Sweet Deal for Fast-Growing Fort Bend County, Texas
- Nov 07, 2011
Houston—Fort Bend County, Texas, was once one of the world’s largest rice and sugar cane producers. More recently, the county, situated a 20-minute drive southwest of central Houston, has been better known as the home to the swiftly-growing, job-generating city of Sugar Land, headquarters of the Imperial Sugar Co.
Responding to pent-up demand for housing in the county, Houston-based Buckhead Investment Partners Inc. has announced it will break ground soon on 196 new luxury apartments in the city of Rosenberg, about 17 miles southwest of Sugar Land.
“The explosive job growth in Fort Bend County calls for more housing,” Buckhead Principal Matthew Morgan tells MHN. “We’ve had a dearth of new housing deliveries in the area, due to the national recession and lack of available financing. Rosenberg is benefiting from continuing explosive job growth in Sugar Land proper. There’s not a lot of entitled multifamily sites there, so satellite communities like Rosenberg are the beneficiaries.”
The $17 million Waterford at Summer Park Apartments, bordered by a lake and ringed by a fitness trail, will offer rents ranging from $830 a month for one-bedrooms to $1,350 for large three-bedroom, two-bath apartment homes. First move-ins are expected in early summer of 2012, Morgan says.
The prices may seem low for luxury apartments, but speak volumes about the factors underpinning the area’s growth. “The rents indicate the competitive advantages Houston offers over other areas. The cost of living is relatively lower than it is in comparably sized cities that offer the same amenities and quality of living,” Morgan says. “That’s why employers are flocking to the area.”
This is the eleventh new construction project from the 15-year-old Buckhead Investment Partners, a real estate firm headed by Morgan and his partner Kevin Kirton, which specializes in the development, ownership and operation of multifamily residential properties. And, according to Morgan, this development proved more difficult to get off the drawing boards than the first 10 put together.
“We live in financially and regulatory-challenging times, and this project proves that,” he says. “It’s still hard to get suburban deals financed here. We’re still tied to what’s going on nationally as far as the capital markets go. Equity is very hard to come by for suburban projects like this one. Everyone is concerned about barriers to entry, the availability of land and exit strategy.”
The first challenge was the difficulty raising equity, which was overcome by turning to the FHA multifamily insurance program. Morgan and Kirton knew an FHA-insured construction loan would be their best opportunity. “We have the advantage of an affiliated company that is a FHA MAP lender,” Morgan says.
Another obstacle was a disagreement between Buckhead and the FHA about the size of the development. Buckhead had planned for 260 units, but the FHA economist decided, based on the FHA’s own methodology, that demand was insufficient for that number. A compromise of 196 units was then reached.
What Morgan terms “onerous and extraordinary costs” on- and off-site represented additional hurdles, adding approximately $1 million in costs. The company had to build a section of public street to connect to the site’s main driveway, add runs of sanitary sewer and storm sewer, make modifications to an existing street to accommodate turn movements into and out of the site and pay impact fees to connect to public water and waste water systems.
On-site expenses included burying copper instead of aluminum service entry and secondary underground cables, and an extra water loop for fire protection.
When complete, the Waterford at Summer Park Apartments should help address a vexing problem faced by Fort Bend County officials. Says Morgan: “If you can’t house the people moving there, you’re not going to benefit from the economic growth you are spending tens of millions of dollars generating.”