Luxury high-rise apartments planned inside the Loop
The Houston-based company acquired the 2.6-acre site on the northeast corner of Weslayan and West Alabama Aug. 22 for an undisclosed price from Interfin Cos., which assembled the tract five years ago with no specific plans for development.
“We were actively out looking at sites,” said Roger Gregory, PM Realty’s CFO. “This was the site we really felt was best-suited for high-rise multifamily.”
PM Realty’s development site is a stone’s throw away from the 10-acre Willowick Court Townhomes, which were recently acquired by an affiliate of Martin Fein Interests Ltd. Martin Fein Interests Ltd. Latest from The Business Journals Sawyer Heights Village sells for MApartment project set for Katy’s ReserveGriffin Partners breaks ground on retail project near JSC Follow this company as a site for new apartments, townhomes and large residential units.
PM Realty’s project — its first multifamily development in Houston — will include 250 units ranging in size from 850 square feet to 3,200 square feet.
This will be the company’s third high-rise residential development. The Heights at Park Lane, a three-building project in Dallas that includes a 20-story structure, was finished in 2009. The 24-story 1400 Hi Line project is currently under construction in Dallas.
Multiple developers are planning apartment complexes in Houston, but PM Realty’s project is the only high-rise that’s been announced in the latest round of deals.
“The least amount of competition in the market is in the high-rise arena,” Gregory said.
Not all the proposed apartment deals will ultimately get built because financing is difficult to obtain, said Bryant Nail, senior vice president in charge of PM Realty’s multifamily group.
PM Realty’s Houston deal is being developed in a joint-venture partnership with the INDURE Fund, which is part of the National Electric Benefit Fund. INDURE is contributing 90 percent of the project’s capital, with the rest coming from PM Realty’s half-dozen owners and two outside investors, Gregory said.
Construction loans are another issue. It took six months to negotiate the construction loan on 1400 Hi Line with U.S. Bank U.S. Bank Latest from The Business Journals Banks offer B in help to small businessBanks offer B in help to small businessLincare revamps credit deal with Bank of America Follow this company , said Nail, who works in PM Realty’s Dallas office.
The company has a lender lined up on the Houston project, he said, but he won’t divulge its identity until the deal is formalized.
In general, high-rise deals require at least a $60 million construction loan with a 30 percent repayment guarantee, said Nail, who would not reveal specifics on the Houston deal.
‘Home run’ location
PM Realty’s new Houston tower will have some of the highest lease rates in town, with a net effective rental rate of $2.40 per square foot.
Occupancy rates in high-rise rentals are very strong, said Laurie Null, who markets high-rise condominiums for sale and lease.
“So many people are coming to Houston, and so many people are choosing to rent,” said Null, CEO of Personette Group, who is not involved with PM Realty’s project.
Personette Group worked with another developer about a year ago that wanted to build a residential tower on PM Realty’s site, Null said, but it could not get financing.
Based on the feasibility study at the time, she predicts PM Realty’s tower will do well in the urban setting, which is within walking distance of Central Market, Highland Village and restaurants.
“I think that location will be a home run,” she said.
Renters will be willing to pay more to live there, said PM Realty executives, because of the planned quality of the building’s architecture, finishes and amenities. RTKL Associates Inc. RTKL Associates Inc. Latest from The Business Journals Commercial Real Estate: Medical construction has room to growLegg Mason CEO Fetting's pay approved in quiet annual meetingLegg Mason compensation committee chair defends CEO Fetting’s pay Follow this company is designing the structure.
The rental units will have gas cooktops, which is unusual for apartments, Gregory said.
“That is one thing that will clearly set us apart from other high-rise buildings in town,” he said. “Gas cooktops are something that amateur chefs really look for and want.”
Apartment interiors will feature hardwood floors, granite countertops, stainless steel appliances and designer lighting and plumbing fixtures. The building will have a 24-hour valet service, a concierge, direct elevator access to some units, a 3,000-square-foot fitness center, a country club-type pool and a full catering kitchen.
The first floor of the building will have 12,500 square feet of retail space for lease.
PM Realty plans to break ground on the tower in the second quarter of 2012. A general contractor has not been selected.
It will take two years to finish the development. The first residents, however, will begin moving in six months prior to completion.
Omnium Management Company Inc., a division of Palladium USA Palladium USA Latest from The Business Journals Palladium upgrades its propertiesBetting on the 'burbs Follow this company Inc., will handle leasing and management.
PM Realty Group LP
2010 Revenue: More than $100 million
Top exec: Rick Kirk, chairman and CEO
INSIDE THE DEAL: Tim Dosch and David Marshall with Apartment Realty Advisors represented PM Realty on the land acquisition.
Industry: PM Realty is involved with property management, leasing, marketing, development, investment sales, construction management and engineering.
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