysis of financial markets would recognize this lull period as a time to buy and accumulate or just hang on in anticipation of the next powerful wave up. This could be Camden's approach.

[musicman]

Yes it definitely does capture many discussions we've had here. While many would and have disagreed with it, I'll have to say that it is an honest synposis. councilmember peter brown spoke often on this subject and says he would turn it around if he was elected. Well he was and no headway has been made since his election. unfortunately some residents have been a little "demanding" and that might also be discouraging developers.

[nmainguy]

Having lived in Midtown for 5 years (1999-2004), I think this article is a little misleading. Midtown's redevelopment has been nothing short of amazing. I grew up across the street from the gentleman mentioned in the article who heads up the Midtown Managment District. He's a cool guy. He now lives just down the street here in Longwood.

The person that heads up the Midtown Managment District lives in Longwood? For real?

[musicman]

The person that heads up the Midtown Managment District lives in Longwood? For real?

was thinking the same thing. thought they would be "closer" to the area.

[bachanon]

Danax - Things are always changing and what once worked is guaranteed to need tweaking eventually. Maybe the City needs to examine its hands-off approach and establish some design criteria in Midtown and other areas. I know that there are forces at work to create such guidelines and I hope that they prevail.

i agree. however, i wonder if design criteria would slow development.

is any development better than none?

isn't the cvs mentioned going in at elgin and main?

[musicman]

i agree. however, i wonder if design criteria would slow development.

is any development better than none?

isn't the cvs mentioned going in at elgin and main?

design criteria would slow developement because everyone would have issues with what should be the "proper design."

at this point any development is good IMO.

yes the cvs is at elgin @ main.

[tamtagon]

By Thaddeus Herrick

From The Wall Street Journal Online

... Light rail service gave the area a further boost in 2004, with Midtown getting three stations along the $324 million, 7.5-mile line.

...

At a time when urban neighborhoods across the country are undergoing revivals, often with transit-oriented development leading the way, Houston's Midtown is a notable exception. Mr. Le Blanc says development will come, but not before developers see that Houstonians are willing to embrace a transit-oriented urban culture.

...

"There's no urban cohesion," says Peter Brown, an architect and urban planner who was elected to the Houston City Council last year.

Seems like the eventual light rail extention to Uptown will solve many of the Midtown TOD issues.

[mrfootball]

There are several businesses that you just know are making "too much" money. Pharmacies like CVS, Retail Banks like Wachovia, etc and Wal-Mart.

They're everywhere. Deep pockets to buy the best corner locations in the area and not bat an eye at the price.

I hate them.

[TheNiche]

There are several businesses that you just know are making "too much" money. Pharmacies like CVS, Retail Banks like Wachovia, etc and Wal-Mart.

They're everywhere. Deep pockets to buy the best corner locations in the area and not bat an eye at the price.

I hate them.

They're only better at making money for two reasons: 1) reasonable prices, which are the result of their economies of scale, and 2) because people tend to be more willing to shop there than at independent competitors. If you want to blame or hate somebody, it should be they that shop there. The stores are merely fulfilling the wants of the consumers.

Btw, what's wrong with Wachovia? They're actually building some really nice bank branches.

[mrfootball]

Actually Niche, I fully understand the economics of why and how they're able to do what they do. No explanation needed. Thanks though...

[TheNiche]

Actually Niche, I fully understand the economics of why and how they're able to do what they do. No explanation needed. Thanks though...

There are several businesses that you just know are making "too much" money.

I hate them.

They make as much money as we, the consumers, are willing to give them. Clearly then, it is not them that you should hate, but those that empower them: us.

[Jeebus]

Midtown is missing that "X-factor" development. Take for instance if the Pavillions were built in midtown, I think that would spur more dense residential growth. Right now its too sparce to fully justify living in mid-town.

As a side note, I hate that I'm seeing Vietnamese businesses closing shop in Midtown and moving to New-Chinatown. The same thing happened with Old-Chinatown & the Chinese. I hate to see it happen twice.

[largeTEXAS]

Midtown is missing that "X-factor" development. Take for instance if the Pavillions were built in midtown, I think that would spur more dense residential growth. Right now its too sparce to fully justify living in mid-town.

There are two large projects that should be that "X-factor." Actually there are four, but two that are farther along in concept and can be discussed. We all know them, Camden's superblock and the project at Main and Alabama. Both are ramping up and should reverse the thinking that Midtown is a failure. I'm glad the article was written, though. It needs to be talked about, especially in terms of things like CVS and motivating some of the backwards owners to hopefully do something with their properties.

Actually, this weekend I spent some time in one of the neighborhoods mentioned in the article - Uptown Dallas. Although the neighborhood has lots of development and there are some definite positives, I wasn't all that impressed. There was very little life on the street and projects like West Village and the many Post and Gables projects just aren't that exciting. Now, to give credit, Dallas does have these developments as well as the growing Victory complex and many new apartments and condos where Houston's Midtown only has a few apartments, town homes, and strip centers to show so far.

I think Main Street in Midtown is going to be a great corridor though. It'll take a few years, but I think the wait will actually result in a nicer product. Uptown Dallas definitely has the advantage right now, but in the years to come Midtown Houston is going to get really cool!

[jt16]

There are two large projects that should be that "X-factor." Actually there are four, but two that are farther along in concept and can be discussed. We all know them, Camden's superblock and the project at Main and Alabama. Both are ramping up and should reverse the thinking that Midtown is a failure. I'm glad the article was written, though. It needs to be talked about, especially in terms of things like CVS and motivating some of the backwards owners to hopefully do something with their properties.

Actually, this weekend I spent some time in one of the neighborhoods mentioned in the article - Uptown Dallas. Although the neighborhood has lots of development and there are some definite positives, I wasn't all that impressed. There was very little life on the street and projects like West Village and the many Post and Gables projects just aren't that exciting. Now, to give credit, Dallas does have these developments as well as the growing Victory complex and many new apartments and condos where Houston's Midtown only has a few apartments, town homes, and strip centers to show so far.

I think Main Street in Midtown is going to be a great corridor though. It'll take a few years, but I think the wait will actually result in a nicer product. Uptown Dallas definitely has the advantage right now, but in the years to come Midtown Houston is going to get really cool!

I'm actually more inclined to think that the most influential project in Midtown will be the intermodal transporatation center North of downtown. I drive past the Pierce elevated daily, and it looks like a third world shanty town. If I were a developer, I wouldn't invest a lot of money until some of the undesirables in the area were shipped out.

[N Judah]

If the problem is that the land is too expensive, then I'd say that the midtown vision has only 'faltered' in a superficial sense. Obvioiusly a lot of people think it is the place to be but are just waiting for the right time to build something that will be there for the long haul.

[TheNiche]

If the problem is that the land is too expensive, then I'd say that the midtown vision has only 'faltered' in a superficial sense. Obvioiusly a lot of people think it is the place to be but are just waiting for the right time to build something that will be there for the long haul.

This is very correct. Land prices reflect the extent to which investors have literally 'bought in' to the vision. Higher land prices only mean that it'll take longer...but what is ultimately built will reflect the prices paid.