CREguy13

Costar article:

 

Houston's coolest street is about to get cooler. A plan to transform a section of lower Westheimer into a trendy, tree-studded retail-office hub with a modern library is beginning to take shape in the Montrose neighborhood.

 

Construction on Montrose Collective, a 150,000-square-foot-project, is officially underway, the project's developers have found a finance partner, and a lead office tenant has inked a new lease.

 

Radom Capital, the Houston-based development firm known for creating hip, walkable projects such as Heights Mercantile, has formed a joint venture with institutional investors advised by JPMorgan Asset Management for the project. The team hired the Michael Hsu Office of Architecture, an Austin-based design firm behind Uchi restaurants, Understory and several other high-profile Texas projects.

 

Montrose Collective is at 802 and 888 Westheimer Road in an area recently named as one of the nation’s top 20 coolest streets in a report by Cushman & Wakefield because of its walkability, diversity, nightlife, food scene and vintage stores. Nearly 97,000 people live within a 2-mile radius of the area with a median income of $83,233, according to the report. About 37% of residents nearby are millennials, the report found.

 

Radom Capital and Michael Hsu sought to design a project that blends into the neighborhood with mid-rise buildings and a canopy of preserved live oak trees. Plans call for about 40,000 square feet of high-end shops and restaurants, plus about 110,000 square feet of office space and a modern roughly 16,000-square-foot public library building. The project is estimated to cost at least $38.9 million for the three mid-rise buildings, according to state records. With a planned opening of late 2021, Montrose Collective is expected to bring six new dining options, along with 15 boutique retail spaces for local and first-to-market retailers, plus beauty and service providers.

 

The Montrose Collective team didn’t want to just create a "boring box" retail center or typical office building.

"Montrose is really the hub of everything creative and has the No. 1 concentration of James Beard Award winners in the state. We wanted to do something scaled to the neighborhood," Steve Radom, principal of Radom Capital, said in an interview with CoStar News.

 

The team plans to build a four-story structure that connects to a six-story structure with a cantilevered walkway. The buildings open to an outdoor plaza with seating, greenery, trees and unique lighting fixtures.

Radom Capital hired landscape architect, the Office of James Burnett, to design exterior public improvements that include decoratively tiled sidewalks, an expansive green wall that wraps around one of the buildings, hanging plants and custom planters throughout the site.

 

"This is truly a mixed-use project and it's going to look like it belongs in the Montrose neighborhood," said Parker Duffie, vice president at CBRE, who is handling office leasing for the project with CBRE's Elliot Hirshfeld.

 

The project already has signed a lease with an undisclosed technology company for about 75,000 square feet of office space on floors 4, 5 and 6 in one of the buildings, according to the project team. There is roughly 35,000 square feet of office space left in the project, according to the team.

The roughly 2.5-acre project is planned along the north side of Westheimer on both sides of Grant Street. The property includes the existing Uchi restaurant and the building next door with Hue hair salon and Rosemont Social, which will all remain on site. East of those buildings across Grant Street, buildings that previously housed a Greek restaurant called Theo’s and a city of Houston police station are getting demolished.

 

Construction is starting after the Houston City Council in December approved a deal with the Montrose Collective team to transfer ownership of the land where the former police station was housed at 802 Westheimer to the developers. City officials closed the police station as part of an initiative to get more police officers on the streets instead of behind a desk, according to a Dec. 3 city council agenda item. The police department is expanding its online reporting services and closing police stations in most communities, according to the city.

 

In exchange for the land, developers are building a new public library for the city to replace the aging Freed-Montrose Library at 4100 Montrose. The city will maintain ownership of the library at 10001 California St. through a condominium unit agreement with Montrose Collective. Radom said he sought a condo agreement for the library to secure financing for the rest of the project easier.

 

The library building design includes a two-story custom art installation to be designed by a local artist, according to developers. The city expects to open the new library by 2022, and close the 70-year old Freed Montrose Library.

 

It is rare for a public library to be in a privately built mixed-use project, but Radom Capital said the team is emulating Bookmarks, a public library in Dallas in the NorthPark Center. Radom Capital said it also took inspiration from the new Austin public library downtown that has drawn accolades for its design, retail and outdoor landscaped plaza near the privately built mixed-use Seaholm District.

 

"I love taking my kids to the library. We really liked the idea of a mixed-use project, not just being your traditional mixed-use project. Our thought was what is more endearing to the community than a community library?" Radom said. He is envisioning a "dynamic, interesting" "house of books” with events, programming and retail.

 

The plans will introduce new office to a neighborhood without a substantial amount of office space and bring additional retail to an area already attractive to real estate developers. The city of Houston granted 28 building permits for sites on Westheimer Road in 2018, which is double the number of permits issued in 2017, according to Cushman & Wakefield's report.

Had a chance to view these renderings.  This building will have even more terraces than Texas Tower.  I think this forum will be very impressed by the redesign.  High quality project - hopefully it gets capitalized!

Crane is now up.

1 hour ago, Avossos said:

 

every little bit counts...

 

@CREguy13 If you were to guess, what is the most likely downtown office to start construction - Houston Center 6, or 1 Market Square / International Tower...

6 Houston has been dead quiet. Very little substance there for several years.

 

My money would be on 1 Market Square.  There is a huge shift to this part of downtown by the tenants these new buildings are trying to attract.  There was rumor of the Developer being in negotiations with a couple large tenants last year that would have met the pre-leasing requirement to start construction - I believe around 2024.  I am not sure of the current status, but as Texas Tower continues to fill up the availability for trophy Class A space considerably decreases.  I would not be surprised if more information came out later this year and this project broke ground in the next 12 - 18 months.  Just my opinion.

It's a pretty long article:

Houston's Buffalo Bayou Transformation Offers Flood-Plan Lessons to Other Cities

How to Turn a Drainage Ditch Into a Regional Amenity in Era of Climate Change

 

 

The growing climate change challenge facing commercial developers came into sharp focus as Hurricane Harvey dumped 27 trillion gallons of rain onto Houston two years ago, wreaking $125 billion in damage and displacing almost 30,000 people. Floodwaters rose 38 feet, destroying sections of a recently renovated public park.

 

Urban planners and onlookers watched in astonishment as new lawns, picnic tables and shelters in Buffalo Bayou Park were swept into the flood that at one point made staircases, street signs and lamps barely visible. Mountains of sand and debris littered the park's western end. Yet within a week, joggers returned to the trails and the restaurant at the park resumed serving avocado toast to customers to raise money for flood relief funds.

 

While it took a full year for the park to be fully restored, its basic functions were intact thanks to the $58 million revitalization that shored up the bayou’s historical role as a flood control mechanism for the city. Completed in 2015, it transformed what was basically a drainage ditch into a regional outdoor amenity with features that also serve as flood storage, according to an Urban Land Institute study.

 

The relatively fast reopening signals how urban planning mitigated the damage of one of the costliest floods in U.S. history. And planners say it now holds broader lessons as the growing challenge to plan for the effects of climate change becomes a larger part of commercial development.

 

“This is an issue that's facing cities across America in different ways," said Anne-Marie Lubenau, a Boston architect and director of the board behind the Rudy Bruner Award, a national urban planning accolade given to the Buffalo Bayou Partnership for its work along the bayou. "In Boston you've got coastal erosion and big snow storms; we’ve got fires in California; water is a challenge in [Houston] and this project addresses it in a bold way, but also in a way that, while it is unique and distinctive to the bayou, it also incorporates a number of design moves that can be adapted to other cities.”

 

Houston, a city with no zoning codes that's not often held up as a bastion of urban planning, gained national attention from planners by showing how urban systems projects can create green spaces while planning for floods. The work included 2.3 miles of waterfront land along Buffalo Bayou, roughly the length of New York's Central Park, and it added 10 miles of walking and biking trails with four pedestrian bridges.

 

The project spurred significant real estate building in the area. Since 2012, within a 1-mile radius of the project, nearly 6 million square feet of new multifamily and retail space was constructed, according to CoStar’s analysis. In total, about 50 new commercial properties were developed that, if sold today, could be worth about $1.4 billion, according to CoStar’s modeling. That's a significant return on investment for a project sparked by a partnership between the nonprofit Buffalo Bayou Partnership, the city and flood control district. It was kicked off by a $30 million gift from the Kinder Foundation, the nonprofit backed by Houston billionaire and oil baron Rich Kinder.

 

Now, the Buffalo Bayou Partnership, the nonprofit behind that revitalization, is setting its sights on the east end of the bayou, which is much wider and less flood-prone, and it has long been an industrial area. The east end of the bayou turns into the Houston Ship Channel, home to 330 public and private terminals that are owned by more than 150 companies, and it empties into the Gulf of Mexico.

 

Plans for the east end are much larger and more ambitious than what was done successfully on the bayou's west side. Buffalo Bayou East is a 20-year master plan expected to cost $200 million to transform four miles of waterfront land on the bayou and create 263 acres of parks and 40 miles of trails and paths with seven pedestrian bridges.

 

Some land use experts are calling the plan one of the most complex waterfront redevelopment projects in the country. It comes as real estate investors are increasingly concerned about how climate change would affect real estate markets and urban planners from New York to San Francisco are looking for more ways to creatively manage water in growing population centers.

 

“For those of us not from Houston, we don't think of the city as being associated with a strong ethic of planning. This really shifts the paradigm," said Lubenau.

 

Former Industrial Sites

 

In Houston, the bayou is not known for its pristine beauty – the brown, opaque waters of the river are home to bass, catfish, alligator gars, a fish native to Texas with razor sharp teeth, and alligator snapping turtles, as well as the occasional alligator. The bayou often has high levels of bacteria that make it unsafe for swimming and the Texas Commission on Environmental Quality recommends not to eat any fish caught in the bayou.

 

Nevertheless, the Buffalo Bayou Partnership aims to transform a patchwork of public and private land, including several abandoned industrial sites, into an area focused on the water with seven boat landings. It aims to connect the African American and Hispanic communities of the Fifth Ward and Great East neighborhoods to one another and give the historically working class neighborhoods new access to nature and 200 acres of open space.

 

“In some ways, what’s different about it is the scale and complexity of it all,” said Cary Hirschstein, a partner at HR&A Advisors, a real estate, economic development and public policy firm. It co-led the master planning process of the proposed east project along with landscape architecture firm Michael Van Valkenburg Associates.

 

The project represents a unique infusion of investment into historically working class communities that typically don’t see investments of this scale, Hirschtein said in an interview. The restored industrial structures harken to other similar projects across the country, from Concrete Plant Park in the Bronx in New York City, Gas Works Park in Seattle or Steel Stacks Park near Philadelphia in Pennsylvania, which all turned industrial properties into nationally recognized community spaces. But this project would affect a much larger area than those parks in terms of acreage.

 

“There are really incredible industrial elements that we want to celebrate. It’s going to be unlike any other place in Houston, if not the country,” Hirschtein said.

 

The revitalization efforts focus first on 70 acres of land, including 50 acres owned by the Buffalo Bayou Partnership, running along a four-mile stretch of the river. But the plan envisions a much wider area of influence and aims to give developers and investors design guidelines and a vision for renovating the eastern side of downtown.

 

The project is expected to be a game changer for commercial real estate in the area.

 

“The Buffalo Bayou East revitalization plans are almost certain to lead to a rise in property values, which could drive a new vision for reimagining best-and-highest-use along the eastern portion of the bayou,” said Justin Boyar, director of market analytics in Houston for CoStar, in an email.

 

Boyar notes two Houston neighborhoods, the Second and Fifth Ward, bordering the Buffalo Bayou East project are located in opportunity zones with tax incentives likely to attract investors. “If done smartly and inclusively, this could also be an opportunity to serve and unite historically neglected working class communities,” he added.

 

Redevelopment Interest

 

On the east side of the bayou, private developers are already making massive changes that could further speed growth and gentrification in the hip, former industrial district called EaDo, short for East Downtown, which is similar to Deep Ellum in Dallas or East Austin, Texas, which were both noted as "Cool Streets" on Cushman & Wakefield's 2019 report on hipness.

 

“It’s definitely growing very quickly, we have quite a few developers looking into the district trying to see which properties are available and how they can start to redevelop,” said Jessica Bacorn, executive of the East Downtown Management District, the local economic development group for the area, in an interview. Bacorn said the district has seen an “influx of development” in recent years from new restaurants to coworking spaces.

 

“The vibe that’s in EaDo, with all the arts and culture that’s already there, I think we’re seeing a lot of developers coming in who aren’t looking to change the culture, which is one thing I love about the district and the area. They’re looking at what’s already there,” Bacorn said.

 

Midway, the developer behind the CityCentre mixed-use project in west Houston, is preparing to break ground on a 150-acre project along the eastern end of the bayou spanning 60 city blocks in Houston’s Fifth Ward neighborhood, which also is located in an opportunity zone.

 

The project, called East River, is being touted as walkable where urban-meets-nature oasis that “celebrates local cultures, cuisines, arts and history” with 8.9 million square feet of office, 1,440 apartments, 500,000 square feet of retail space and 390 hotel rooms, according to Midway's website.

 

Midway’s East River site, which was pitched as a potential location to Amazon during its second headquarters search, is one of the largest contiguous blocks of land in the nation located within a mile of several major employment centers: downtown, the Houston Ship Channel, and the Texas Medical Center, said Boyar, the CoStar analyst.

 

“Given the Buffalo Bayou East and East River plans, combined with its opportunity zone status, the area is solidly located in the path of growth for urban infill development,” Boyar said.

 

The plans are creating some jitters about gentrification and concerns about pushing low-income communities out. At a public panel to reveal the master plan in October, three protesters disrupted the meeting shouting anti-gentrification slogans for 10 tense minutes before an audience member convinced them to leave after police were called. The protesters, who were not arrested but refused to speak to media or provide their names, argued that east end development would raise land values and price out working class communities.

 

Anne Olson, president of the Buffalo Bayou Partnership, told CoStar News it was the first time the nonprofit had heard vocal opposition to their plans in more than two years of community engagement discussions.

 

Reclaiming Waterfront

 

Proponents of the plan say it was drawn up in a way that aims to maintain the character and people of the community. A handful of other low-income residents at the meeting expressed support for the proposal.

 

The issue of equity was important to the nonprofit’s master planning as the consultants for Buffalo Bayou Partnership engaged in conversations with more than a 1,000 people, said Hirschtein, the partner with HR&A who has worked on the project for four years.

 

“There’s been a tremendous amount of investment in open space across the city and it’s tended to skew toward affluent places. This allows communities to reclaim their waterfront. These are communities that have been disconnected from their water space,” Hirschtein said in an Oct. 28 panel discussion about the partnership’s master plan.

 

Concern about pricing residents out drove the nonprofit to think more broadly than just planning a beautiful park, he noted.

 

“The plan has a real focus on inclusive economic development. There are elements that you don't see in a normal park master plan like providing affordable housing on-site as part of this project,” Hirschtein said.

 

As part of the proposal, Buffalo Bayou Partnership wants to build a mixed-income residential community called Lockwood South, which would provide a combination of multifamily, single-family homes and workforce housing near Lockwood Drive. It would be next to other mixed-income communities proposed by other nonprofits with the help of disaster relief funding, said Olson, president of Buffalo Bayou Partnership, in an interview.

 

The nonprofit is also redeveloping a 50,000-square-foot former barge terminal, warehouse and wastewater treatment facility along Navigation Boulevard into a community event center and possible incubator space for neighborhood businesses and food service at a site called Turkey Bend. Olson added that the partnership would aim to work with local entrepreneurs and small businesses with ties to the neighborhood in finding any retail tenants or assisting with event programming.

 

“We could sell that property in a minute to some developer who could turn it into a shi-shi bar, but it is something that but we want to make into an community space for the neighborhood,” Olson said.

 

Awaiting 500-Year Floods

 

Beyond economic and cultural resiliency, the proposal also aims to bolster the environmental strength of the eastern side of Buffalo Bayou.

 

Parts of the bayou are still recovering from Hurricane Harvey, when the region was devastated by flooding over four days in August 2017. That’s sparked an effort to this day to determine how to make Houston’s waterfront more resilient. And planners with the Buffalo Bayou Partnership are trying to take lessons from the historic flood.

 

To combat the impact of possible flooding, the nonprofit’s plan calls for stabilizing eroding banks, designing structures that can withstand 500-year floods and creating spaces that are easier to clean after major flooding.

 

Those types of storms are an increasing concern, with executives naming climate change the top risk to organizational growth this year, according to KPMG’s 2019 Global CEO Outlook report. And the United Nations Intergovernmental Panel on Climate Change urges elected leaders to make sweeping changes to combat climate change and sea level rise, such as creating dikes or seawalls, maintaining mangroves or coral reefs and raising buildings along shorelines.

 

Scott McCready, principal of SWA Group, a key planner in the western end of the Buffalo Bayou Park, agrees that preparing for flooding is an increasingly good investment.

 

"While we never anticipated a Hurricane Harvey scale, we did anticipate [flooding]. We had serious discussions about where to place trails, how to design docks, all that kind of thing. So we had an incredibly responsive plan and responsible design to help minimize issues," he said in the panel discussion.

 

But the park also owes its resiliency to the public-private partnerships the Buffalo Bayou has formed with the city, the Downtown Development Authority and the Harris County Flood Control District, he said.

 

“We have this partnership in place and that is how I define resilience,” McCready said.

From Costar:

 

Luxury apartment developer Hanover Co. and partner Lionstone Investments are getting closer to breaking ground on the first phase of a mixed-use project that is expected to be the first of its kind for both developers in Houston.

 

The 13.58-acre site is about 2 miles west of downtown Houston, near where Allen Parkway and Shepherd Drive intersect by Autry Park and across from the western side of Buffalo Bayou Park, a sprawling public park stretching along the bayou.

 

Site preparation is underway on the roughly $200 million apartment portion of the project, which is expected to include 744 units spread across a 22-story high rise and an eight-story mid-rise tower, according to the developers and state documents.

 

Although details are not finalized yet, the mixed-use project could ultimately include a roughly 275-key room hotel, a 300,000-square-foot office tower, two apartment towers and a new 0.5-acre park, the developers told CoStar News in interviews.

 

Hanover started demolishing structures at the site earlier this year and is now "actively working" on utilities and infrastructure work, Hanover CEO Brandt Bowden said in a phone interview.

 

"We anticipate commencing vertical construction next month," Bowden said, pending additional permitting approvals from the city of Houston. The developers have received several permits related to preparing the site and laying the foundation for the apartment towers, according to city of Houston records.

 

The multifamily portion is expected to take two years to build, Bowden said.

Hanover and Lionstone, both based in Houston, have not finalized the name of the project.

 

The full project cost for the mixed-use development wasn’t immediately available, but initial architectural estimates filed with the Texas Department of Licensing and Regulation estimated it would be $108 million for the eight-story mid-rise with apartments, retail and precast parking garage, and an additional $109 million for the mixed-use skyscraper with a five-story precast parking garage.

 

An entity tied to Hanover bought a portion of the property, a 4.54-acre tract at 3540 W. Dallas St., from the city of Houston for about $30.6 million in April, according to a city of Houston agenda item and Harris County deed records. The property has an appraised valued of $21.5 million, according to the Harris County Appraisal District.

 

Entities tied to Hanover purchased multiple parcels along Dallas Street and Marston Place from nonprofit organizations earlier this year, according to Harris County deed records.

 

The total project size is 13.58 acres, according to a January variance request for the project filed in the city of Houston’s Planning Commission by LJA Engineering on behalf of Hanover earlier this year.

 

Hanover plans to build a "highly programmed urban park," said Bowden.

 

The office portion of the project could include roughly 300,000 square feet in a tower about 20 stories or more, roughly 300 feet high, Bowden added.

 

Jane Page, president of Lionstone, said in an interview that the developers are still evaluating the "right mix" of office, hotel and retail components and have not fully committed to the office tower yet.

 

"We’ve done a lot of homework and a lot of brokers are saying, 'if you build it in that location, they will come,'" said Page, who was speaking at a Nov. 14 event in Houston organized by the Urban Land Institute. Page said Lionstone's research suggests that out of the last 16 new office projects built in Houston, nine buildings are within mixed-use environments and those towers are 98% occupied on average.

 

"Those are some pretty strong stats that people want new [and] people want mixed use. So we’re really excited to continue building that space out now," Page said.

 

The Allen Parkway location would offer office tenants convenient access to downtown Houston with relatively easy commutes from the Heights, West University and Kirby Drive areas, said Page.

 

The ground floor level of the office structure would have a retail portion "that really mixes everyone together in a collaborative" way, she added.

 

The proposal includes adding a stoplight along Allen Parkway at the entrance of the mixed-use so "there will be direct connectivity" to Buffalo Bayou Park, Page said.

 

The developers are working with multiple architecture firms on the project, including Ziegler Cooper, DCI Architects, the Office of Michael Hsu, said Bowden. Additional permitting documents with the state also list Houston-based architecture firm W Partnership.

 

Separately, adjacent to Hanover’s project, apartment developer Wood Partners is planning a 364-unit midrise multifamily project called Alta River Oaks at 3636 W Dallas St. The project is expected to open by the fourth quarter 2020, according to a statement from Wood Partners.

 

Wood Partners’ project will be built on roughly 3 acres, as part of a larger 26-acre super block that will be subdivided, said Bowen, Hanover’s CEO. The superblock also contains Hanover and Lionstone mixed-use development, the 2.5 acre Autrey Park, which will grow in size, and a new 0.5-acre park proposed by Hanover, he added.

 

The projects are popping up in a corridor along Allen Parkway that has attracted more attention from real estate developers after the $58 million revitalization of the western end of Buffalo Bayou. Boston real estate firm GID Development and Houston-based DC Partners also are building large mixed-use projects in the area.

 

Hanover, which specializes in building and managing luxury multifamily projects across the country, has been busy with several Houston projects lately, including the recently opened Hanover Blvd Place in the Uptown-Galleria area that includes office space for Hanover's corporate headquarters.

 

Construction is underway on Hanover's The Driscoll, part of a $150 million, 30-story high rise as part of a venture with Weingarten Realty Investors. The Driscoll is less than a mile south of the Allen Parkway proposed project.

 

Meanwhile, Lionstone, a Houston real estate investment firm started by former Hines leaders, is increasing its exposure to office projects located at mixed-use developments in Houston, such as its recent purchase of CityCentre Five in CityCentre.

I was eating turkey when I saw the Bat Signal:

 

 

Houston luxury condominium developer Pelican Builders plans to break ground next quarter on a 17-story skyscraper near Houston's Uptown-Galleria area.

 

Called the Hawthorne, the $100 million condo tower aims to lure empty-nesters from the tree-lined upscale Tanglewood neighborhood with "pet-potty" porches and designer finishes.

 

The Hawthorne is the first high-rise luxury condo project to be built in 40 years in the middle of Houston's upscale single-family neighborhoods like Tanglewood, Briargrove and the Memorial Villages, according to Derek Darnell, principal at Pelican Builders. The average price for a home listed for sale in Tanglewood is $2.7 million, according to the Houston Association of Realtors.

 

In the first month after opening a glitzy sales gallery for the Hawthorne at 5656 San Felipe St. in September, Pelican Builders sold about 13% of the 67 units, Darnell said. He expects to sell about 15% of the units by the end of the year.

 

Pelican Builders secured a $7.3 million loan earlier this year from an undisclosed national real estate finance company to buy the 1.26-acre development site for the Hawthorne, according to a statement at the time from Mission Capital Advisors, which arranged the loan.

 

Pelican Builders, which says it is responsible for developing almost half of all high-rise condo projects in

Houston, is aiming to cater to wealthy empty-nesters with its latest project.

 

The Hawthorne features floor plans between 1,700 square feet and 4,000 square feet and prices range from $1.1 million to $3.5 million per unit, according to Pelican Builders. That compares to Houston’s median price for condominiums-townhouses sold in October of $164,500, which includes new homes and resales across the entire metropolitan area, according to data from the Houston Association of Realtors.

 

To attract high-end buyers, Hawthorne units are expected to have large terraces with "pet-potty" porches and resident amenities such as a 67-foot lap pool, fitness center, lounge with a bar and fireplace and 24/7 concierge and valet. Kirksey Architecture designed the Hawthorne, the Houston-based architecture firm's third project with Pelican Builders. Lauren Rottet of Rottet Studio is designing the public indoor-outdoor spaces for the Hawthorne.

 

The luxury condo market in Houston is still a relatively niche market. Last year, only 32 condos built after 2010 priced above $1 million sold in Houston, according to data from the Houston Association of Realtors analyzed by the Houston Properties Team at Keller Williams. Another 30 condos priced above $1 million built before 2009 sold last year, according to the data. If condos priced above $1 million sold at that current pace in Houston, it would take about 26 months to work through the current inventory of homes, including newly built and resale condos.

 

"Right now, Houston's $1 million condo market is one of the biggest buyer's market with over 26 months of inventory," which doesn't include all of the inventory that builders haven't listed on the open market yet, Paige Martin, a broker associate with Keller Williams, said in an email. "In my opinion, there are some great new construction condos. However, we have definitely seen an overbuilding of the luxury condo market in Houston."

 

But Darnell with Pelican Builders has a calculated optimism about the condo market in Houston, and he points out that location is vitally important. So far, Pelican Builders has had a penchant for picking areas with hotter demand. The company sold out of condos at The Wilshire, a 96-unit luxury high rise at 2047 Westcreek Lane that was financed by the Carlyle Group in the Galleria area. And, Pelican Builders' Revere at River Oaks, a nine-story condo project located at 2325 Welch St., is about 85% sold with move-ins on track for the second quarter of 2020, according to the company. IBC Bank provided the construction loan for the Revere.

 

Darnell said he is seeing demand for new condos pick up in Houston, but he doesn’t expect it to reach the same fever pitch that the apartment market is seeing now.

 

"It will never be as big as the apartment market, and that’s just true in any city. Houston and all Texas cities are continuing to grow" by population and jobs, so the "condo market will continue to grow, but I don’t expect it to just take off. I think it will always be very calculated and measured," Darnell said.

 

Also near the Uptown-Galleria area, other new high-rise condo projects include the Arabella and Astoria from Houston developer DC Partners. Elsewhere in Houston, DC Partners recently broke ground on the first phase of a $500 million mixed-use project by Buffalo Bayou, west of downtown, called the Allen, which is expected to include a 34-story condo-hotel high rise.

 

Construction on the Hawthorne is expected to take two years.

 

For the Record

 

Ludlow & Associates Construction is expected to break ground on the Hawthorne in the first quarter of 2020. Darnell said Pelican Builders is evaluating multiple options for a construction loan. Mission Capital is helping to secure the construction loan and arranged the loan for the land from an undisclosed lender.

 

Jason Parker, Steven Buchwald and Alex Draganiuk with Mission Capital arranged the loan for the land.

Douglas Elliman Real Estate, a New York City-based residential brokerage that recently entered the Houston market by acquiring Houston-based Sudhoff Cos., is handling sales and marketing for the Hawthorne.

Ask and you shall receive:

 

Morgan Group to Break Ground on 13-Story Tower in Houston

Exclusive: Developer to Start Construction on Project That has Been on Hold

The developer behind a Pearl-branded apartment project where a new Whole Foods is opening in Houston's midtown area this week is already planning to move forward with another project about a half-mile away that has been on hold.

 

Morgan Group, a Houston-based developer that has built $3.1 billion worth of multifamily projects nationally, is reviving plans to build a 13-story luxury apartment tower at 102 Dennis St. in Houston.

 

The project is tucked on a quiet residential street in one of Houston’s hottest neighborhoods for apartment and retail development.

Construction on the new project is expected to start in December or the first quarter of 2020, Philip Morgan, vice president of the Morgan Group, said in an interview with CoStar News.

 

The project for now is called the Pearl Rosemont, although the developer is not solidified on a name, he said. In building documents with the city, the project has also been referred to as Pearl on Helena. Morgan Group has used the Pearl brand for at least 10 other apartment projects in Houston as well as projects in Austin, Texas; Phoenix; California; and Miami.

 

The developer's proposed Houston project will include 298 apartment units on top of a parking podium. The total project will be 260,000 square feet, Morgan said.

 

Originally, the Pearl Rosemont project was pitched in 2015, but like several other real estate projects in Houston, plans were put on hold after oil prices started to decline around that time. But Morgan said the market conditions are improving, spurring more multifamily development in midtown, Montrose and the River Oaks neighborhoods.

 

"Midtown has changed a lot in the last decade and there’s other high-rise buildings in the market getting done," Morgan said. "The market is improving and the neighborhood is improving. We’ve already opened our other projects nearby."

 

Earlier this year, Morgan Group opened Pearl Marketplace, an eight-story, 264-unit apartment project located at 3120 Smith St. A 40,000-square-foot Whole Foods Market opened this week on the ground floor of Pearl Marketplace at 515 Elign St.

 

In 2014, the development group built a five-story, 154-unit apartment complex nearby called Pearl Midtown at 3101 Smith St.

 

The newest proposed project, Pearl Rosemont, will be "a step up from Pearl Marketplace in terms of finishes and views. Being 13 stories high, it will have nicer views and I think that neighborhood is a little quieter," Morgan said.

 

Morgan Group will serve as general contractor for Pearl Rosemont and the architect is Ziegler Cooper. Renderings of the project were not available.

 

The project was originally slated to cost $20 million, according to state documents, but in more recent filings that estimate was listed at $92 million. However, Morgan said those estimates are incorrect. He declined to disclose the project's estimated cost.

 

The midtown market has seen more multifamily growth in recent years as more workers look to be close to downtown and the nearby Montrose neighborhood continues to attract national attention.

 

The Lower Weisthemier-Montrose area was recently named one of the nation’s top 20 coolest streets in a report by Cushman & Wakefield. The report rated it as one the hippest areas because of its walkability, diversity, nightlife, food scene and vintage stores. Nearly 97,000 people live within a 2-mile radius of the area with a median income of $83,233, according to the report, and about 37% of residents nearby are millennials. The city of Houston granted 28 building permits for sites on Westheimer Road in 2018, double the number issued in 2017, Cushman & Wakefield said.

 

Overall, there are 5,064 apartment units under construction in downtown Houston and another 5,634 units under construction in the submarket that contains Midtown, River Oaks, Montrose and Rice Military, according to CoStar data.

It looks like this site closed this month and was sold to Woodbranch - the developer of Market Square Tower.  I would not be upset if there was another MST quality project here...