(By Dale King) HOUSTON – By tapping into a city-sponsored program offering monetary incentives for constructing residential properties downtown, developers of what will be the tallest apartment tower in Houston’s central business district chose to go ahead with the project that might otherwise have been delayed.
The financial enticements “could have impacted on whether we did the project or not,” said Philip Schneidau, CEO of Woodbranch Investments Corp., one of several firms involved in building the 40-story Market Square Tower at 777 Preston, across from Market Square Park, which will open in October.
“We have a fair amount of money invested in this,” he said. “It is more costly to build downtown than in the suburbs.” And while a lack of financial incentives would probably not have killed the project, “we may have waited longer” to build it.
“Without the incentives, it would have definitely been more of a challenge. We would have had to really think hard about it.”
“We probably would just have waited a bit longer,” he said. “We have owned the property for 20 years. The land has had a parking garage on it.”
Developers got the necessary money through Houston’s Downtown Living Initiative, a tax rebate program that encourages residential development in the urban core.
The program offers up to $15,000 per unit for multifamily complexes of 10 apartments or more built downtown. Market Square Tower’s 463 units will bring in $6.945 million via the rebate route for the developers.
Qualifying properties must also meet certain design guidelines.
Total cost of the Market Square Tower has not been disclosed. Companies involved in constructing the high-rise include: Woodbranch, the developer, an affiliate of Houston-based BMS Management Inc.; Jackson & Ryan Architects; Oakmont Group (project manager); Harvey Builders (general contractor); Walter P. Moore (structural and civil engineer) and Greystar Management Service, which will manage the development once it is complete.
Aided by the Downtown Living Initiative, Schneidau said there has been “an explosion of residential development” in downtown Houston. Part of an overall strategy to pump up both the housing and commercial markets in the center city, the effort is tied to a movement to make downtown a place to live, work and play without depending on the automobile to get around.
As of February 2016, the Downtown District reported a total of 17 residential projects either under construction or in the planning stages. Because of the Downtown Living Initiative, said district officials, the number of people living in the central business district is expected to triple over the next few years.
“Downtown Houston has changed drastically,” said Schneidau. “More people are walking around. And as this happens, there is a follow-up in the retail sector. More new restaurants are opening and more support services are coming.” Even Market Square Tower is slated to offer about 22,000-square-feet of retail space on the first floor. Schneidau said several national firms are being courted, but he is not yet able to disclose names.
It appears the availability of residences downtown is about to soar. But the rental market is beginning to slow after several years of intense growth. Developers of Market Square Tower are undeterred. “We said, ‘Listen, if the market goes down, we still feel good about building this project.’ It would be nicer if the market were stronger, but we came into this with a very assertive approach. It is working out well with us.”
Units in the Market Square Tower are already being leased, but the rent-in-advance program started barely three weeks ago. Schneidau said he’s sure occupancy will hit 80 percent within 12 to 18 months. “Whether it hits 90 percent is anyone’s crystal ball.”
The tower will be made up of 463 luxury units ranging in price from $1,805 to $5,800 a month, depending on size, he said. Apartments will offer one-, two- and three-bedroom configurations with features such as 10-foot ceilings, marble and granite kitchens and bathrooms, solid core doors, customized walk-in closets, oversized picture windows and balconies, among other touches.
The lengthy list of luxury amenities will be topped – literally – by a rooftop swimming pool with a portion encased in glass – including the bottom – and cantilevered beyond the face of the building so swimmers can view street level 500 feet below.
Other high-end touches include an indoor basketball court, virtual golf simulator, screening room with lie-flat recliners and a banquet room that connects to the second floor outdoor deck for indoor-outdoor functions. A deck located outside, adjacent to a swimming pool, Jacuzzi, luxury spa, sauna, steam and treatment rooms will be lined with palm trees and cabanas.
In October, said Schneidau, “15 floors will be finished along with all amenities. The building will be entirely enclosed. We will be completing one additional floor a week until the building is totally done in March or April 2017. This is the way most high-rises are delivered these days.”
May 17, 2016