HOUSTON – (By Cynthia Lescalleet for Realty News Report) – With first residents expected July 1 at Drewery Place, Caydon Development’s high-rise apartment building in Midtown, company CEO Joe Russo was in Houston to check the $200 million project’s progress as well as that of the second phase of the Melbourne-based company’s mixed-use development, Houston Laneways.
Multi-phased, the project is located on 3.5-acre site adjacent to Midtown Park, on the light rail line between downtown and Texas Medical Center, and in the midst of an established neighborhood continuing to gain density, amenities and urban bustle.
Realty News Report talked informally with Russo about how his Houston mega-project came to be, where it’s heading — and how it’s going.
RNR: Why did you pick Houston for your U.S. development debut rather than one of the more typical gateway cities?
Russo: “I get asked that question a lot back home.”
While many developers head to established markets in the U.S. like New York and Los Angeles, Russo said he instead focused research and interest in asset acquisition on emerging cities, such as Houston and Dallas, Seattle, San Diego, Denver and Atlanta.
And then he visited Houston. “It felt familiar.”
He said the city’s fundamentals echo those of Melbourne. Among the similarities, the diverse and dispersed population, sprawling footprint, get-it-done industries, foodie and sports cultures, and parks; “It was a no-brainer.”
RNR: Houston’s lack of zoning?
Russo: “I’d be lying to say that no zoning wasn’t encouraging, too.”
With restrictive zoning, you don’t get the same quality of development, he said, because there’s a limited envelope to getting a return, which reduces such things as higher-end amenities like wellness, wider corridors and higher ceilings.
Before deciding on Midtown, Russo looked in several Houston submarkets, from Uptown to Montrose to EaDo. The Midtown site, however, had a combination of new park, transit and growing amenities to serve a densifying neighborhood near employment. Those are common elements of any development he takes on, he said.
RNR: Any changes to the project vision over time?
Russo: “When I came in, I was probably going to do a typical five-over-two product.”
As he got more familiar and comfortable with the city, however, he opted for a bigger play. The mid-rise became a 27- story tower, now officially named Drewery Place.
RNR: What about Phase 2, Houston Laneways? Any updates on what to expect?
Russo: “We’ll get started in the first quarter of 2020.”
(Houston Laneways project materials call for a 2.5 million SF mixed-use development spanning three city blocks bordered by Main, Fannin, Tuam and McGowen streets. Future components of the project include a boutique hotel with 200 rooms, ground floor retail, art, and active outdoor spaces.)
“Laneways” is a nod at Melbourne’s signature system of pedestrian alleys that have been redeveloped as districts of eclectic shops, cafes, street art and galleries, high-rise residences and hotels.
RNR: What is total value of the Houston Laneways development?
Russo: “We’ve got towers A and B worked up. What we do on the second parcel of land is depending on market conditions and timing. We’ll know more about it then. We’re not getting too ahead of ourselves.”
RNR: Funding? The Australian dollar is low.
Russo: “I don’t have investors. I put up my own capital and then have senior and mezzanine debt.”
The Australian dollar, meanwhile: “It’s affecting me a lot. We’re full steam ahead. It’s just costing me more than I wanted. I’ll manage it. It’s not going to stop development.”
June 12, 2019 Realty News Report Copyright 2019
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