134-Acres Purchased For Mixed-Use Development In Sugar Land

[lockmat]

LINK HERE

Houston-based Read King Commercial Real Estate purchased 134 acres from the state of Texas with plans for a mixed-use development near the entrance of an enormous upscale residential development.

The Sugar Land parcel is located at the entrance into Aliana, a 2,044-acre master planned residential community featuring more than 5,000 homes, office, retail and apartment sites.

"This property was attractive because it has frontage on Grand Parkway and Harlem Road," Owens, a senior associate with CBRE, told CPN today. "Aliana is going to be to the east of the property, Waterside Estates is an existing single-family neighborhood to the west."

I wonder just how mixed use it will actually be.

[ProHouston]

I wonder just how mixed use it will actually be.

Probably your typical suburban development. It's not dense enough out there for a true "mixed use" concept.

[lockmat]

http://www.read-king.com/site.php

[TheNiche]

The term "mixed-use" has become a cliche. And that's an sign that the "mixed-use" movement has been a cultural fad that is becoming played out.

[lockmat]

The term "mixed-use" has become a cliche. And that's an sign that the "mixed-use" movement has been a cultural fad that is becoming played out.

but it's still technically correct, don't ya think?

[TheNiche]

but it's still technically correct, don't ya think?

No. Technically, they should've labeled it "multi-use", not "mixed-use".

[AK123]

Way too much land in there for "multifamily housing" which I assume means apartments. There seems to already be a glut of apartments in these parts (I hear the place next to Chelsea Harbour can't find enough tenants after the big expansion; the guy who wants to build some next to the new Cloisters has been getting tons of complaints/resistance; there are a bunch more all up and down Hwy 6 near Woodbridge; and some on the edge of Grand Mission on the Westpark.)

This site is outside of Sugar Land city limits, so there's really no zoning. Hopefully these developers are doing some due diligence and spending some money on market research before just building more and more of what we don't need out here. What we really need are more decent, family-friendly restaurants; can't go anywhere on a Fri or Sat night it seems without long waits and mayhem. I've even heard some people saying they're going to stop voting for MUD bonds because they don't want the MUDs to continue to spend on increased capacity in order to accommodate more new monster-sized apt complexes...

http://www.read-king.com/site.php

[TheNiche]

Hopefully these developers are doing some due diligence and spending some money on market research before just building more and more of what we don't need out here.

Yeah, actually they did exactly that.

[AK123]

Yeah, actually they did exactly that.

Did they?

And if so, how long ago? Things are a lot different now than they were in 2007.

[TheNiche]

Did they?

And if so, how long ago? Things are a lot different now than they were in 2007.

The capital structure of MUDs is not dependent upon all the multifamily residential and commercial acreage being developed within the initial few years. And that's a good thing, because nothing on that acreage would get built there anytime soon. In the long term, however, these two multifamily parcels really are of reasonable size and layout for multifamily uses and the larger tax base created by the apartments will aide in covering the MUD's fixed costs, thus indirectly reducing everybody's tax rate.

A little market data for the skeptic:

The Sugar Land-Fort Bend submarket currently has 30 operational Class A apartment complexes, averages 93% occupancy (compared to 88% in the entire Houston region), and has experienced positive absorption of 174 units year-to-date. You are correct that 2007 was a better year; occupancy peaked at 95% during the 1st quarter of that year, and since that time, average rents have declined by two tenths of a cent per square foot, and only 654 units have been absorbed.

There is one Class A complex currently under construction, and including those units in the total inventory and assuming the continuance of the recessionary absorption rate, it'll take another year and one month for the fundamentals to recover to 2007 levels. Two additional months after that, the occupancy rate would exceed the level that has ever been recorded for the Sugar Land-Fort Bend submarket. And honestly, I think that that's exactly what will happen...seeing as how the capital markets are acting as a sort of barrier to entry. Sooner or later (and probably later), things on Wall Street will loosen up; and when they do, Aliana will be an attractive location for new multifamily development.

[AK123]

A little market data for the skeptic:

The Sugar Land-Fort Bend submarket currently has 30 operational Class A apartment complexes, averages 93% occupancy (compared to 88% in the entire Houston region), and has experienced positive absorption of 174 units year-to-date. You are correct that 2007 was a better year; occupancy peaked at 95% during the 1st quarter of that year, and since that time, average rents have declined by two tenths of a cent per square foot, and only 654 units have been absorbed.

There is one Class A complex currently under construction, and including those units in the total inventory and assuming the continuance of the recessionary absorption rate, it'll take another year and one month for the fundamentals to recover to 2007 levels. Two additional months after that, the occupancy rate would exceed the level that has ever been recorded for the Sugar Land-Fort Bend submarket. And honestly, I think that that's exactly what will happen...seeing as how the capital markets are acting as a sort of barrier to entry. Sooner or later (and probably later), things on Wall Street will loosen up; and when they do, Aliana will be an attractive location for new multifamily development.

Even assuming all of this, it seems like any area lacking in apartments is all south of Hwy 59. And south of Hwy 6 for that matter.

North of 59 and especially north of 90 has lots of apartment complexes, especially along 6.

And you have to remember, to most homeowners in Fort Bend "apartments' is a dirty word. Mostly having to do with Sugar Land/Fort Bend bordering southwest Houston, which was ruined by the overbuilding of apartments in ratio single-family homes. In fact, many of the older generation moved away from places like Alief and Fondren when those places started going downhill, to get away from that sort of thing.

As far as bank financing for projects -- that's obviously had an effect. Telfair is getting closer to build-out (on homes), there's got to be tons of disposable income in there, yet the perimeter (which was supposed to be filled with retail/shopping/restaurants) all still sits as open land.

[TheNiche]

Even assuming all of this, it seems like any area lacking in apartments is all south of Hwy 59. And south of Hwy 6 for that matter.

North of 59 and especially north of 90 has lots of apartment complexes, especially along 6.

Yes, and in fact Parkside Apartments (along Hwy 6) has the highest occupancy rate in the whole submarket.

And you have to remember, to most homeowners in Fort Bend "apartments' is a dirty word. Mostly having to do with Sugar Land/Fort Bend bordering southwest Houston, which was ruined by the overbuilding of apartments in ratio single-family homes. In fact, many of the older generation moved away from places like Alief and Fondren when those places started going downhill, to get away from that sort of thing.

In the grand scheme of things, Alief and Fondren were aberrations coinciding with an oil and credit boom that simultaneously busted us in the mid-80's. Nothing approaching such an extreme level of insanity has happened in any other part of the region either during that era or since then.

And don't get me wrong, it's not that I don't understand the fears of classist old fogies. I'm not even about to say that the fears are baseless. Today's suburban "luxury apartments" are tomorrow's burdens on the otherwise nice school districts that service them. It's not because they're apartments though, it's because they provide housing at a lower price point than can be achieved by *most* single-family products. And what are we to believe, that it's good policy to place a floor on the cost of new housing that they can develop? That would just seem really...dumb.

If you want to avoid your neighborhood becoming apartment hell, the best thing you can do is to move into a suburban municipality such as Sugar Land, Pearland, or League City. They have zoning (not that their politicians can't be bought off, but it's at least a modicum of protection). Unincorporated areas have no land use protections whatsoever AND less code enforcement AND frequently offer better city services at lower tax rates.

As far as bank financing for projects -- that's obviously had an effect. Telfair is getting closer to build-out (on homes), there's got to be tons of disposable income in there, yet the perimeter (which was supposed to be filled with retail/shopping/restaurants) all still sits as open land.

Yep, more evidence that switching around Aliana's land uses to weigh more heavily on commercial than multifamily wouldn't have any effect.

[AK123]

In the grand scheme of things, Alief and Fondren were aberrations coinciding with an oil and credit boom that simultaneously busted us in the mid-80's. Nothing approaching such an extreme level of insanity has happened in any other part of the region either during that era or since then.

I know it's not quite on the same level, but what about the demise of the Spring ISD / FM 1960 area within the last 10-15 years? Also due to overbuild of apartments?

[TheNiche]

I know it's not quite on the same level, but what about the demise of the Spring ISD / FM 1960 area within the last 10-15 years? Also due to overbuild of apartments?

Well sure, as long as you acknowledge that most of the homes in Spring tended to kind of suck in the first place. That certainly didn't help.

Look, I'm not about to deny that suburban apartments have adverse long-term effects on communities. It's true. But you weren't arguing from a NIMBYist perspective; you were arguing from a market perspective that there was a "glut" of apartments. And that's false. An apartment developer that initiated a deal in that submarket today could expect to complete the project in the midst of historically record-breaking high occupancy.

[AK123]

Well sure, as long as you acknowledge that most of the homes in Spring tended to kind of suck in the first place. That certainly didn't help.

Hmm, I seem to remember the Spring ISD neighborhoods of Northgate Forest, Olde Oaks, Ponderosa, etc. as being quite nice with some really nice homes. Northgate still has customs being built I believe. The public schools have taken quite a turn for the worst, however.

[TheNiche]

Hmm, I seem to remember the Spring ISD neighborhoods of Northgate Forest, Olde Oaks, Ponderosa, etc. as being quite nice with some really nice homes. Northgate still has customs being built I believe. The public schools have taken quite a turn for the worst, however.

Stop cherry-picking your data and open your eyes to the easy-credit Hardieboard-hell that has enveloped nicer--but aging--neighborhoods.

[AK123]

Stop cherry-picking your data and open your eyes to the easy-credit Hardieboard-hell that has enveloped nicer--but aging--neighborhoods.

I see what you're saying. Are these days really over as they say, after the credit crash of '08?