Texas: High-rise living and #1 in Fortune 500 HQs
The NY Times has had a recent spurt of Texas articles, most recently a profile of local pastor Joel Osteen, his Houston-based Lakewood Church (the largest in the U.S.), their $72m/year budget (!), his critics, and his next book ("A Little Bit Better Than Your Best Life Now" ;-). Now they're profiling the rise of, well, high-rise living in Texas and specifically Houston (with a picture of Villa d'Este).NOT all Texans own ranches, but they tend to like good-sized yards even if they live in the city, which is why the state's urban areas sprawl into the sunset. It's possible to run out of gas crisscrossing Houston. The same could be said for Dallas, Austin and San Antonio.Previous post of local second-home purchases by wealthy Latin Americans here.
Tall buildings are clustered mainly in downtown areas, which historically have been so deserted at night that tumbleweeds could blow unperturbed across the desolate streets. But now there's life after dark in and around Texas's central business districts, thanks to the construction of residential high-rise buildings. In a marked shift, more Texans are warming to high-rise living, particularly if the properties offer luxury amenities.
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According to Property and Portfolio Research, an independent real estate research and advisory firm in Boston, Houston is expected to add 3,119 high-rise condominium units in 2006 versus 1,001 in 2005.
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"We are seeing increased demand in Texas for the lock-and-leave condo lifestyle," said Mark Cover, executive vice president for the southwest region at Hines Interests, a privately owned international real estate firm based in Houston. "It appeals especially to people who travel a lot and don't want to worry about their home's security or maintenance while they're gone."
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The increase is in contrast to other markets around the country. "In places like Florida, Arizona and California, the markets got overheated, but Texas arrived late to the party and is still very active," said Michael E. Puls, president of Foley & Puls, a real estate consulting firm based in Dallas.
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Developers of residential high-rises in major Texas cities say their target is baby boomers whose children are grown. "These people can live anywhere they want, so we're not so much in the housing business as the lifestyle business," said Giorgio Borlenghi, president of Interfin. His company's newly built residential towers have Olympic-size pools, health clubs and day spas, along with concierge and valet service.
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But empty-nesters are not the only ones moving into Texas high-rises. They also appeal to young professionals tired of commuting from outlying suburbs.
"The congestion in Austin has increased so much and become such a quality of life issue that people want to live near where they work so they can leave their car in the garage," said Charles Heimsath, president of Capitol Market Research, a real estate consulting firm in Austin.
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Another contributing factor is the number of big companies that have their headquarters in the state, including Dell Computer, Continental Airlines, American Airlines and ExxonMobil. These businesses attract employees from all over the world and many are already accustomed to living in high-rise buildings.Wealthy people from Latin America and the Middle East who have oil or other business interests in Texas are also buying high-rise units in the state.
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Like residential high-rises in other Texas cities, the ones in San Antonio offer high-end amenities, at prices ranging from $350,000 to $2 million. "Cheap ones wouldn't do well," said Ms. Garfield in Houston. "It's got to be well-built, luxurious and have a fabulous view for Texans to give up their yards."
It's good to finally see the acknowledgement of Austin's massive traffic problems and the quality of life hit they're suffering. I think they're far worse than Houston relative to their size. Lesson learned: not building needed transportation infrastructure does not preserve and improve quality of life, but actually causes it to fall off sharply. I think Austin partially learned its lesson and is half-heartedly trying to catch up now with some major road and transit projects.
Speaking of "big companies that have their headquarters in the state", I got some numbers on the 2006 Fortune 500 today, and Texas has passed up NY for the first time - 56 to 55 - making us the big numero uno, ahead of even CA (52), a state with almost twice our population. Can you say "$60+ oil"? Houston is still a strong #2 with 23 to NYC's 44, and well ahead of #3 Atlanta(14), #4 Dallas (11), and #5 Chicago (10) (city list - everybody else 7 or below). Atlanta still lists BellSouth, which should get absorbed by San Antonio-based AT&T/SBC this year. Chicago, and Dallas for that matter, would have a whole lot more if you looked at their metro areas instead of just the city - but Houston still has almost half of Texas' total, with the rest spread in the "Texas Triangle" between DFW, San Antonio, and Round Rock (...um, I mean 'Austin').
posted by Tory Gattis @ 10:17 PM
10 Comments:
I applaud the Times for some relatively objective assessments of the dynamics of residential real estate in Texas and Houston in particular. We all know that traditionally it has not been very kind to us to say the least.
That said, a statistic quoted in the article astounded me. Houston will ADD 3,119 high-rise condo units just this year? That is preposterous. I don't know if there's that many high-rise units currently existing in the metro area. I know of only two residential high-rises here that might open for occupancy this year, and they're both rental towers (and one of them really probably won't open until 2007). I don't know much about Property and Portfolio Research but they seriously need to check their sources.
The other thing not mentioned in the article is that doing residential high-rises in Houston, which was never easy to begin with, is now nearly impossible except in established high-end neighborhoods or locations like Uptown, River Oaks, the shores of Clear Lake, and the beach. Construction costs have made required home prices / rents too high for all except a tiny slice of the Houston market to afford. Thus most high-rise proposals here are either being put on hold or canceled altogether.
This isn't the case in Austin or Dallas, where new projects are underway and more are announced frequently. Not that all of them will get built, of course. But there's still a noticeable difference. Any thoughts or comments on the difference between Houston and those cities? I have theories but will keep them to myself for now...
Houston will ADD 3,119 high-rise condo units just this year? That is preposterous.
I agree. Unless they mean starts and they have information that I don't have. The only two that I know are breaking ground are the Endeavour in Clear Lake and 2727 Kirby.
Re: Other Texas cities and high-rises. Are high rises necessarily a positive measure? While they look cool they usually don't add to street level pedestrian activity in the way that mid-rise condo developments do. They have to have a large parking garage, pools and other amenties that put them too far away from everything else.
Re: Fortune 500 list. I believe we talked about this recently and I mentioned that in 2005 Schlumberger was counted for NYC and that they were moving to Houston. Mysteriously, Schlumberger has disappeared from the list altogether. Hmmm...
I did the count, Houston area 24, Dallas 22. So we're slightly ahead in another mostly meaningless measure.
Brian S. said:
Re: Other Texas cities and high-rises. Are high rises necessarily a positive measure? While they look cool they usually don't add to street level pedestrian activity in the way that mid-rise condo developments do. They have to have a large parking garage, pools and other amenties that put them too far away from everything else.
I agree with this, high-rises present an urban design challenge, especially with their market-driven parking requirements (big garages). I am merely trying to figure out why the market dynamics of two other Texas cities, both similar in many ways to Houston (growing economies and a traditional sprawl development pattern) appear so different with regard to high-rise residential demand.
I'm not sure how many of the 3119 condo units coming online in 2006 will be conversions of apartments, but several condominiums, besides 2727 kirby and endeavor condos are set to grace the Houston skyline this year.
Here are a few that might be of interest:
mosaichouston.com
theriparian.com
jacksonplacecondos.com
cosmopolitanhouston.com/
innerloopcondos.com/piedmont
chateauxraveneaux.com
emeraldbythesea.com
I was thinking of condos, specifically high-rise (not mid-rise of 10 stories or less), that will open for occupancy this year. I am aware of the other listed projects; except for the Emerald project in Galveston, of which I don't know the construction status, most of the others will not open until at least next year, if they are built at all.
re - Lesson learned: not building needed transportation infrastructure does not preserve and improve quality of life, but actually causes it to fall off sharply. - ...
if by transportation infrastructure you mean freeways, I think the city of san francisco benefited enormously from a quality of life perspective when they prevented CalTrans from punching freeways across the city through neighborhoods like north beach and chinatown.
> Any thoughts or comments on the difference between Houston and those cities?
My speculation: high-rise condos are driven by childless professionals (single or couples), and because Houston has more flexible development regulations than Austin or Dallas, that market it getting soaked up with new inside-the-loop townhomes, which I think many people prefer (own the land, less expensive for the same or more space, no monthly maintenance fees, micro-yard for the dog and some plants, no elevator hassles, park the car next to your door).
SF made their choice, and now Silicon Valley and San Jose are the economic center of the Bay Area. An Austin doesn't need new freeways punching through neighborhoods, just expanding the existing ones.
re - SF made their choice, and now Silicon Valley and San Jose are the economic center of the Bay Area.
those are unrelated. check your history of how silicon valley was established.
I have to agree with anonymous here. SF and SJ had very different economies which had little to do with freeways. SJ grew mainly because its proximity to Stanford and the associated research / light industrial parks. Until the 1990s its freeway infrastructure was actually rather weak for a sprawl city. Oakland for decades had by far the best freeway access in the Bay Area (and is also the hub of the BART system) but it declined precipitously compared to the other two cities because of a more vulnerable economic base (manufacturing). Oakland seems to be coming back these days, though - it's a more accessible and affordable alternative to SF. Still orders of magnitude more expensive than Houston, though.
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