For original news article, click here.
During the recent energy boom, developers announced more than a dozen luxury condo projects across Houston.
Some of these developers were luxury homebuilders announcing their first high-end condo projects. These first-time condo developers — Al Ross Luxury Homes, Butler Brothers, Riverway Properties and Sims Luxury Builders — saw a growing demand among retiring Baby Boomers for easy-to-maintain, lock-and-leave homes inside the 610 Loop, and jumped into the hot market.
However, as the luxury home market cooled amid the oil slump, these new condo developers stalled or canceled their luxury condo projects.
Al Ross Luxury Homes terminated plans for The Monroe, a seven-story, 10-unit condo near Buffalo Bayou. Butler Brothers nixed plans for Flats on Fairview, an eight-story, 14-unit condo in Montrose. Riverway Properties held off on building 3615 Montrose, a seven-story, 34-unit condo in Montrose. And although Sims Luxury Builders quickly sold out its first project Riva at the Park, the Houston custom homebuilder shelved plans for its second condo project Aurora, a 16-story, 40-unit condo project in Uptown.
Louis Conrad has spent 28 years building condos and residential communities across North America. Conrad, a developer with Houston-based Surge Homes, said he has seen this boom-bust cycle in many condo markets.
“Any booming market attracts a flood of entrants, like these homebuilders who thought they could build midrise and high-rise condos,” Conrad said. “But only the best stay, and the rest leave. Those who succeed are those with the most experience. Newcomers who jump in often bite the dust.”
It’s difficult to build condos, even for experienced developers in a booming market, Conrad said. Conrad pointed to longtime Houston condo developers like Giorgio Borlenghi, Randall Davis and Robert Bland, who are finishing or moving forward on luxury condo projects despite the oil slump. Conrad and his business partner Ben Lemieux are under construction on Parc at Midtown, a more affordable 80-unit condo and townhome community in Midtown that has seen brisk sales.
“The game of building single-family homes is a different game than building condos,” Conrad said. “You don’t have a model home to show, so you have to sell on plans. You’ve got to be a marketing genius and extremely good in sales to be successful.”
Ultimately, developers say this Darwinian survival of the fittest is healthy for Houston’s condo market.
“When a development gets canceled, it’s good because it doesn’t flood a market with a product for which there isn’t much demand,” Conrad said. “What’s worse is when remaining inventory doesn’t sell.”
“If you don’t feel good about where you are, it’s absolutely prudent to shelve projects,” said Will Stolz, a longtime Atlanta-based developer who is launching two luxury condos; The Sophie at Bayou Bend, a seven-story, 42-unit midrise near Memorial Park; and Giorgetti Houston, a seven-story, 32-unit midrise in Upper Kirby. “These condos are big undertaking. When the timing isn’t quite right or the product isn’t right and the decision made not to move forward, that’s great. It’s better than building it speculatively and dragging the whole market down. Because of these people’s good judgement, we don’t have vacant luxury condos in Houston right now.”
Paul Takahashi covers residential and multifamily commercial real estate for the Houston Business Journal. Follow him on Twitter for more.
