April 2, 2006
NY Times National Perspectives
In Some Texas Cities, the Sprawl Is Vertical
By KATE MURPHY
HOUSTON -- NOT all Texans own ranches, but they tend to like good-sized yards even if they live in the city, which is why the state's urban areas sprawl into the sunset. It's possible to run out of gas crisscrossing Houston. The same could be said for Dallas, Austin and San Antonio.
Tall buildings are clustered mainly in downtown areas, which historically have been so deserted at night that tumbleweeds could blow unperturbed across the desolate streets. But now there's life after dark in and around Texas's central business districts, thanks to the construction of residential high-rise buildings. In a marked shift, more Texans are warming to high-rise living, particularly if the properties offer luxury amenities.
"The demand is kind of surprising because Texans are people who like dirt on the ground," said Nancy Elizabeth Garfield, an agent at Greenwood King Properties who specializes in high-rise residences.
According to Property and Portfolio Research, an independent real estate research and advisory firm in Boston, Houston is expected to add 3,119 high-rise condominium units in 2006 versus 1,001 in 2005.
The last time residential high-rises were built in Texas was in the 1980's, and they didn't do very well, Ms. Garfield said. Austin's high-rises were limited to student housing at the University of Texas, and the handful that were constructed in Houston, Dallas and San Antonio went bankrupt or remained vacant while the developers offered incentives like agreeing to buy back units at the purchase price up to 10 years later. Twin high-rises in Houston called the Four-Leaf Towers even offered favorable terms on apartments to local members of the clergy hoping their flocks would follow.
But now the Four-Leaf's 400 units are fully occupied and its local developer, the Interfin Companies, has built two more residential towers closer to downtown. One with 95 units was completed in 2000 and has no vacancies, and the other, built last year, has only 14 of 97 units available, according to brokers.
Cranes are pivoting around the shells of three other high-rise condominium projects nearby with another scheduled to break ground in May.
"We are seeing increased demand in Texas for the lock-and-leave condo lifestyle," said Mark Cover, executive vice president for the southwest region at Hines Interests, a privately owned international real estate firm based in Houston. "It appeals especially to people who travel a lot and don't want to worry about their home's security or maintenance while they're gone."
Hines has participated in the development of two high-rise projects in Houston — one completed last year, which is full, and another scheduled for completion by 2007, which already has contracts on 55 of its 70 units.
Mr. Cover said Hines would also break ground on a residential high-rise in Dallas this summer and was in negotiations to put up three more buildings in the city. Property and Portfolio Research reports that Dallas will add a total of 3,231 high-rise condos this year, up from 1,593 last year.
The increase is in contrast to other markets around the country. "In places like Florida, Arizona and California, the markets got overheated, but Texas arrived late to the party and is still very active," said Michael E. Puls, president of Foley & Puls, a real estate consulting firm based in Dallas.
Because of "irrational exuberance" elsewhere, he said, investor interest in residential high-rise projects has waned, so developers in Texas have had to come up with "concepts that will appeal to the people who will actually move into these places."
An example is the Plaza Turtle Creek high-rise apartments in Dallas, which was completed in 2001 and is now more than 80 percent occupied. The building is on a prime patch of wooded land just outside of the city's downtown and adjacent to the Mansion at Turtle Creek, a luxury hotel. The 18-story, 111-unit high-rise is managed by the hotel, and residents have access to room service and other amenities afforded hotel guests.
The developer, the Meyer Development Corporation, is planning another residential high-rise on the property that will also be managed by the Mansion at Turtle Creek. It will have larger units, from 5,000 to 11,000 square feet, and buyers will be able to design their own floor plans.
"To get people to move out of their houses in Highland Park," said Larry Meyer, president of Meyer Development, referring to an exclusive neighborhood in Dallas, "you've got to give them an exceptional level of service, privacy and customization."
Developers of residential high-rises in major Texas cities say their target is baby boomers whose children are grown. "These people can live anywhere they want, so we're not so much in the housing business as the lifestyle business," said Giorgio Borlenghi, president of Interfin. His company's newly built residential towers have Olympic-size pools, health clubs and day spas, along with concierge and valet service.
Last year, Sue Volk moved with her husband, Richard, from a three-story 4,500-square-foot house in Houston to a 2,200-square-foot apartment on the 21st floor of Interfin's newest high-rise, called the Montebello. "I like being able to leave my car out front, walk in and have them bring up my groceries," she said "The security is wonderful, and you don't have to deal with the upkeep of a house, yard and pool." Mrs. Volk also owns a second home in Aspen, Colo.
But empty-nesters are not the only ones moving into Texas high-rises. They also appeal to young professionals tired of commuting from outlying suburbs.
"The congestion in Austin has increased so much and become such a quality of life issue that people want to live near where they work so they can leave their car in the garage," said Charles Heimsath, president of Capitol Market Research, a real estate consulting firm in Austin.
There are 832 high-rise units scheduled for completion in its downtown area this year versus 20 last year, and at least 10 more high-rise projects are on the drawing board, according to Mr. Heimsath.
Another contributing factor is the number of big companies that have their headquarters in the state, including Dell Computer, Continental Airlines, American Airlines and ExxonMobil. These businesses attract employees from all over the world and many are already accustomed to living in high-rise buildings.
Wealthy people from Latin America and the Middle East who have oil or other business interests in Texas are also buying high-rise units in the state.
"We're only two hours from the border, so we have a lot of Mexican nationals who want to buy high-rise apartments here as a second home," said Phyllis Browning, an independent real estate agent in San Antonio, where two downtown high-rise condominiums were built within the last two years with five more under development.
"We had two high-rises that went up in the 80's and they failed and were foreclosed, but now even they are completely full," Ms. Browning said.
Like residential high-rises in other Texas cities, the ones in San Antonio offer high-end amenities, at prices ranging from $350,000 to $2 million. "Cheap ones wouldn't do well," said Ms. Garfield in Houston. "It's got to be well-built, luxurious and have a fabulous view for Texans to give up their yards."
Copyright 2006 The New York Times Company
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