Partners to Build Apartment High-Rise in Houston
- Mar 13, 2013
Houston—A four-way partnership has closed on land and financing for a new high-rise apartment in Houston, and has announced their attention to proceed with the project. When complete, SkyHouse Houston will be a 24-story, 336-unit apartment building on a full city block at 1625 Main St. in the CBD.
The partnership is between Denver-based Simpson Housing LLLP, Novare Group, Batson-Cook Development Co. and Houston-based developer Peter W. Dienna. SkyHouse is a brand, and the one in Houston is the fifth SkyHouse project by the partners. Others are in Atlanta; Orlando; and Austin, Texas, with Simpson Housing as a partner in the Austin project.
SkyHouse Houston will feature floor-to-ceiling glass and 9-foot-plus ceilings, as well as stainless steel appliances, granite counter tops, wood floors, balconies, and high-speed wiring. The project will have a “Sky House” on the top floor, including a clubroom, fitness center, pool and grilling area. The building will be Energy Star rated.
JP Morgan Chase Bank is providing construction financing for the project, and Simpson Housing, Batson-Cook Development Co., and NGI Investments LLC, led by Jim Borders, are providing equity. CBRE’s Robert LaChappelle, Jonathan Rice and Paul Berry arranged financing. David Cook and Jeff Peden of Cushman & Wakefield brokered the land.
The city of Houston awarded SkyHouse Houston a tax abatement of $15,000 per apartment unit, subsidizing the more expensive high-rise construction costs necessary on the small city blocks. The subsidy represents an incentive to drive new development in a submarket that has lagged an otherwise robust Houston apartment market.
Houston is, in fact, one of the strongest apartment markets in the country. During 2012, according to investment specialist Marcus & Millichap, vacancies market-wide dropped from 8.5 percent to 7.2 percent.
The company further predicts that apartment vacancies will drop even further this year as Houston’s energy and healthcare sectors generate jobs (overall, the entire economy will create 95,600 positions in 2013), and rents will go up 4.5 percent for asking and 4.8 percent for effective. On the other hand, area apartment construction is up as well, with 8,500 new units coming on line this year, about twice as many as last year.