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Apartment Developers Kicking Off Another Round of Construction Starts in Downtown Houston

Ziegler Cooper Architects designed a residential tower that will be constructed in downtown Houston by Camden Property Trust.

HOUSTON – Developers are preparing to start building another round of high-rise residential towers in downtown Houston, where apartment vacancy has been rising as hundreds of new units are being completed and put on the rental market.

The next two projects to be started are expected to be a 21-story, 271-unit apartment tower by Camden Property Trust and a 40-story residential building by Trammell Crow.

These two groundbreakings are coming despite the fact that the fundamentals of downtown’s multifamily market do not look strong. Downtown had a 63 percent occupancy rate in the second quarter, the lowest occupancy of all of the dozens of Houston submarkets tracked by Berkadia.

A big drag on the current downtown occupancy is the fact that so many projects have opened recently and are still in lease-up mode.

The downtown multifamily market was stimulated into construction by the Downtown Living Initiative, which was created about five years ago. It gives apartment developers city tax breaks worth $15,000 per unit to build multifamily in the Central Business District. Some 5,000 units received participated in the program, which is not accepting any more applications. The tax breaks carry deadlines for the developers to finish their projects.

The deadline figures into Camden’s recent decision to start its $125 million, 21-story apartment tower near the corner of Leeland and La Branch near the Toyota Center arena. The 271-unit tower is expected to break ground in November with the first tenants moving in the late 2019. The tax program requires Camden to have a certificate of occupancy by June 2020.

Ric Campo, the CEO of Camden, which is also building the McGowen Station apartments in Midtown, told industry analysts Houston’s overall apartment market will be stabilizing in 2018 and should be in much better shape by 2020.

Camden has a phase two slated, for a few more years down the road, on another block near Toyota Center.

Trammell Crow is expected to start construction early in 2018 on a 314-unit project on Walker Street near the new Marriott Marquis hotel.

According to the Downtown District, some 1,454 new apartment units are proposed and 1,482 units are currently under construction. Downtown proper has about 4,500 existing residences.

The city’s Downtown Living Initiative did accomplish what it was designed to do – get more people living downtown. This provides support for more entertainment and restaurant options, while creating a better convention package and enabling downtown dwellers to walk to work.

Aug. 14, 2017 Realty News Report Copyright 2017

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