Island Riding High in the Saddle With Epoch Building Boom

Not since the rebuilding efforts after the Great Storm of 1900 has Galveston Island seen so much construction activity.

by Tonie Auer

Diamond Beach, a high-rise condo project on the west end of Galveston’s seawall, will break ground in January. With a project cost at more than $50 million, the luxury condos will enjoy amenities such as two oversized pools, four hot tubs, water slide, lazy river, indoor pool and full-service day spa.

It's been more than a century since Galveston Island has been the center of a major building boom, but with more than $2.2 billion in investment made to Galveston Island this year--through August alone--growth is happening across nearly every sector and throughout the city.

"The growth is comprehensive and diversified," said Jeff Sjostrom, president of the Galveston Economic Development Partnership. "Every area of Galveston is having some form of development. That $2.2 billion includes more than 5,000 housing starts in the first half of the year and more than 3 million sq. ft. and 1,000 new jobs in development across the island."

Galveston followed the national trend in the housing market where it has slowed a bit, but it has picked back up, he said.

This type of economic growth hasn't occurred in Galveston since the rebuilding efforts after the infamous 1900 hurricane, Sjostrom said. The Great Storm, as it's called by local media and historians, destroyed what was a flourishing port town and killed more than 6,000 people. Rebuilding efforts after the storm came almost immediately, in a triumph-over-tragedy story that continues to define the spirit of Galveston.

"That is the only comparison to demonstrate a time where Galveston has experienced the growth we're having today on a similar scale," Sjostrom said.

According to the city figures, the number of businesses in Galveston has grown by more than 57 percent in the past year, he added.

"We are excited because it is comprehensive and happening across the board," Sjostrom said.

The entire county is booming right now, said Don Gartman, president of the Galveston County Economic Alliance.

"Friendswood, the League City area and the Dickinson area are all experiencing a growth in residential and small commercial at this point," Gartman said. "Texas City and the La Marque area are falling right behind that. We have about 15,000 to 20,000 homes planned, platted or under construction right now. Countywide, we believe we will have about 30,000 to 40,000 new homes in the next 10 years."

advertisement

Why Galveston? There are many reasons for the growth of this Gulf Coast city, which is about 50 mi. southeast of Houston.

"We are still only 30 to 40 minutes from downtown Houston," Garman said. "And the traffic is not as bad as the other sides of Houston."

Sjostrom agreed that proximity to Houston, the fourth largest metropolitan area in the country with a population of 5.3 million in the Houston-Baytown-Huntsville area, is the biggest reason. The greater Houston area's population has increased by 11 percent since 2000, according to figures from the U.S. Census Bureau.

It also helps to be surrounded by water with lots of waterfront properties and golf course properties available, Gartman said.

"The younger population is more interested in leisure activities with less maintenance associated with it," he added. "They're looking for condos and high-rise living. Then, there are people from Houston looking for second homes. We've always had that in Galveston, but it has grown over the past few years."

As the rooftops grow, the commercial development follows, Gartman said.

There are more than a dozen new condo and resort home developments in the works on the island.

"The residential market has completely reversed itself," Sjostrom said. "Seven years ago it was stagnant. Now, we have new condos going up at an incredible pace. The West End home market for luxury second homes has been extremely strong and we have national builders coming to island."

One of dozens of new and planned luxury condo project, the Eibands Building, built in 1870 and once the home of the Texas Supreme Court, now houses 24 condo units in downtown Galveston.

Condo Craze Among the highest-profile projects is the $167 million Palisade Palms being developed by Houston-based Falcon Group and built by Brasfield & Gorrie LLC of Birmingham, Ala. The high-rise condominium development consists of two curvilinear towers designed to provide residents with views over the Gulf of Mexico.

The first high-rise condo project to be built on Galveston Island in more than 20 years, the two 27-story towers with a total of 288 units will sit atop three levels of elevated parking and will be connected by a podium lobby that opens up onto the pool deck.

The project is full of amenities including two pool areas with spa hot tubs, a plaza deck with luau-style fire pit and a fitness center.

"In order to sell the units, the Falcon Group had to sell the island and all of its attributes," said Scott Evans, vice president and team leader for hospitality and residential projects for Kirksey of Houston, the project architect. "Since it began, other developments have been reaping the benefits. Palisade Palms started bringing condos back to Galveston."

The project should be ready by late 2007 or early 2008, Evans said.

Houston developer Randall Davis worked with Emerald Condominiums, which are sold out and will be ready at year's end. That high-rise has 115 condos at the east end of the beach. The units' selling prices ranged from $250,000 to $1 million.

Now, Davis is developing Diamond Beach, a $50 million to $60 million high-rise condo project on the west end of Galveston's seawall.

Sitting 23 ft. above the water, Diamond Beach will be a 225-unit six-story condo resort with two oversized pools, four hot tubs, water slide, lazy river, indoor pool and full-service day spa.

Ground is expected to be broken in January with the first units ready to open in April 2008.

Another luxury condo project is the Eibands Building. Built in 1870 and once the home of the Texas Supreme Court, it now houses 24 condo units in downtown Galveston. The four-story building includes gated parking, modern stainless appliances, custom build-outs, a fitness center and indoor swimming. The building is almost full and residents began moving into the site in October.

A mix of multifamily and single family homes, Pointe West Resort will have some 2,000 units when completed in about five years. Residential developments are driving the need for such projects as retail, entertainment and schools.

Single-Family and Schools On the west end of the island, the $104 million Pointe West Resort project by Centex Destination Properties is under construction on 1,500 acres. A mix of multifamily and single family homes, the development has mostly second homes, said Paul Shepherd, director of development and operations at Centex Destination Properties.

Featuring 3 mi. of beach along Galveston Bay, the project will have 2,000 units at build-out, Shepherd said.
The project is about one-third of the way through and will reach build-out in about five years, he added. Of the 2,000 units, 500 have been sold. Single-family homes are selling from $300,000 to $500,000. Plans are also in the works for a 100-slip marina with dry storage for another 100 boats on the bay, Shepherd said.

On nearby Bolivar Peninsula, a narrow strip of beach separating Galveston Bay and the Gulf, is home to the Avocet, a master-planned community on 148 acres accessible via the ferry from Galveston or via SH 87. The project features 413 lots with four distinct neighborhoods and a beach club.

The project has partnered with five area homebuilders and the lots range from $75,000 to almost $400,000.

Construction of the first phase of Avocet's infrastructure on the western half of the development began last summer and is scheduled for completion in the spring.
Following the housing growth, schools are expanding, too.

Gilbane Building Co. of Houston started construction in August 2005 on a $54 million high school for Clear Creek Independent School District. The approximately 456,000-sq.-ft. building on nearly 62 acres of land in League City is about halfway between Houston and Galveston.

It includes complete classroom facilities for general studies as well as specialty spaces for science, computers, technical training and music. A 725-seat auditorium with a supporting black-box theater accents the campus. Athletic facilities include three gymnasiums, a natatorium and competition football, baseball and softball fields. The school is slated for completion in July.

Businesses, too, are coming to the Galveston area, and marine-support services have expanded with the residential growth, the Galveston Economic Development Partnership's Sjostrom said.

The Galveston National Laboratory on the campus of the University of Texas Medical Branch is under way by Vaughn Construction and is scheduled to open in June 2008.

National Laboratory The construction of the Galveston National Laboratory under way by Vaughn Construction of Houston has contributed to the island's economy.
Estimates show that the project will contribute $1.705 million to local government revenues over five years.

The Galveston National Laboratory-also called the National Biocontainment Laboratory-will be a sophisticated biomedical research facility constructed largely with funds provided by the National Institutes of Health.

The facility, on the campus of the University of Texas Medical Branch at Galveston, is designed to allow scientists to safely study infectious agents that potentially might be used by bioterrorists or that pose threats as naturally emerging diseases, according to the university.

The construction project has been complex because of the security features in place and because it is located on an active, busy campus, said Scott Sandlin, associate at Perkins+Will, the Dallas-based architects for the project.

The project started three years ago and is targeted for a summer 2008 completion date. It features 175,000 sq. ft. in an eight-story building, Sandlin said.

"It is a big complex project on a tight site in the middle of campus, which makes it hard to integrate," he said. "We are utilizing fast-track project delivery methods to get the building up as quickly as possible."

Maintaining the Momentum Getting to Galveston Island from the mainland means crossing IH-45 on the Galveston Causeway, where an estimated 67,000 vehicles travel daily. Currently, construction is ongoing by Traylor Bros. Inc. of Indiana to expand the causeway to four lanes in each direction.

The first half of the new $135.9 million causeway is scheduled to be completed next spring with an overall targeted 2008 completion.

With all of this development in the works, Sjostrom said that even if no other projects were started and only the projects that are under way now reach fruition, within four years there will be another $1 billion added to the tax base of Galveston Island. "We keep waiting for it to slow down," he added. "As we've looked at (the growth), we are confident it will continue because of the diversified and comprehensive nature of it. It is not all one area or business type and we think that is a strong foundation."
He said a proactive local government creating strong public policy helped lead the way for the development to occur.

"We have been using a comprehensive plan developed about six years ago that oversees the economic development incentives and provides an overall good foundation for growth," he added. "The momentum has been building for the last six to seven years and we're starting to realize the actual development of these properties now."

"We've got an incredible base of public and nonprofit institutions on the island, which are large job generators," Sjostrom said. "We have 2,100 businesses on the island with 43,000 jobs for our 60,000 residents."

Meanwhile, the Port of Galveston is working to attract traditional maritime and support for the offshore oil industry and working to reinvent itself, Sjostrom added.

"The tide is turning in a dramatic fashion with activity in the port today," he said. "We have a new shipyard with one of the largest dry-dock facilities along the coast."

The total tonnage coming through the port was up from 3.4 million tons in 2004 to 4.5 million tons in 2005, according to the Port of Galveston. The number of vessels grew from 444 cargo/research/lay vessels in 2003 to 577 in 2005 and the number of barges more than doubled from 82 in 2004 to 166 in 2005, according to the port.

The growth of the port continues to move forward with the cruise-ship industry that wasn't there five years ago, too, Sjostrom said.

"The tourism picture for Galveston has really brightened," he added. "We have five cruise ships that are here on a permanent rotation basis as well as other ships that come in periodically."

Tourism is still a huge component of Galveston's economy with a new convention center along the seawall, new hotel additions and the completion of Schlitterbahn water park.

The water park is an indoor facility with about half under a roof that can be enclosed in the winter months, which means the park can be open year-round.

"The tourism market has extended to almost a year-round cycle," Sjostrom said. "The convention center hotel is busy and we've had a dramatic increase in airport activity."