Condominium sellers throw in some perks

Incentives could point to a slowdown in the market

By NANCY SARNOFF
Copyright 2007 Houston Chronicle

Is Houston facing a slowdown in the condo market?

One sign could be that condo converters who turn apartments into for-sale units are offering buyers valuable perks to purchase condos in their buildings.

The developer of Rise, a Midtown building that was converted last year is offering free association dues for a year and help with closing costs.

A project near the Texas Medical Center, 7575 Kirby, is promoting 100 percent financing on its units, which started out as apartments and were converted before the development was completed.

And the Oak Lane Garden Condominiums near River Oaks touts 100 percent financing, as well as a $2,500 incentive for Realtors.

Developer Mike Atlas said he's sold about half of the 56 units in one section of the Oak Lane Garden Condominiums near River Oaks and sold the remaining 160 units to a company planning to build new apartments there.

"In the condo market, you have to be patient," he said.

The poster child for the conversion market is Florida, where overzealous developers created a glut of units by converting numerous apartment buildings to condos, causing prices to fall.

Houston's had its own boomlet, and competition is mounting.

No doubt, price increases for condos and townhomes here have been marginal.

In November, the median sales price was $120,700, up less than 1 percent from the same month the previous year, according to the latest data from the Houston Association of Realtors. And sales were up just 1.5 percent to 535 units.

Still, no one's predicting a Florida situation, where many conversion projects are being turned back into apartments.

Developments that sell best have something extra, like unique architecture, high-end finishes or a good location, said Sandra Gunn, a real estate agent active inside the Loop.

"Absorption has slowed down some, but people still want to buy that product," she said.

Endangered list grows
Houston's preservation society has added yet another structure to its ever-expanding list of endangered buildings.

The property it says is at risk for demolition: the historic James and Jessie West mansion along Clear Lake.

In October, Hakeem Olajuwon bought the 17,000-square-foot Italian Renaissance mansion and its 41-acre site from the Pappas restaurant family. The property is to be sold in parcels.

Though the estate is listed on the National Register of Historic Places and is a Recorded Texas Historic Landmark, neither designation would prevent its demolition, according to the Greater Houston Preservation Alliance. If someone were to save the building, however, its National Register listing allows for substantial federal preservation tax credits if the house is restored to high standards.

"We had hoped that Mr. Olajuwon would use his resources to preserve this extremely important property as he did with his adaptive reuse of the Houston National Bank building on Main Street," said Ramona Davis, the group's executive director.

The old Houston National Bank was purchased by the former Houston Rocket and turned into the city's first downtown mosque.

A real estate broker marketing the West property said there have already been offers from developers of apartments, a hotel and a senior housing community.

"There is interest in incorporating the house as a part of some of these development plans," said David Cook of Cushman & Wakefield, adding that parcels won't be sold until it's determined how the acreage will be divided.

In the late 1920s, oil, lumber and cattle baron J.M. West Sr. commissioned architect Joseph Finger to design the opulent house, at 3303 E. NASA Parkway at Space Center Boulevard. The expansive site still includes the original tennis court with twin gazebos, swimming pool and changing rooms, a nine-car garage and a manager's house.

The preservation group created the endangered list in an attempt to generate public awareness on historically significant properties threatened by demolition.

Other recent additions to the endangered list include the River Oaks Shopping Center, River Oaks Theater and the Alabama Theater/Bookstop.

Northwest medical center
Kelsey-Seybold Clinic has announced plans for a medical center in the Vintage, a 640-acre planned development near the Hewlett-Packard campus in northwest Harris County.

The physicians group purchased 10 acres for the center in the Vintage, near Louetta and Texas 249. Construction on the 60,000-square-foot project will break ground this spring.

"As the northwest communities continue to expand, so do local families' needs for comprehensive and convenient medical services," Dr. Spencer Berthelsen, Kelsey-Seybold Clinic chairman of the board, said in a statement.

The facility will be for one-stop health care, Berthelsen said. It will have diagnostic testing services, laboratories and a pharmacy. The center will also have a 12,000-square-foot St. Luke's Minor Emergency Center.

Harrell Architects will design the clinic, which will serve as the new home for the physicians and staff currently housed at Kelsey-Seybold's Willowbrook clinic.

The Vintage is a joint venture of Kickerillo Cos. and Mischer Investments. In addition to high-end housing, the project will have commercial developments, including a shopping center modeled after Uptown Park in the Galleria area.

Condominium sellers throw in some perks

Incentives could point to a slowdown in the market

By NANCY SARNOFF
Copyright 2007 Houston Chronicle

Is Houston facing a slowdown in the condo market?

One sign could be that condo converters who turn apartments into for-sale units are offering buyers valuable perks to purchase condos in their buildings.

The developer of Rise, a Midtown building that was converted last year is offering free association dues for a year and help with closing costs.

A project near the Texas Medical Center, 7575 Kirby, is promoting 100 percent financing on its units, which started out as apartments and were converted before the development was completed.

And the Oak Lane Garden Condominiums near River Oaks touts 100 percent financing, as well as a $2,500 incentive for Realtors.

Developer Mike Atlas said he's sold about half of the 56 units in one section of the Oak Lane Garden Condominiums near River Oaks and sold the remaining 160 units to a company planning to build new apartments there.

"In the condo market, you have to be patient," he said.

The poster child for the conversion market is Florida, where overzealous developers created a glut of units by converting numerous apartment buildings to condos, causing prices to fall.

Houston's had its own boomlet, and competition is mounting.

No doubt, price increases for condos and townhomes here have been marginal.

In November, the median sales price was $120,700, up less than 1 percent from the same month the previous year, according to the latest data from the Houston Association of Realtors. And sales were up just 1.5 percent to 535 units.

Still, no one's predicting a Florida situation, where many conversion projects are being turned back into apartments.

Developments that sell best have something extra, like unique architecture, high-end finishes or a good location, said Sandra Gunn, a real estate agent active inside the Loop.

"Absorption has slowed down some, but people still want to buy that product," she said.

Endangered list grows
Houston's preservation society has added yet another structure to its ever-expanding list of endangered buildings.

The property it says is at risk for demolition: the historic James and Jessie West mansion along Clear Lake.

In October, Hakeem Olajuwon bought the 17,000-square-foot Italian Renaissance mansion and its 41-acre site from the Pappas restaurant family. The property is to be sold in parcels.

Though the estate is listed on the National Register of Historic Places and is a Recorded Texas Historic Landmark, neither designation would prevent its demolition, according to the Greater Houston Preservation Alliance. If someone were to save the building, however, its National Register listing allows for substantial federal preservation tax credits if the house is restored to high standards.

"We had hoped that Mr. Olajuwon would use his resources to preserve this extremely important property as he did with his adaptive reuse of the Houston National Bank building on Main Street," said Ramona Davis, the group's executive director.

The old Houston National Bank was purchased by the former Houston Rocket and turned into the city's first downtown mosque.

A real estate broker marketing the West property said there have already been offers from developers of apartments, a hotel and a senior housing community.

"There is interest in incorporating the house as a part of some of these development plans," said David Cook of Cushman & Wakefield, adding that parcels won't be sold until it's determined how the acreage will be divided.

In the late 1920s, oil, lumber and cattle baron J.M. West Sr. commissioned architect Joseph Finger to design the opulent house, at 3303 E. NASA Parkway at Space Center Boulevard. The expansive site still includes the original tennis court with twin gazebos, swimming pool and changing rooms, a nine-car garage and a manager's house.

The preservation group created the endangered list in an attempt to generate public awareness on historically significant properties threatened by demolition.

Other recent additions to the endangered list include the River Oaks Shopping Center, River Oaks Theater and the Alabama Theater/Bookstop.

Northwest medical center
Kelsey-Seybold Clinic has announced plans for a medical center in the Vintage, a 640-acre planned development near the Hewlett-Packard campus in northwest Harris County.

The physicians group purchased 10 acres for the center in the Vintage, near Louetta and Texas 249. Construction on the 60,000-square-foot project will break ground this spring.

"As the northwest communities continue to expand, so do local families' needs for comprehensive and convenient medical services," Dr. Spencer Berthelsen, Kelsey-Seybold Clinic chairman of the board, said in a statement.

The facility will be for one-stop health care, Berthelsen said. It will have diagnostic testing services, laboratories and a pharmacy. The center will also have a 12,000-square-foot St. Luke's Minor Emergency Center.

Harrell Architects will design the clinic, which will serve as the new home for the physicians and staff currently housed at Kelsey-Seybold's Willowbrook clinic.

The Vintage is a joint venture of Kickerillo Cos. and Mischer Investments. In addition to high-end housing, the project will have commercial developments, including a shopping center modeled after Uptown Park in the Galleria area.

Developers Nix or Delay Condo Projects

July 31, 2006, 7:03PM
By DEBORAH YAO AP Business Writer
© 2006 The Associated Press

PHILADELPHIA — In a city cluttered with condominium construction, Old City 205 aspired to shine as an ultramodern residence for the well-heeled with its zinc and glass facade, loft-style homes and windows that span floor to ceiling.
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Too bad no one will get to move in now: The $40 million project in Philadelphia's Old City neighborhood won't break ground after the housing market softened and increasingly picky buyers balked at its price tags from $400,000 for a studio to over $2 million for a three-bedroom penthouse.

Brown Hill Development, the company behind the project, noticed slower traffic and decided it didn't want to be left with unsold units, said partner Greg Hill.

From coast to coast, developers are nixing or delaying condominium projects as home sales decelerate, construction costs soar and lenders start to balk at financing units that might not sell. What's making it worse is the glut of high-priced condos and too few people who can afford them.

"We've gone through the biggest real estate boom in the last eight or nine years and some of these projects haven't started yet. Do you think they're going to start building now?" said real estate executive Allan Domb, dubbed Philadelphia's "condo king."

In Las Vegas, projects nixed include high-profile developments such as Aqua Blue, a $600 million, 825-unit luxury condominium-hotel resort that counted Michael Jordan as an investor; the $3 billion, 4,400-unit Las Ramblas resort, backed by George Clooney; and Ivana Las Vegas, a $700 million, 945-unit tower named after Donald Trump's ex-wife.

Related Las Vegas, one of the two developers for Las Ramblas, had cited rising construction costs and slowing sales for the cancellation.

In South Florida, canceled condo developments include 1390 Brickell Bay and ICE in Miami, and Fort Lauderdale's The Waves Las Olas. WCI Communities Inc., a luxury home builder based in Bonita Springs, Fla., said in June that new orders for its high-rise condominiums fell by 84 percent in the second quarter. The company will now go forward with only three to five condo projects in 2006, down from as many as 15 to 17, mostly in Florida.

With housing looking increasingly anemic, it's not surprising that developers are bailing out.

Domb said he's gotten about half a dozen phone calls over the past four weeks from developers asking if he would like to buy their properties.

In May, the volume of apartment-to-condo conversions plunged to $334 million from $1.65 billion a year ago, said Gleb Nechayev, senior economist at Torto Wheaton Research, a real estate research firm in Boston owned by CB Richard Ellis. The all-time high was $4 billion, hit last September.

Builder confidence, as measured by the National Association of Home Builders/Wells Fargo Housing Market Index, fell in June to its lowest level since April 1995. Confidence took a hit due to rising mortgage rates, high home prices and investors and speculators fleeing the market.

The index surveyed builders of single-family homes, where the sales decline hasn't been as severe as for condos.

Jack McCabe, chief executive of McCabe Research and Consulting in Deerfield Beach, Fla., said desperate developers with finished condos are offering plenty of incentives in South Florida.

Freebies range from one year's free mortgage to the use of a yacht or upgraded kitchen packages. McCabe thinks some developers might even sell units at cost if condo sales continue to weaken.

McCabe considers the condo market, especially the luxury end, at risk of a crash. Over the next few years, he sees prices falling by double-digit percentages.

The luxury condo surplus is to blame. McCabe said about 25,000 condos are under construction in Miami-Dade County, with two-thirds costing $700,000 or higher; another 25,000 units have gotten building permits and 50,000 have been announced for future construction.

McCabe said the median household income in the county qualifies local buyers for a $225,000 home, so the luxury units are targeted mainly toward affluent, out-of-state buyers.

Meanwhile, speculators have driven up prices by flipping units, he said. But they're now leaving the market _ driving down demand _ and putting up for sale properties they own, adding to the glut.

Aside from Miami, he said areas at risk include Boston, San Diego, Las Vegas, Seattle, Chicago, Orlando, Fla., Washington, D.C., and Manhattan.

A big part of the problem is that many condo projects are priced high, in part because developers have to recoup the high prices they paid for land. But most buyers can't afford it.

"The sweet spot of the market is probably $250,000 to $700,000," Domb said. "That's what the majority of the population can afford. Many condos are priced higher. That's part of the problem."

Tell that to The Donald. Real estate mogul Donald Trump told The Associated Press he's going ahead with his 45-story waterfront luxury high rise called Trump Tower Philadelphia.

"It's doing fine," Trump said. "It's been intense. So many people want to move there."

He added interest has been high for the project, which he said doesn't surprise him because his name sells.

High-rise to bring luxury to Kirby

By NANCY SARNOFF
Copyright 2005 Houston Chronicle

While luxury high-rise condominiums are commonplace in big cities — where land is scarce, forcing developers to build up instead of out — they've been slow to develop in Houston, where most folks prefer single-family homes.

Still, high-rise living is spreading to some neighborhoods in the Loop.

Real estate developer Mike Atlas of MDA Cos. thinks Houston is ready for an ultra-chic condominium building to rival those going up in Dallas, Miami and Vancouver.

Atlas is planning a 30-story high-rise on Kirby Drive that he said will have the feel of condos in a Four Seasons or Ritz-Carlton.

"We're going to pull out the stops," said Atlas, a native Houstonian who ran Atlas Air Conditioning until a couple of years ago when he retired.

The proposed building, called 2727 Kirby at River Oaks, will be made of glass and steel. The slim tower's west-facing facade will slope toward Kirby like the bow of a ship.

Scott Ziegler of Ziegler Cooper Architects designed the building.

The developer and architect had to be creative with the design because the building will sit on a narrow lot that's less than an acre in size.

A 1960s-era, eight-story office building on the site will be torn down to make way for the new tower.

The building will be able to accommodate 96 residential units, but Atlas expects many of them to be combined to create larger ones.

The residential units will start on the eighth floor, above parking and an "aqua level," which will feature a resort-style swimming pool, lounge and party room.

Ledingham Design Consultants of Vancouver is designing the interiors, which will have 12-foot ceilings, fireplaces, floor-to-ceiling windows and large balconies with outdoor kitchens.

Atlas wouldn't reveal the project cost, but prices for units will start at $400 per square foot, or just over $500,000 for a 1,280-square-foot unit.

The developer said no extras would be necessary.

The units will be complete, down to the organizational systems in the closets.

"Our vision is options aren't required," Jerry Brown of MDA Cos. said.

Atlas just purchased the eight-story building that's on the site. The Page Parkes modeling agency was the building's main tenant.

Atlas expects to begin demolition this fall, but he first must sell 25 percent of the units.

Officials with the Upper Kirby District said the new high-rise and other projects planned for the area will improve property values in the neighborhood.

"It's exciting that an inner-city area is getting a lot of density," said Jamie Brewster, president of the district.

The district is talking about building an esplanade down the middle of Kirby to keep up with its changing image.

"The whole area is not going to look the same in two years," said David Joachim of International Realty Concepts, which was involved in the sale of 2727 Kirby.

Across the street from Atlas' project, Gables Residential Trust is planning a residential and retail development at the site of the old River Oaks Tennis Club.

Ben Pisklak , regional development director for Gables, said the company will break ground on its Kirby project early next year. It will combine 140,000 square feet of shops with some 390 apartments in a seven-story structure.

Gables is being acquired by Dutch-owned ING Clarion Partners for $2.8 billion — a deal that was announced this month — but Pisklak said there should be no change in the company's development plans for Houston.

New home for the arts
After more than 15 years, an arts group called the Community Artists' Collective is replacing its aging home in Midtown.

A partnership between the collective and private developer British American Properties is developing the Collective at Baldwin Park, a $22 million, seven-story project at 1515 Elgin.

The two-story building on the site, which became home to the collective in 1989, will be demolished to make way for the 100,000-square-foot commercial and residential development.

In addition to housing the collective and other small businesses, the project will have 62 residential units ranging from 925 to more than 4,000 square feet.

The units will be for sale and start at about $250,000, said Barry Barnes, a collective board member. Financial incentives will be offered to certain qualified buyers, but the details are still being ironed out, he said.

The group must sell between 30 and 50 percent of the units before construction begins.

Officials from the collective said the property's location next to Baldwin Park will be an asset. The park is being renovated, adding new lighting, more trees and new sidewalks.

The collective focuses on education, community development programs and exhibitions to make art more accessible to children and adults.

Jack Preston Wood & Associates is the architect for the new building.

Land still up for grabs
More land owners are selling real estate at auction these days because they say it can be a faster and cheaper way to sell a property than traditional methods.

But the owner doesn't always walk away from the sale with a deal.

Northeast Holdings, which owns about two acres of downtown land, still has its property after an auction earlier this month didn't produce a buyer.

It was a reserve auction, which means the seller could reject the highest bid if it didn't reach a preset price.

The high bid for the land at Commerce and Franklin streets near Minute Maid Park was $5.5 million. There's a paid parking lot on one of the parcels and an industrial warehouse on the other.

While there were 10 groups that bid, there were several buyers that were not able to attend the auction, said Kelly Toney of Richmond, Va.-based Tranzon, the auction house handling the sale.

"It did not sell at the auction, but we have four parties right now that we're negotiating with and expecting to get a contract," Toney said.

Galveston landmark to become condos

A historic building in downtown Galveston is being converted into residential condominiums.

The Eibands Building, once home of the Texas Supreme Court, is being transformed into 24 luxury condos by Karam Development Interests. Located at 2201 Postoffice St., the building was originally constructed around 1870 by Ballinger & Jack, a prestigious Galveston law firm that also founded the State Bar of Texas.

The building housed the Texas Supreme Court from 1875 until 1890, and was known as Eibands Department Store from 1900 until the end of the 20th Century.

Plans call for that retail tradition to continue on the first floor, while condos will be located on floors two through four. Units will range in size from 1,523 square feet to 2,012 square feet, and range in price from $313,530 to $486,240.

Amenities of the Eibands Luxury Condominiums will include gated parking, storage units, a rooftop overlook deck and a fitness center. Units will feature granite kitchen countertops and backsplashes, modern stainless appliances and custom build-outs.

Karam's development team consists of Pinnacle Construction Industries Inc., Joe Rozier of Eubanks Group Architects, interior designer Mikel Reper and V.J. Tramonte of Joe Tramonte Realty. Karam also developed the Ice & Cold Storage Building on Harborside Drive in Galveston.

LAKE CONROE - A new set of condominiums on Lake Conroe hopes to meet the needs of people who are seeking the good life without all the work.

Winkler and Associates created Paradise Point as a way to meet demand for a high quality, maintenance free housing option on Lake Conroe.
Paradise Point consists of four buildings with three floors each that contain a total of 48 condominiums along Lake Conroe at 168 Lake Point Boulevard just off Texas 105 West.

There is a market for people who want to live on the lake but don't want the responsibility of taking care of a house, said Kim Mercer, marketing director for Winkler and Associates. The company already has sold 23 of the condominiums.

A number of people that are buying the homes live in Houston and are using the condominiums as weekend homes, she said. "They want to come up here and just be able to enjoy their time on the water.
"They don't want to spend their weekends doing maintenance."
Mercer said they are still educating people in Houston about Lake Conroe. "They know there's a lake up here but they don't know much about it or how nice it is."

The condominiums are built to be like the company's custom homes along the lake but on a smaller scale, she said. "We believe that people want that type of living."

Custom features such as granite countertops, tile floors and crown molding are used in each condominium, Mercer said. "They're very high-end for what you get for the money."

The average age of individuals purchasing the homes is 45-60 years old. "Right now there's a nice mix between weekend and full-time residents."

Bud Dixon was Paradise Point's first resident. Dixon said he owns 10 acres of land in the area and was planning on building a house there when he drove past the newly opened condominiums. He stopped by for a tour and was sold.

"I came back that next morning with a check for $10,000," Dixon said.
Dixon, a retired airline captain, said that he was very impressed with the view of Lake Conroe from his living room.

"To look out and see this every morning is breathtaking," Dixon said. "It's just a great place to live."

The prices for the condominiums range from $147,000 for the one-bedroom floor plan to as much as $231,000 for the two-bedroom plan.
All of the condominiums have a view of the lake along with a balcony or porch, Mercer said. Each condominium also has its own boat slip.
The builder can add options to any of the floor plans for an additional cost, Mercer said.

Plans are for the entire development to be completed by the end of the year, she said. Some homes have already been finished and the first residents began to move in a few weeks ago.