Rising land costs boost Houston's mid-rise market
The developers who launched the Inner Loop residential communities of Hyde Park Crescent and Hawthorne Place broke ground this week on Tremont Tower a 76-unit, six-story mid-rise that will be located in Montrose at the corner of Westheimer and Yupon, not far from the historic Tower Theater.
The new development, which got final approval for its more than $10 million loan from a Chicago bank just four days after the Sept. 11 terrorist attacks, marks the first foray into mid-rise construction by Tremont Custom Homes' Jorge Casimiro, CEO, Tom Thibodeau, president, and Amad Al-Banna, executive vice president.
The new venture has been compelled, in part, by rising Inner Loop land prices that have caused some developers to forgo building standard single-family townhome projects and divert their resources into multi-level, multi-unit buildings.
"It's just more realistic right now," says Casimiro. "You keep prices down by going up."
And, after laying all the groundwork for their project, the partners were determined to go ahead, despite economic uncertainties, notes Al-Banna.
As home buyers continue to be drawn to the convenience and lifestyle of urban living and investors continue to covet Inner Loop property, most view the construction of mid-rises as a natural progression of the market and a way for developers to make the most of ever-increasing land prices which have skyrocketed in the past decade.
From the late 1980s to early `90s, prices rose from about $10 to $12 a square foot for land. Today, townhome builders are paying from $20 to $35 dollars per foot. Mid-rise builders pay about $35 to $45.
"When land gets to be at that level," says one developer, "it's simply not economical to put up a three-story townhome. The numbers don't work. That's why you see all the loft developers and townhome people backing into the mid-rise niche."
Mid-rise market
Several other Houston-area developers have done the math and are adding to the number of Houston residences that don't quite qualify as high-rises. Currently about eight to 10 mid-rises have been completed or are under construction. A handful of others are on the drawing boards.
Typically four to eight stories with 40 to 80 units, most are located inside the Loop or just outside. They include Randall Davis' trio of lofts, The Gotham, The Metropolis and The Renoir; The Manhattan, located near the Galleria; Memorial Cove Lofts; the Tanglewood on Fountainview; The Chalet another Galleria-area project; and Il Palazzo, located in the Museum District.
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