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Sonoma

Your one-minute real estate update

I just have one mostly tangential thing to say about this.

Houston will see a modest and steady growth in retail activity in 2013, according to Ed Wulfe’s annual retail forecast.

And the following year should be much better, said Wulfe, who is chairman and CEO of Wulfe & Co., a retail development, brokerage and property management firm.

The amount of new shopping center space to be built and opened in 2013 will be slightly greater than this year’s, while 2014 should be “very strong based on what’s underway,” Wulfe said.

I note that story mostly because it seems like as good an excuse as any to wonder once again about the status of all those long-dormant projects whose empty lots serve as a daily reminder of their lack of activity. I speak of course of the Stables and the Robinson Warehouse, now celebrating its sixth anniversary of vacantness. At last report the Sonoma site was being redeveloped; I can’t personally confirm this, as I generally avoid the area. Regent Square was supposed to have commenced construction in October, but I haven’t seen anything on the Allen Parkway part of the property. And one property that I generally forget about but was in the news recently, the old Astroworld site, also continues to lay fallow. I know this story is about retail development, and most of the sites I’m talking about were intended to be residential or mixed-use, but I feel like the Houston real estate market won’t truly be healthy again until something is happening with all of them.

Apartment boom coming

I have many things to say about this.

High occupancies and rising rents for apartments are driving a new wave of development in Houston’s high-end urban neighborhoods.

More than 3,500 units in a dozen complexes are under construction primarily inside the 610 Loop and around the Galleria. Nearly 8,700 more are proposed, according to Houston-based Apartment Data Services. Most, if not all, are being planned with top-notch finishes and high-dollar rents.

The flurry of activity is meaningful after a period where construction was virtually nonexistent. Amid the nation’s economic crisis, developers couldn’t get loans to start new construction and the appetite for apartments soured as renters moved in with relatives or doubled up in units.

But with the local job market beginning to recover, demand has been ramping back up, and the numbers of available units are dwindling. Few are concerned about a glut.

“If we ever needed construction, we need it now and need it soon,” said Bruce McClenny, president of Apartment Data Services.

Most of the units won’t be ready until late 2012 at the earliest.

The print edition of this story, which ran on Sunday, included a completely inaccurate map that among other things confused Weslayan with Shepherd and Richmond with both Bissonnet and Allen Parkway. I eventually gave up trying to make sense of it.

Among the projects listed were several of the longstanding vacant lots that I’ve noted from time to time. One that is actually under construction is the Ashton Rice Village, formerly the hippie bohemian attorney Sonoma development. Two others that are listed as “proposed” are Regent Square, home of the former Allen House apartments, which claimed last year that it would break ground in 2012, and the infamous Ashby Highrise, which may have lawsuit issues of its own to deal with. Not included: The site that used to house The Stables restaurant, which was torn down nearly five years ago. I have absolutely no idea what is going on with that site and when if ever something will be built there. At the time, one of the buyers said “We’ve acquired a crucial one-acre parcel in the Med Center area, which is hard to do”. You’d think by now someone would want to do something with it.

About two thirds of the 37 properties shown on the crappy map are in the rectangle bounded by the West Loop, I-10, the Southwest Freeway, and I-45. In other words, basically Montrose, Rice U/Med Center, Upper Kirby, West U, and River Oaks. If all of these projects get built, and all of the apartments get leased (I know, not going to happen) you’re talking 20 to 25 thousand more people in the area. As these are mostly high-end places, you have to wonder what effect this will have on the demographics and the politics; most of this territory is in the court-drawn HD134, and in the new City Council District C. Greg often talks about the re-honkification of the Heights. This isn’t the Heights, and this area was pretty Anglo to begin with, but there’s likely to be an effect nonetheless.

(Alta Heights, at 141 Heights Blvd, is the closest project listed to the Heights proper. This is basically across the street from the Ainbinder Wal-Mart site, and used to be a low-income apartment complex.)

With all this dense construction taking place in an already crowded part of town, you would hope that the need for more and better transit would be seen as increasingly urgent. Some of these projects will be close to the Universities rail line when it finally gets built, but a lot more than that is going to be needed to handle this and to allow for future projects like them. I’ll say again how nice it would be if the county, instead of spending gazillions of dollars on a road to nowhere to accommodate people that might live there 20 years from now, spent a few dollars helping to improve mobility where people are right now.

Hanover at Rice Village

Swamplot:

In 2007, Houston’s city council sold a block of Bolsover St. in the Rice Village to the developers of Randall Davis’s Sonomaproject so that it could be used as a private drive and restaurant plaza linking two phases of the development. Davis and Lamesa Properties did manage to demolish the neighboring buildings, but Sonoma was never built. Now, the Hanover Company is saying it’s ready to build portions of a 6-story mixed-use building directly on top of part of that street. Plans for the new project, called Hanover at Rice Village, show a large plaza with restaurant seating on the eastern portion of what used to be Bolsover, facing Morningside. But the west half of the block is slated for retail space, apartments, and a private courtyard for residents.

Click over to see pictures. I’m still in mourning for the hippie bohemian attorneys, but this sounds pretty good, too.

Where hippie bohemian attorney dreams go to die

Via Swamplot, I see that the site of the never-was Sonoma development in the Rice Village has been sold to someone that plans to actually build something.

Hanover’s project, called Plaza View, is scheduled to include 385 “high-end” apartments, 14,000 sq. ft. of retail or restaurant space, and a multi-level parking garage, all in what its designers label a pedestrian-friendly design. What’s that plaza we’ll be viewing? An almost-17,000-sq.-ft. public space along Morningside, with a “water feature, grass lawn, large trees, and restaurant dining spaces.” According to Hanover executive veep John Garibaldi, 55,000 sq. ft. of retail space, 34,000 sq. ft. of office space, and an 8,000-sq.-ft. grocery store were cut from the earlier Sonoma plans. Much of the towering nouveau pomposity of the Sonoma design has been cut too. Along Kelvin St., Hanover’s buildings will reach 6 stories tall; 5 stories along Morningside and Dunstan.

Here’s the Chron story about this.

Houston-based Hanover Co. plans to build a five-story mixed-use property on the site where other developers had originally planned to build a much-anticipated retail and residential development called Sonoma.

The project will have less retail and apartments instead of condos, said John Nash, president of Hanover.

The finished brick property will boast 381 rental units, 13,000 square feet of retail space on the ground floor, above-ground and underground parking, and a public plaza. The project, at Bolsover and Morningside, will generate less traffic than Sonoma because of the limited retail, Nash said.

While I’m delighted that one of the many longstanding vacant lots will finally see some action on it – I’m sure they’re doing cartwheels in Mayor Parker’s office over the imminent increase in property tax revenues – I must say that I’m heartbroken that this will now never become reality:

It was a crazy dream, but it was fun while it lasted. Rest in peace, Hippie Bohemian Attorney highrise.

What if they built it someplace else?

For better or worse, the argument against the Washington Heights Wal-Mart mostly boils down to the fact that it’s an inappropriate location for a suburban-style big-box store. There are also concerns about traffic, and about the nature of Wal-Mart, both in terms of its business practices and its 24/7 operations, all of which have helped generate the pushback from residents in the area. The argument for Wal-Mart, beyond the basic belief that developers should be mostly free to develop what they want where they want, is that the city and the immediate area would benefit economically from its presence, as a provider of jobs and of affordable merchandise. The vacant lot sitting there now isn’t doing anyone any good, and there are people nearby who would like to shop and work there. There are nuances and variations and whatnot to each argument, but that’s more or less what they come down to.

If you agree that these are the main points, then you might observe that the Yale/Koehler property isn’t the only vacant lot in this part of town. What if Ainbinder or some other developer had picked a different location for a Wal-Mart? I got to wondering about that. Here’s the result of that little thought experiment:

Empty lot #1: Sonoma/Bolsover

Of the places I have in mind, this is the hardest to imagine being proposed as a Wal-Mart site, never mind one actually being built there. None of the streets that surround it are capable of handling the kind of traffic a Wal-Mart generates. There are many large retailers nearby – high-end grocers Rice Epicurean at Holcombe and Buffalo Speedway, Kroger Signature and HEB on Buffalo Speedway between Bissonnet and Westpark; CVS stores on Kirby in the Rice Village and at 59, and on Greenbriar at Holcombe. The immediate area is relatively wealthy, so both the customer base and the pool of potential employees is smaller. They would likely be at least as hostile to the idea of a Wal-Mart as they were to the Sonoma project and to the Ashby highrise. Other than it being a vacant lot, I can’t think of a good reason why a Wal-Mart would ever be proposed there.

Empty lot #2: The Stables

Conversely, this seems like the best fit. With access from Main and Greenbriar, traffic would be much less of an issue. Lots of apartments nearby, in the mid- and lower-income ranges, so there should be a solid customer and employee base. Extra points for being close to the light rail line, making it easier for employees to get there via transit. It’s mostly surrounded by Medical Center structures (more potential customers), with the only adjoining neighborhood being north of Main Street, so there would likely be little political pushback. There are similar retailers nearby – the Fiesta at Old Spanish Trail and Kirby, the CVS at Main and Kirby, and the Target at Main just west of Kirby are all within walking distance – but Wal-Mart didn’t get where it is by shrinking from a little competition. Whatever traffic issues there are would annoy me – I’m mostly thinking of people turning left on Greenbriar as they pass Main heading south – but beyond that I can’t think of a strong reason against it. This location just makes sense.

Empty lot #3: Allen House/Regent Square

Possibly the largest lot on my list, though it’s split by West Dallas, so that would present some challenges. Mostly good access from Dallas and Dunlavy, plus eastbound on Allen Parkway; entering from or exiting to the west on Allen Parkway would almost certainly require adding a traffic light, which is of course an abomination. There’s some nearby retail – a Kroger Signature at Gray and Woodhead, the future Whole Foods at Dallas and Waugh, just across the street from a CVS – but not that much. There’s a fair amount of low-income housing in the immediate area, and I’d bet The Center would be interested in possible employment opportunities for the people they serve. On the other hand, this location is also right next door to River Oaks, and they might not be too hot to have a Wal-Mart right there.

Empty lot #4: Robinson Warehouse

The only lot among the four that wasn’t originally intended to be some kind of high rise/mixed use development. About a half mile away from Empty Lot #3, so all of the same things apply to it, though it’s farther from River Oaks and closer to many apartments and lower income housing east of Montrose/Studemont. Easier access, from Dallas, Montrose, and the existing intersection/traffic light at Montrose and Allen Parkway, but possibly the largest impact on traffic, as both Montrose and Dallas get mighty busy at rush hour.

So there you have it. Obviously, none of these sites were bought (and none of the then-existing structures demolished) with the idea of putting up a big-box store. But with all of them being fallow for three years or more, possibly much more as things stand, who knows what might happen. The question is, whatever your opinion may be of the Washington Heights Wal-Mart proposal or the now-approved 380 agreement, what would your reaction be if that same project were to be suddenly relocated to one of these places? Discuss in the comments.

At long last, the Ashby Highrise Lawsuit

The Ashby Highrise developers have filed suit against the city.

The developers of the Ashby high-rise sued the city of Houston today seeking more than $40 million in compensation after repeated denials of their permit application.

“The city must learn that it cannot misapply the law to please a select few or to achieve de factor zoning regulations that our community has consistently rejected,” said Kevin Kirton, the chief executive of Buckhead Investment Partners Inc., the company that sought to build the 23-story tower at 1717 Bissonnet near Rice University.

I presume “de factor” is a typo in the statement they sent out about this, but as I am not on their press release distribution list, I cannot confirm that. I will simply note that both the neighborhood and the developers have threatened to sue at one time or another, and it actually feels a bit like relief that one of them finally went ahead and did it. As you know, I do think the original project, with the mixed-use component, is a better overall idea than what was eventually approved, but it remains the case that this is the wrong location for that project. We’ll see what a judge and/or jury makes of it.

On a side note, think about all the grand projects that were going to happen in recent years, for which things were torn down, and whose sites now lie fallow for who knows how much longer thanks to the crappy economic and financial environment. I’m talking about sites like the Robinson Warehouse, Allen House, The Stables, and of course Sonoma. Is is just me, or is anyone else amazed that Morgan and Kirton are so secure in their financing position that they keep bulling ahead like this? You have to wonder what their secret is.

A hippie bohemian flashback

Remember this?

Those were the days, my friends, those were the days. These days? Not so much.

Three years ago, developers got the city to shut down Bolsover Street so they could build the seven-story complex, but those plans stopped after the economy took a turn for the worse.

The Houston City Council will vote Wednesday to decide whether to turn the entire thing into a surface parking lot.

Somewhere in this crazy world, there’s still a place for hippie bohemian attorneys. I just know it.

Once and again with the Ashby Highrise

There was a town hall meeting on Wednesday night on the status of the Ashby Highrise at Poe Elementary School just as there had been back in 2007 when the project first came up. Given that the developers have finally gotten approval from the city, the impression I get from reading this Examiner story about that town hall is that it’s basically all over but for the shouting. It’s just that there’s still going to be a lot of shouting.

“None of us is happy that the Buckheads have been approved,” Chris Amandes, an attorney and task force leader, told a packed house. “But, I think, we now see there is quite a bit that can be done.”

[…]

Amandes said the developers have three choices now: “pick up the permit” and start building, sue the city in an effort to build the original design or hope for a better deal from the new mayor.

He said grounds for legal action by the developers had actually been weakened by the issuance of the final permit, because it would be like going to court and saying, “They gave us what we asked for, but it wasn’t fair.”

Fellow task-force leader Jim Reeder helped provide insight on the third option by asking the three mayoral candidates who attended if they would “assure what was done (permitting only the scaled-back high-rise) would not be undone.”

[…]

Reeder said the task force is currently in a position of having to be “reactive” in its approach, because its members do not know what the Buckhead Developers will do next.

He said “a number of litigation theories” have been discussed, and he encouraged his neighbors to keep contacting elected officials and continue displaying their yellow yard signs and bumper stickers.

“This is not going to end tomorrow,” he said.

The possibility of the neighbors suing the developers over this project has been raised before, and I still don’t think that will go anywhere. Getting the next Mayor to commit to holding them to the scaled-down (though still 23-story) design that the permit they finally won allows is likely the best they’ll do. And kudos to Gene Locke for reminding the Ashby agitators that they’re not the only folks in Houston who’ve run into this situation before. The irony is that I feel like he’s the least likely of the three to extrapolate from this situation when it does arise again elsewhere, but that’s a side issue at this point. In any event, while it will surely be awhile before this issue goes away – hell, it may be awhile before the tower gets built, if it ever does; there’s plenty of empty lots sitting around these days where grandiose construction projects (Sonoma, anyone?) were supposed to have been – I see it as being on a low simmer rather than a rolling boil. For now, anyway.