March 13, 2019
by Melissa Baer
Mixed-use has become a preferred asset class in Houston, and projects that blend real estate sectors are at an all-time high. A panel of mixed-use developers at Connect Houston recently discussed the benefits and challenges of their projects.
“It’s amazing to see the growth and development in mix-use properties all across Houston,” moderator Jeff Stein, CBRE’s Senior Vice President and Co-Head of Houston Debt & Structured Finance said. “But I wonder if the popularity of the trend will continue.” The panel agreed unanimously that it will.
“These little slices of heaven are here to stay,” Kristin Rick, vice president of originations at Pender Capital said. “They offer a great resource for those who want the feel of a metropolitan area.”
The Howard Hughes Company has developed many live-work-play, pedestrian-friendly communities around the country. Paul Layne, president of the company’s central region, told the audience there will always be demand for a place for people to walk from home to the office, or a movie theater or a restaurant.
The Woodlands is one of Howard Hughes’ megadevelopments. The award-winning, 28,000-acre master planned community has a population of more than 110,000. “We’re continuing our rapid growth and are still making deals,” Layne said.
With the idea that the end result must ultimately be a place where people will want to live, eat, shop and revisit, panelists addressed the hurdles and challenges experienced during various phases of the mixed-use development cycle.
David Rendon, vice president of construction at Thor Equities, discussed the early stages of the company’s Kirby Collection in Central Houston. “In the beginning of a project, there are a number of challenges upfront, including the logistics and construction of a densely packed development.” He added that, how the property will actually be used must be in the forefront of a developer’s mind at all times.
Midway Cos. Executive Vice President David Hightower told attendees that one of the biggest challenges he faces when preparing for a project is the parking. He stressed that parking should complement the many types of properties housed in a large development. “This can be tricky because you want to prevent overbuilding yet satisfy all of the clients who are using the properties,” he commented
Midway’s megadevelopment, CityCentre, is a redevelopment from Houston’s former Town & Country mall, and contains office properties, hotels, retail, entertainment, restaurants and residential. “We’ve put together a walkable, high-density development,” Hightower said.
In addition to controlling costs, the panel’s additional challenges include working with older infrastructure, market dynamics, finding the right tenants and securing an anchor.
When discussing the “secret sauce” of a successful mixed-use property, Layne said owning the land when putting together a development is a great benefit. “It’s important to have a place where you can build freely, understand the cost of capital, understand the return requirements and then be able to forecast the exit strategy,” he said.
Pictured: CityCentre, 800 Town & Country Blvd., Houston
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