HOUSTON – (Realty News Report) – With new multifamily developments on the drawing boards, planned new office towers and ever-expanding green space, downtown Houston has changed dramatically over the past several years. One of the people responsible for these changes is Ric Campo, CEO of Camden Property Trust. As chairman of Houston First for a dozen years, Campo helped spearhead additional development downtown including major hotels. He also led the Houston Super Bowl Host Committee, which was responsible for bringing the Super Bowl LI to Houston in 2017. Camden is now constructing a 20-story, 275-unit residential tower downtown next to the Toyota Center – its first ground up high-rise construction in Houston. With interests in 159 properties with 54,480 units across the United States, the company was recently named by Fortune Magazine for the 11th consecutive year as one of the “100 Best Companies to Work For” in America. Realty News Report spoke to Campo about development, green space, Houston’s multifamily market and the future of downtown.
Realty News Report: Camden is under construction with a downtown residential tower in Houston and maybe another one. Can you tell us about that?
Ric Campo: Camden is building a $140 million project downtown, across the street from Toyota Center. I’ve had a long history of downtown civic development and know a lot about downtown. Over last 5-6 years, we’ve had massive investment downtown of over $5 billion. There have been continuous efforts by civic leaders, to bring people downtown, for Houston to become a 24-hour city. The incentives are part of the equation. That included the Downtown Living Initiative, where the city provides incentives to developers to build multifamily downtown. Some 3,000 units have been built or are under construction downtown. We hitched our wagon to that. Public improvements downtown include Discovery Green, the redevelopment of the George R. Brown Convention Center, the Marriott Marquis hotel and numerous pedestrian improvements to make Houston an even more user friendly downtown.
Realty News Report: Do you have plans to construct any more multifamily in Houston in the next few years?
Ric Campo: We’re considering the second phase of our downtown project. Maybe as soon as we finish the first building, we could start. So, the answer is “we’ll see.” Construction costs continue to rise and putting up two buildings at almost the same time would be more efficient. We could simply move the team from one block to another. Camden will continue to build in Houston. Houston is one of our largest markets and it is a great market long term. Looking ahead, we will have to reexamine our Houston portfolio. Some of our properties were built 25 years ago so we need to renew them or maybe sell those properties.
Realty News Report: The Houston market gained a lot of occupancy following Hurricane Harvey, which wiped out thousands of homes. How is Houston multifamily doing as the Post-Harvey market continues to shake-out?
Ric Campo: Prior to Harvey, Houston’s multifamily market was oversupplied. It was Camden’s worst market in our 15 markets in the U.S. The Houston market was starting to improve in the summer of 2017. Then Harvey came, and we leased 600 apartments in two days! Over the previous eight months leading up to that, we leased 400 apartments. Harvey sped up the health of Houston’s multifamily market by a year. Houston’s multifamily industry also helped the community that was affected. We froze prices at pre-Harvey level. We were very user friendly — there were no additional deposits or fees and we let people stay on short-term leases — 3 months – with no penalty. The high occupancy levels in 2017 moderated in the first quarter of 2018 and by June 2018 rates were more normalized 95-96% occupancy at Camden’s Houston properties. Today, there are just a few people from Hurricane Harvey left in our properties. The market is doing well, and it more normalized.
Realty News Report: You have one major high-rise project under construction in downtown Houston and another proposed. Other developers are building downtown, too. It seems like downtown Houston is moving to a higher level. What’s going on downtown?
Ric Campo: The cost of building associated with land and construction are rising. It’s hard to build low-rise wood construction downtown, so you have to go higher to make economic sense.
Realty News Report: Downtown has certainly undergone a transformation in the last 10 or 15 years. You were a part of that with your leadership at Houston First Corp. and Central Houston Inc. What lies ahead for the future of downtown Houston?
Ric Campo: I think downtown Houston will continue to densify. If you look at Houston from a density perspective, we’re one of the least dense cities in America — even less dense than Dallas. Over the next 10 years, Houston is supposed to add a million more people, so density is going to increase. Inside the loop is becoming denser and downtown too. The land downtown has become more expensive and multifamily developments will be denser. Up until now, Camden has built mainly mid-rise developments. Rents have risen enough to support high rise development.
Realty News Report: During your time serving at the helm of Houston First Corp., there were a number of new projects undertaken: the new Marriott Marquis convention hotel, the redevelopment of the George R. Brown Convention Center (GRB), and the Partnership Tower building with the proposed W Hotel on top. Tell us about the importance of what was accomplished there.
Ric Campo: The Marriott Marquis was built to increase direct hotel access to the GRB. Another 3,000 hotel rooms were added rooms to downtown as well. We sought new hotels to increase Houston’s convention business. Houston convention hotel bookings had stagnated at about 550,000 room nights annually due to the of lack of additional hotel rooms with proximity to the GRB. So, we built the Marriott and other hotels, using public dollar incentives, redeveloped the George R. Brown Convention Center Downtown and created a pedestrian entrance connecting Discovery Green to the George R. Brown. We wanted to make downtown more pedestrian friendly. The Super Bowl was first major event. With the new hotel construction, we went from 550,000 convention room nights per year to over 800,000 rooms night per year – we increase room nights by almost a third. This is important because companies and people don’t move to a city unless they’ve been to that city. So, the more conventions we can schedule, the more people come here and say, “Wow, they’ve got amazing pedestrian spaces” and more companies would consider moving here. More visitors means people can see the real Houston and think, “I didn’t realize all this existed in Houston,’ and that leads to more job growth and overall economic development and a more vibrant downtown. The Partnership Towers was developed to gather the city’s civic organizations responsible for economic development — Greater Houston Partnership, Houston First, the Greater Houston Convention and Visitors Bureau, the Hotel and Lodging Association of Greater Houston and the Harris County Houston Sports Authority under one roof. They were all in different places. We wanted to put them in one building to promote civic cooperation – so they would work effectively together.
Realty News Report: You were the lead “pitch man” presenting on behalf of Houston to get the Super Bowl in Houston in 2017. Houston was selected as you were considered a local hero. How did you craft the Houston presentation?
Ric Campo: We framed the presentation to the NFL on Houston being a football town. If you think about Texas generally, you think football – with Friday night football high school football and Saturday afternoon college football. We convinced the NFL that Houston was the best city in America to expand and promote the NFL brand. Houston is the most diverse city in America, with a large Hispanic population many of whom were not NFL fans. Houston also has a high percentage of female football fans- a growing market for the NFL. We promoted Houston as a fun place to live, work, and play – a place where the NFL could promote their product with a large diverse fan base. They thought our presentation was great and awarded Houston Super Bowl LI.
Realty News Report: Some of the older downtown properties, such as the old Texaco building have been turned into residential buildings or hotels. Downtown Houston certainly has a large supply of office buildings that are now considered obsolete, or at least in need or major upgrades to remain competitive. How far can this redevelopment trend go?
Ric Campo: Yes. there will be more repurposing of older buildings downtown. Repurposing will continue in downtown for quite some time. What will be interesting to see is the repurposing of parking garages in downtown into residential over the next 10 years with the impact of autonomous vehicles and ride sharing and how that will change the way we think about cars. Development of parking structures will change as well. At Camden, we’re already thinking about it. If people don’t need a car and then we don’t need all the parking. If you look at parking in America today, 50% of the built space is devoted to parking. In next 10 years, we will need less parking and we could repurpose parking garages into residential or other uses. We want to make sure we are prepared for that, so we are spending 2-3% more on building new garages today. We are using poured in place instead of precast concrete. We are using flat, garage plates so that instead of building parking on incline it will be easier to repurpose in the future. You can’t build a residential unit on an incline. We are installing sleeves for utilities, so if you need to run electric or water in the future, we have the ability to do that. We are putting ramps on ends of buildings instead of in the middle. Just think about all parking garages in America that are built, and people might not use them!
Realty News Report: Regarding the future of Houston, how will the city change in the next 10, 20 years?
Ric Campo: I think the next 10-20 years will be fascinating. There will be changes in tech and infrastructure in the built environment. Again, the biggest change will be autonomous cars and their impact on infrastructure requirements. Today our highways and streets are underutilized because people are such bad drivers. Self-driving cars will need less space. I think you’ll also see the energy industry adapting efficiently to market changes. Energy companies will adapt to less demand for oil and gas products in the future.
Houston will continue to densify. We’re going to be 24-hour city. Houston is a young city. We have a can-do attitude, if you can dream it you can make it happen in Houston. That’s not going to change, and Houston will adapt to whatever comes at it.