When Marvy Finger decided to move forward with development of One Park Place — Houston’s first residential high-rise in 40 years built from the ground up — during the midst of the economic downturn, he was somehow sure it would be a home run.
Many didn’t share that confidence, but the success of One Park Place not only proved naysayers wrong, it seems to have given downtown a much-needed boost to spur more development.
Earlier this month, the former Texaco building at 1111 Rusk, between Fannin and San Jacinto streets, went under contract to a Dallas-based buyer who plans to redevelop it into apartments. This would represent the second major downtown complex to come online in the last couple of years.
EFO Residential Partners LP, a subsidiary of EFO Holdings LP, plans to create as many as 360 apartment units, along with a mix of commercial and retail space, in the vacant 13-story building. Construction is set to begin sometime next year, according to Craig D. “Kip” Platt, principal of EFO Residential Partners.
CB Richard Ellis Group Inc. broker Mike Hassler, who is representing building owner Kimberly-Clark Corp. in the sale, informed the Downtown Redevelopment Authority during an April meeting that EFO would likely ask for grant funding to supplement the project.
The scope of the grant request is not yet known, but Platt said he believes the project will come to fruition.
The company is bullish on downtown Houston.
“I am a huge fan of Houston, and I have a real affinity toward downtown Houston,” Platt said. “Downtown has some real momentum going right now.”
Units in the 410,000-square-foot project would be similar to One Park Place in terms of their high-end offerings, Platt said, but would appeal to renters who are drawn to the historical significance of the building.
“We think the rental market is about to go crazy, and we expect a lot of demand for apartments,” Platt said.
Indeed, Laura Van Ness, business development director at Central Houston Inc., said the downtown organization is hearing rumblings from two other developers considering the downtown market for apartment projects.
“Now that One Park Place is open and successful and the credit markets have started to loosen a little bit, I think we’ll see more developers starting to ride that wave,” Van Ness said. “We are seeing other serious developers coming back and looking at the market.”
Van Ness, who would not elaborate on the pair of potential new projects, said that before the credit crisis hit a few years ago, there were two other apartment projects under consideration downtown. Both of those deals later disappeared off the drawing board, essentially bringing activity to a grinding halt.
But with One Park Place reaching
90 percent-plus occupancy, Bruce McClenny, president of Houston-based Apartment Data Services Inc., which tracks apartment activity, said a new wave of downtown apartments would likely be met with strong demand.
“We definitely needed somebody to blaze the trail, especially going back into downtown,” McClenny said of One Park Place’s success. “Having a developer come out with a good product like that was the successful attempt we needed to get business going in downtown again.”
For his part, Finger said although he is pleased with the success of the 346-unit, 37-story One Park Place tower, which saw its first residents take occupancy in 2009, he is not surprised by it. He pointed to the completion of the nearby Discovery Park and the Discovery Tower — an 871,000-square-foot office building now completely leased by Hess Corp. and set to be renamed Hess Tower when the company takes occupancy later this year — as the catalysts for the quick lease-up of One Park Place.
“There was no doubt in my mind that it was going to be successful — I wouldn’t have engaged in it otherwise,” Finger said. “There had to be a start, and there was a lot of momentum going into that part of downtown.”
In fact, statistics compiled by Apartment Data Services indicate there is momentum in downtown’s housing market overall. The occupancy rate for all downtown rental communities combined was 91.3 percent in April, up 4.1 points from April 2010. And the annual growth trend in rental rates for those properties was up 3 percent.
McClenny said those statistics — when combined with a couple of other trends — make the downtown apartment development market ripe for activity.
He said that because there has been very little new apartment construction in recent years, especially in downtown, there is pent-up demand for apartment units. Also, it is still difficult to get home loans, so people are choosing to remain renters longer, McClenny said.
In addition to new projects, the owners of the 31-story Houston House apartment building at Fannin and Leeland, which was built in 1966, are spending $10 million on a restoration and renovation effort, slated to be complete by spring 2012.
The aging downtown landmark will be refurbished with a new lobby and a renovated amenities floor featuring a full-size basketball court, lounge, workout center and pool cabanas that overlook downtown.
All 396 units in Houston House are being updated with natural stone countertops, tile backsplashes, stainless steel appliances and hardwood floors. The building’s infrastructure is also being replaced.
“There was no doubt in my mind that it was going to be successful — I wouldn’t have engaged in it otherwise,” Finger said. “There had to be a start, and there was a lot of momentum going into that part of downtown.”
In fact, statistics compiled by Apartment Data Services indicate there is momentum in downtown’s housing market overall. The occupancy rate for all downtown rental communities combined was 91.3 percent in April, up 4.1 points from April 2010. And the annual growth trend in rental rates for those properties was up 3 percent.
McClenny said those statistics — when combined with a couple of other trends — make the downtown apartment development market ripe for activity.
He said that because there has been very little new apartment construction in recent years, especially in downtown, there is pent-up demand for apartment units. Also, it is still difficult to get home loans, so people are choosing to remain renters longer, McClenny said.
In addition to new projects, the owners of the 31-story Houston House apartment building at Fannin and Leeland, which was built in 1966, are spending $10 million on a restoration and renovation effort, slated to be complete by spring 2012.
The aging downtown landmark will be refurbished with a new lobby and a renovated amenities floor featuring a full-size basketball court, lounge, workout center and pool cabanas that overlook downtown.
All 396 units in Houston House are being updated with natural stone countertops, tile backsplashes, stainless steel appliances and hardwood floors. The building’s infrastructure is also being replaced.