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Houston's Multifamily Market May Be Oversupplied, But Condos Are Not

Bisnow Houston | Kyle Hagerty

Thanks to Hurricane Harvey, Houston's multifamily market avoided much of the pain from years of overbuilding during an oil downturn. With the positive effects fading, adding new supply is still hard to rationalize. But new condos? That is another story.

stolz multifamily meeting

Bisnow/Kyle Hagerty

Alliance Residential Managing Director Cyrus Bahrami, Stolz Partners founder Will Stolz, STG Design Principal Warren Johnson and Arch-Con Corp. Senior Vice President Michael Vaughn at Bisnow's Houston multifamily event 2018







This year, Houston's multifamily sector will add roughly 7,000 units, compared to 21,191 in 2016 and 13,719 in 2017. The slowdown is a welcome change of pace.

"My hope is we that we don't have the level of units being developed in the past," Alliance Residential Managing Director Cyrus Bahrami said. "I think investors learned during the last few years. We don't need 50,000 units over a four-year period."

Despite the high levels of supply, Bahrami is still betting on Houston. With several projects in the works and others still leasing up, the summer months, when apartment leasing is at its peak, will be yet another shot in the arm for Houston's multifamily sector.

Bahrami spoke at Bisnow's Multifamily Revival event Thursday morning at The Westin Galleria, where over 300 multifamily sector professionals gathered to hear the latest developments in the Houston market.

Houston's condo sales also jumped after Hurricane Harvey as Houstonians looked for alternative housing. Between projects like Arabella and Astoria, high-profile condo developments are all over Houston and more are on the way.

"You see the amount of condo inventory compared to other major metros, it's a shame we don't have as many as other major cities," DC Partners Chief Operating Officer Acho Azuike said. "In a city our size there can be a lot more."

Stolz Partners, behind Giorgetti Houston and The Sophie, looks for signs of a vibrant urban core, which is exactly what Houston has been developing recently, according to Stolz Partners founder Will Stolz.

"The other piece we have to have is a buyer that can afford the product, it has to be an area of affluence. The list of cities you can build in gets much shorter when you look at it that way," Stolz said. "For all its ups and downs, Houston is a very affluent city."

Houston's condos are selling in the $600 to $900/SF range, Stolz said. While that is a lot locally, compared to other major metros with robust condo markets, it is relatively low.

Houston's biggest problems are land and construction prices. Houston's land prices have not gone down and construction prices have risen in the wake of Hurricane Harvey as construction workers and subcontractors work to complete residential projects. The result is construction costs on par with other major metros, but lower sale prices.

"Harvey's effect on the construction industry has lingered, but I think we're getting past that now,"Arch-Con Corp. Senior Vice President Michael Vaughn said. "Only about 15-20% of damaged homes still need work."

Bahrami said investors are beginning to lower their expectations on returns in Houston. When combined with the increasing push to go vertical, deals are still able to be penciled out in the right areas.

"There's a growing belief from investors that Houston has great downside protection. If you buy it right, develop it right, it's a good investment opportunity."

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D.R. Horton begins 335-acre Gwinnett project, one of region's largest in more than a decade

www.bizjournals.com  |  Douglas Sams

stolz jan 2018

Homebuilder D.R. Horton is starting one of Atlanta's largest master-planned communities in more than a decade, with 760 residential lots.

Homebuilder D.R. Horton Inc. is starting one of metro Atlanta’s largest master planned residential projects in more than a decade.

An affiliate of Forestar Group, which was officially acquired by D.R. Horton (NYSE: DHI) earlier this month, bought 335 acres for the massive development near Highway 20 and Ozora Road in the Grayson area.

The transaction closed Oct. 17 for $15.3 million. Stolz Partners was the seller.

D.R. Horton will develop 760 residential lots, with two miles of walking trails connecting to Bay Creek Park and Grayson High School.

Construction is already starting, said Brent Story, with Avalon Real Estate Partners, the real estate firm that brokered the land sale.

“I don’t know of any master-planned communities started in the Grayson area, or any part of metro Atlanta for that matter, that are this large since well before the Recession,” Story said. “I think it speaks to just how strong the market is for entry-level and move-up buyers in this area.”

The entire project, known as “Independence,” will exceed 400 acres, including land along Highway 20 for 450,000 square feet of stores, restaurants and some office space.

RankCompanyNumber of homes closed in 2016
1 D.R. Horton Inc. 3,070
2 Century Communities of Georgia 1,265
3 PulteGroup Inc. 758
View This List
 



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Luxury condo project in Upper Kirby approaches presale finish line

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Announced condo project will carry Italian luxury brand

The Giorgetti Houston 600Plans announced this week for a new condominium project would carry a 118-year-old Italian furniture maker's name and will emulate the look of art galleries, boutiques and restaurants abroad that carry the luxury brand.

Giorgetti, a renowned furniture maker that has worked on hotels, yachts and royal palaces around the world with its unique shapes and maple, oak and marble accents, is lending its century-old brand to the project by Stolz Parnters, Mirador Group and Sudhoff Companies.

"Art and architecture are coming together," said Jacob Sudhoff, of Sudhoff Co.

The 7-story mid-rise site will be in Upper Kirby's Steel Street, known for its canopy of oak trees down the quiet road, where an older apartment complex was razed. A long-time Houston family previously owned the land.

The project will have 32 residences ranges from 2,400 square feet to 4,500 square feet. Ceilings will range in height from 10 to 12 feet, with balconies from 500 to 2,000 square feet. Giorgetti touches will be apparent throughout the design from the kitchen and outdoor cabinetry to paneling, lighting, carpets, closets, woodwork and furnishings.

Pre-sales for the condominiums are scheduled to begin in September. Construction is set to begin with 50 percent of the homes are pre-sold with an expected start date in the third quarter next year.

This mid-rise condominium project is being announced at a time when the outlook is increasingly uncertain for the multimillion condos and high-end market in Houston. Several mid-rise condo projects that were announced during the real estate boom have scuttled or shelved plans.

Meanwhile, construction is ongoing for a number of high-rise condo projects around the city, also marketing a new kind of lifestyle for Houston.

Giorgetti designs have been featured in $24 million penthouse at New York's Plaza Hotel, the Shangri-La Hotel in Toronto, Fontainebleau Chateau Suites in Miami, Four Seasons Residences in Austin, Torch Doha and The Reverie Saigon in Ho Chi Minh.

"For us, beauty is the first source of inspiration, including and above all, for the contribution it can make to improving the quality of where we live," said Giovanni del Vecchio, managing director of Giorgetti. "With our partners, we share the same passion, vision and love for the brand and for the lifestyle that we are able to create and express. The result is very special—a remarkable living space, imbued with the spirit of modern elegance."

Jerry Hooker, Principal of Mirador Group and Jacob Sudhoff of Sudhoff Co. said their idea to bring the luxury brand to Houston dovetailed with Giorgetti's expansion into an expanding lifestyle brand. They eventually flew to Italy to pitch the idea for a luxury-branded condo building in Houston.

"It was a perfect marriage," Hooker said. "What we had envisioned and where their company was going....We are bringing in Italian culture and quality in to the building."
Hooker said the project will be the first of its kind in the United States.

By Erin Mulvaney, Chron

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Atlanta developer teams up with Italian furniture maker for second Houston condo project

The Giorgetti Houston 600An Atlanta developer has partnered with a high-end Italian designer to build its second luxury condominium project in Houston.

Stolz Partners LLC, in collaboration with furniture maker Giorgetti, are planning to develop Giorgetti Houston, a luxury condo project in Upper Kirby.

The seven-story, 32-unit project will sit on a little less than an acre at the northeast corner of Steel Street and Virginia Avenue, just south of the West Ave mixed-use development. Stolz Partners is currently under contract for the land, which was the former site of the Kirby Court apartments.

Giorgetti Houston, designed by Houston architect Mirador Group, will feature a contemporary glass, stucco and masonry exterior, inspired by iconic furniture designs from Giorgetti.

The condo will offer two-bedroom units with a study and three-bedroom units averaging about 3,000 square feet of living space as well as up to 500 square feet of outdoor terrace space. The units will feature high-end kitchen and bathroom cabinets designed and manufactured by Giorgetti as well as Gaggenau appliances. Prices will average just under $2 million.

The project will have four penthouse units — boasting 5,000 square feet of living space — on the top floor with views overlooking the Upper Kirby area.

Giorgetti Houston will feature a well-appointed lobby area furnished with Giorgetti furniture. There will be some common lounges and outdoor spaces, as well as a fitness room, but the project was intentionally designed without costly amenities, like a pool or a large club room, to save on HOA fees, said Will Stolz, founder and owner of Stolz Partners.

Giorgetti Houston will likely appeal to working professionals and empty nesters who want to live within walking distance to neighborhood shops, restaurants and offices, said Stolz.

Stolz Partners plans to open a sales center at the Internum furniture store, 3303 Kirby Drive, in mid-September, and will break ground on the project after preselling half of the units. Houston-based Sudhoff Cos. is marketing the project. The general contractor and engineering teams are yet to be determined.

Stolz Partners is doubling down on Houston’s luxury condo market despite the oil slump. The developer is also developing The Sophie, a seven-story, 42-unit luxury condo project near Memorial Park. The developer has sold nearly a fifth of the units inside The Sophie since presales began less than a month ago.

Paul Takahashi covers residential and multifamily commercial real estate for the Houston Business Journal.

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Stolz Partners, LLC
12645 Birmingham Highway
Alpharetta, Georgia 30004
770.390.2555
Stolz Partners, LLC
12645 Birmingham Highway
Alpharetta, Georgia 30004
770.390.2555

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