Life In The Big City
Downtown Residential Comes Into Its Own

Looking across the Downtown landscape these days, there’s an endless state of activity. It seems everywhere you look, something is happening: construction fencing is going up around projects that will soon break ground, scaffolding and building crews stretch ever upward as they tackle projects in the works, new businesses and residences are coming online. Walk the streets and you’ll see it all around you. But the interesting thing about much of this new hustle and bustle is that much of it is residential.

It didn’t happen out of nowhere. But it was a long time coming. Experts watching the city knew that it was essential that Downtown build its residential population if it was going to thrive. From the mid 1990s through the last decade, the city expanded its office and entertainment options, and bringing more housing online was a logical next step. In 2004, many of Downtown’s key stakeholders put out the Downtown Houston Framework, citing the goal of having a residential population of 20,000 by 2025.

Building on that, the City of Houston and the Houston Downtown Management District worked together to create a plan to help make that happen. While it’s less expensive to build in Houston than it is in other parts of the country, Downtown is still a big-dollar investment for builders and developers (roughly $23,000 per unit). There is a finite amount of land available, and the options for residential construction tend to be in building up, not out, as they can do in suburban developments. The answer was the Downtown Living Initiative, a program offering a host of financial incentives for those interested in constructing residential units in the city. Approved by the Houston City Council in August 2012, the initiative was initially capped at 2,500 units, all of which needed to be completed by the end of June, 2016.

“That created a psychological urgency,” says Bob Eury, president of the Downtown Management District. “And it also attracted a host of serious businesses to come into our neighborhood, since they were well aware they needed to buy the land for their projects and have them completed by the deadline.”

That psychological urgency also created a bandwagon effect, generating so much more interest in the DLI that the District and the City recently went back to City Council, asking to extend the cap on the project specifications to 5,000 units. The expansion of the program was unanimously approved on April 16.

The effect: the sounds of residential construction have become part of the soundtrack of the city.


Going Up:

As we went to press, finishing touches were being applied to Sky House, a 24-story, 336-unit residential behemoth at 1625 Main, in the blocks of Leland, Pease and Fannin. The first Houston project for Atlanta-based Novare Group, which partnered with Simpson Housing on the project, it’s set to open its doors in June. The preview center for the luxury apartment complex opened a few months back; at press time, nearly 20 percent of the studio, one-, two- and three-bedroom units were leased.

“We are very bullish on our second SkyHouse project in Texas with Novare and Batson-Cook Development, and the TIRZ tax abatement was a significant factor in our underwriting,” said Scott Henley, senior vice president of Simpson Housing, when the project was announced.  “We have made a significant push into the Houston market and are pleased to be executing on a Downtown development with this outstanding team.”

SkyHouse’s Downtown imprint comes after similar projects in Atlanta, Orlando and Austin. With expected costs of $67 million, The City of Houston awarded SkyHouse Houston a tax abatement of $15,000 per apartment unit. SkyHouse’s posh accommodations feature a rooftop pool and amenity deck, a state-of-the-art fitness center and a spacious clubroom designed for residents to hang out and socialize, as well as use for party space. The apartments have hardwood floors, ceramic tile, Kohler fixtures in the kitchens and bathrooms, Whirlpool stainless-steel appliances and washers and dryers, and floor-to-ceiling windows and private balconies affording stunning city views. The average unit will be about 800 square feet and will likely rent for around $1,600 per month.

Novare Group president Jim Borders’ excitement is evident, “Our mission with SkyHouse is to find places in dynamic cities where 25- to 34-year-old singles can, with our developments, experience a great high-rise living experience that fits within their budget.,” he said. “We are impressed with all that Downtown has to offer SkyHouse residents, and we are very proud to have a shovel in the ground in Houston.”

That sort of sentiment is echoed by Ric Campo, the chairman and CEO of Camden Properties, which is known throughout the city for its own luxury apartments.

“I think Downtown is finally on the verge of totally transforming into what so many of us imagined it to be,” he said.

His company has long had properties in Midtown and River Oaks and will break ground in the middle of 2015 on a Downtown project. He says the DLI was a tremendous incentive for him.

“It shows the city of Houston is willing to be a true partner to developers and can help us create the vibrant residential life we all want to see here in the city,” Campo said.

His yet-to-be-named project will take up two city blocks. As we went to press, Campo and his team were still working on the design process for the space, expected to be between 12 and 20 stories. Campo says he expects to attract a blend of young professionals who work Downtown or in the Texas Medical Center and empty nesters looking to downsize  who want a residential life filled with amenities.

“In many of our properties, I’m seeing this trend of young professionals who want to live close to where they work. Maybe they’re more interested in jumping on light rail or biking to work than in dealing with the stress of a traffic commute,” he explains. “And a huge growth has been with empty nesters, who are coming in from the suburbs, saying ‘I don’t want to deal with the big house and the yard anymore. I’m done. I’m coming inside the Loop.’”

Campo says that his company’s personal “sweet spot” is to create “small units with high-end amenities.” He expects nearly 80 percent of the Downtown project’s single units will be one-bedroom and studios, with another 20 percent being either two-bedroom apartments or one-bedroom spaces with a study.

"The couple with the kids off to college who are looking to downsize know it’s tough to go from a 2,500-square-foot house to an 800-square-foot apartment, so we find they are more interested in larger units. But young professionals are happy with a smaller space and lots of places in the complex for gatherings, like a great pool, a fitness center.”


Buy In:

“Downtown living caught momentum in the late 1990s,” says Paige Martin, a broker-associate with Keller Williams Realty and the owner of “And the folks who came here then were really early adapters. After the Super Bowl in 2002, we saw a little less rah-rah and some darker days, where the nightlife might have been just bars, and there wasn’t necessarily a strong infrastructure for what many people wanted in a living environment.” But, she’s quick to point out, those living in Downtown through all the transitions always knew the heart of the city was the place to be. “

“And now, as we’re coming off the market crash of 2008 – which we as a city weathered a lot better than anyone else – we’re seeing revitalization efforts in our Downtown Historic District, we saw a new wave of retail and restaurants come in, there are more services in the area.”

An enthusiastic booster for Downtown living, Martin lives in the Franklin Lofts and loves the experience. It’s something she’s able to point out to her clients, who may be hesitant about living in the city. As a real estate agent, she works with buyers and sellers all over the city, and she loves being able to ply her trade in a market that’s seen 33 consecutive months of growth. But she feels there’s something special about Downtown.

“Right now, with both the rental and purchase market, Downtown is really strong,” she says. “Something that might have taken four months to see is now often going in the first few weeks, and we’re starting to see property values going back up to 2007 levels. It’s just a really exciting time to be here. You go around, walking the streets, and you just see the whole skyline change all around you.”

Terry Stanfield agrees. He’s a realtor with Heritage Texas Properties (see our Hot Co. profile on page 4), who’s been living in Downtown for the last 15 years.

“I’m thrilled to watch the way we have more residential options happening here in the heart of the city,” he says. “We have more restaurants, more grocery stores, more places to go out and walk. Those are all great selling points for Downtown.”

Stanfield says he’s spent his whole career downtown, and he’s heard over and over again some form of “If only Downtown had this or that, we’d love to live here.” Martin’s heard it too, and they agree it’s something of a chicken-and-egg argument.

“People tell me, when Downtown has more restaurants or more grocery stores,” I’ll come live here,” says Stanfield. “Meanwhile, investors and business people are thinking, when Downtown has more residents, we’ll come in and build. And we’re here now.”

He likens it to the idea from the movie Field of Dreams, “if you build it, they will come.”

Both Stanfield and Martin say they’re definitely seeing people come.

“It’s so easy to live here now.” Martin says. “There are so many more options than people think about. There’s Phoenicia Specialty Foods or Georgia’s Market located Downtown or Whole Foods on Waugh for grocery shopping. You can go to a Dynamo game and explore EaDo, or hop on the rail to Reliant to watch a football game. Some of the best performing arts in the country are within walking distance.”

“I’m excited to see how we’ve built up our parks and green spaces,” adds Stanfield, who says those things might be taken for granted by those who come to work every day in Downtown, then decamp for other places, but they’re not to be underestimated. They’re a huge selling point for Downtown residential and they add to the neighborhood’s quality of life. “We’ve planted more trees, we have more sidewalks. I go walking nearly every morning along Buffalo Bayou, and it’s wonderful to see what’s being done there in terms of beautification. My clients love to see so much happening in terms of how Downtown life can be what they expect.”

Those city improvements, both big and small, are translating to sales. Stanfield estimates he had 80 closings last year, and a healthy chunk were second homeowners, people with primary residences in Katy or The Woodlands, who were taking their first steps into Downtown living by purchasing a pied-a-terre in Downtown. He echoes Campo’s sentiment about some of his older buyers.

“Retirees don’t want the bother of the pool and the lawn and the upkeep. But, they can buy a place in Downtown and have a great living space.”


City Life:

So, where and how does Downtown go from here? Onward and upward is the prevailing sentiment. There seems to be no stopping the excitement and expansion happening in the city center.

Bobby Heugel, who opened craft cocktail haven Anvil five years ago, and now owns The Pastry War on Main Street in the Historic District, says many of his regulars at the tequilaria are Downtown residents.

“And they tell us they love that there are places like this, and so many others, here. The loyalty of clientele is definitely here for business owners, and the support we get from all our guests – and Downtown residents in particular – is great. Having that kind of support in place is an important step for someone thinking about opening a place Downtown.”

That’s something Hank and Brian Fasthoff, the brothers behind Market Square’s Batanga, which just celebrated its first anniversary, agree on.

“We feel such a part of this neighborhood,” said Hank. “Both in the support we’ve received from fellow business owners, but also from our guests, many of whom are residents of Downtown and have become regulars. There is such a feeling of family.”

Building off that feeling are statistics that indicate Downtown is ever-growing and that its popularity shows no sign of waning. Martin’s released a report showing that EaDo (East Downtown) is one of the best performing real estate neighborhoods in the city over the past decade with a 209 percent median sales price increase. She says that many are forecasting EaDo to continue its growth due to light rail, the new BBVA Compass Stadium and a substantial growth in new retail establishments. In addition, last year Downtown Houston condos had the best performance  since 2007. According to Martin, the median sales price of condos in Downtown Houston has improved 59 percent over the last five years.

“The downtown Houston rental market had its best year ever,” she said. “Thanks to a combination of low inventory and rising prices. The average price per square foot of downtown rentals increased 30 percent over the past five years.”

News like that is great for developers like Campo and the team behind SkyHouse, but it also means that buyers and renters can look forward to  more projects coming online.

And Campo knows that those looking for a truly integrated work-life balance are going to find Downtown at the top of the list of their living choices.

“I love the availability of choice that happens in Downtown,” he said. “You have the ballpark, you have the ballet, you have multiple event venues for everything from dinner to a drink to parties. It’s an amazing atmosphere. I absolutely understand why people love living Downtown.”

“It’s evolved so much,” Martin says of the neighborhood she calls home. “When we first moved in, we were like the pioneers.  And now, I have so much available to me, and I get it all just by walking out my front door.”

With so many new residential spaces becoming available, the vibe of Downtown is likely to change – for the better. Developers and realtors agree that more residents moving into Downtown mean more opportunities for other businesses, and that influx also has the potential to increase the value of office and hotel properties, not to mention existing private residences. And because DLI’s guidelines require developers to pay attention to how their projects fit into the streetscape, the new spaces should fold nicely into the rhythm of the thriving city core.

“There’s this crazy statistic that our company has,” muses Campo. “1.4 people live in each of our units. But there are .3-.4 dogs to each apartment. So, if you build 3,000 apartments, you wind up with about 900 dogs. And there’s something that happens then: dog owners go out and walk and they meet other dog owners. In Downtown, there are so many places for walking; all the new building is bound to create this fantastic street life. Downtown is already vibrant. So, it’s fantastic to see all this unfold as we move forward.”

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