High style

Despite some financing challenges, high-rise residential construction continues in Texas.

By Debra Wood

Bucking a nationwide trend, high-rise residential projects are coming out of the ground in Texas, albeit at a slower pace than during the residential boom.

Ziegler Cooper Architects designed the 56-story Austonian, being built by Balfour Beatty. The new high-rise condo will be Austin’s tallest building when complete in summer 2010.

“The interesting thing about Texas is its resilient economy,” says Scott Ziegler, founding principal of Ziegler Cooper Architects of Houston, designer of the $57 million 2727 Kirby project in Houston and the $150 million Austonian project in Austin, among others. “It’s not that we haven’t been feeling the subprime problem. But we’ve been insulated because our job growth has been stellar.”

The U.S. Bureau of Labor Statistics reported in July that Houston had an annual net gain of 58,300 jobs in May, up 2.3% from May 2007. Year-over-year nonfarm employment growth topped all of the country’s most populous metro areas, with Dallas coming in second at 2.2%, both far exceeding number three Atlanta and Washington, D.C., each with 0.9% nonfarm job growth. Jobs in Austin-Round Rock grew by 2.2% and San Antonio by 1.9%.

“Our market is not affected by the economy elsewhere,” says Jerry Brown, president of MDA Holdings of Houston, developer of 2727 Kirby. “It’s truly about location.”

Ziegler attributes much of the growth to oil industry profitability and plentiful land available in the state at a reasonable cost.

“We have a much lower barrier to entry,” Ziegler says. “Developers are coming to serve the market.”

He adds that many retirees are relocating in Texas, because the cost of living is lower than many states.

The second building at Mosaic in Houston, being built by J.E. Dunn Construction South Central, will contain apartments, rather than condominiums.

Bob Bowen, executive vice president of Manhattan Construction Co.’s Dallas division, says North Texas remains healthy for residential for-rent and senior-living communities. The company recently completed the base building construction on 1407 Main St., a 16-story, rental apartment building in Dallas, for $16 million, and is now constructing phase two of the $91.4 million, 23-story Ritz Carlton Hotel & Residences in Dallas.

“For-sale projects will still be an active component, as there is not as much pent-up product as people think,” Bowen says.

On the other hand, Peter Doyle, chairman of J.E. Dunn Construction Co. South Central in Houston, says in Texas and nationally “there has been a dramatic slowdown in development activity related to high-rise condominium and residential construction.” JE Dunn is building the $73 million, 22-story GlassHouse condominiums in Dallas and the second, 30-story apartment phase of the $118 million, two-tower Mosaic in Houston, developed by Phillips Development & Realty and Wood Partners, both with offices in Houston.

Financing new starts has become more difficult.

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“Because of problems throughout the rest of the nation on financing projects, there are problems even for viable projects in Texas,” Doyle says. “The hurdle for developers has been increased, made more difficult. Additional equity, more than had recently been required, is being asked for, and it has slowed the process.”

Paul Allen, a senior project manager with The Preston Partnership of Atlanta, agrees. Preston Partnership designed the $80 million, 432-unit 360 Condominiums in Austin and the GlassHouse.

“[There are] not as many new starts,” Allen says. “Financing seems to be the biggest hurdle but some markets, such as Austin, remain vibrant.”

Some developers, such as Phillips and Wood Partners at the Mosaic, are switching to apartment projects. But Bowen says that presents cost challenges for the developer, design professionals and builders. Unchecked it is difficult for rents to cover the cost to build with all the amenities people expect. An apartment building may have smaller units, which lowers the cost per month in unit rent. But smaller units can drive up the cost per-sq-ft basis, as a percentage of higher-cost kitchens and baths changes in relation to less expensive costs of bedrooms and living rooms.

The Mosaic apartment building contains smaller units than the prior-phase condo tower.

“It’s more affordable for the market,” Doyle says. “The developer’s goal was to get younger singles and couples who don’t need large square footage.”

What’s driving demand? Young professionals seeking an urban lifestyle and a more mature baby boomer population looking for less maintenance on a home are attracted to high-rise living.

“High-rise residential, be it for sale or for rent, has been driven by several factors in terms of the demographics,” Bowen says. “People do not want to live so far out and some young professionals want to live a different lifestyle.”

Many of the current apartment and mid-price range ($230,000 to $400,000) condo projects include retail and restaurants in the base, Doyle says. The luxury buildings, with units selling for $1 million or more, usually do not, with residents desiring more exclusivity.

In addition, many people find high-rises attractive due to their energy efficiency.

“It’s a much more sustainable living style and offers lower expense for energy consumption,” Ziegler says.

Living in close proximity to restaurants, retail, cultural attractions, sporting events and other services saves time and money spent on driving, Ziegler says. Also, he adds, compared to a house, exposed to the ambient air temperature on all four sides and from the roof, a high-rise condominium results in less heat loss, so residents, typically, spend less on heating and cooling. In addition, many high-rises are built with energy-efficient mechanical or other systems.

Ziegler’s Austonian boasts several green features to decrease energy and water use, a white roof to reduce the urban heat-island affect, native plants, and high performance, low-E glass to allow light in while minimizing demands on the cooling and heating system.

Wood Partners is seeking LEED-silver certification for its GlassHouse in Dallas.

Allen says, however, that the added cost for sustainable residential products seems a major stumbling block. His project, 360 Condominiums in Austin, meets the city’s Energy Green Building Program’s requirements for sustainable building practices and conservation of energy and natural resources.

Even if developers do not seek LEED certification, Doyle sees increased interest in sustainability.

Houston projects Houston’s ultra-luxury high-rise, 2727 Kirby, topped out in July. MDA Builders is building the 30-story condominium tower for its sister company MDA Holdings.

A sleek, slender tower, 70-ft wide by 200-ft long, 2727 Kirby slopes out 15-ft toward the street, with each floor sporting a larger floorplate, which gives the upper units larger master bedrooms. Transfer beams and cantilevers carry the load.

“A gravity-flow column follows the plane of the sloping facade,” Ziegler says.

The building features a sunset terrace, infinity-edge pool, cabanas, outdoor fireplaces and a fitness center. Brown says 2727 Kirby seeks to replicate a country club atmosphere, with the amenity deck taking the place of a traditional backyard.

Each of the 96 units, ranging from 1,250 to 6,100 sq ft, includes a private terrace, stone flooring, European cabinetry and an electric hologram fireplace with a heat strip that gives the illusion of a real fireplace without the cost of venting. About 70% of the units are sold.

Brown attributes much of the success to the property’s urban location, adjacent to a residential area. It is the first modern condo tower built in the vicinity.

The cast-in-place, post-tensioned concrete structure sits on a 6-in thick mat-slab foundation. The six-level parking deck is topped by the residential units. A December finish is anticipated.

GT Leach Construction of Houston broke ground in July on the 17-story Highland Tower, also in Houston. The 96 units range in size from 800 sq ft to 1,600 sq ft and are priced from $375,000 to $675,000. It was designed by Ziegler Cooper to appeal to a younger buyer than Kirby. Piers will support the post-tensioned concrete structure, which will be clad with a combination of aluminum panels, glass and brick. Completion is scheduled for late 2009. Requests for the cost of the project were not released by developer Pelican Builders of Houston.

Dallas projects Manhattan Construction began excavation on The House in November 2006 and topped out in February 2007. Wesley Weaver, project manager for Manhattan, expects to start turning over units on levels five through seven in November and complete the rest by March.

An exterior rendering of Houston’s 2727 Kirby, a 30-story luxury condo tower designed by Ziegler Cooper and being built by MDA Construction.

The $74 million project includes ground-level retail with one level of below-grade parking for 94 cars; a 276-space parking deck, with a 46,000-sq-ft footprint, for condominium owners on levels two through four; and 150 units in the tower, which has a 13,000-sq-ft footprint. An amenity deck, with a pool, cabanas and spa, tops the garage. Trees will surround the deck to help block noise from the street below.

The poured-in-place, post-tensioned concrete structure sits on 115 piles driven to an average depth of 53 ft. A combination of precast concrete, glass, metal panels and exposed concrete clads the exterior. Bathrooms and kitchen countertops feature marble imported from China. Except for the carpeted bedrooms, hardwood covers the floors.

“There is not a lot of elaborate, ornate detail. It has crisp lines and smooth finishes,” Weaver says.

JE Dunn Construction of Houston topped out the 372-unit, 21-story GlassHouse in July. The post-tension concrete-frame building features a podium with an amenity deck and four-levels of parking, topped with 17 floors of residential units.

Austin projects Balfour Beatty Construction of Dallas is working on the $150 million, 55-story, 850,000-sq-ft The Austonian for Benchmark Development of Austin. Ziegler Cooper designed the high-rise, with its elliptical-shaped tower. The building will house 188 luxury condominiums, parking and two floors of retail space. When complete, scheduled for August 2010, it will be the city’s tallest building.

JE Dunn began construction of the $75 million, 44-story 360 Condominiums in June 2006 for the Novare Group of Atlanta and Andrews Urban of Austin. The 840,000-sq-ft project includes about 14,000 sq ft of retail. Deep piles support the post-tensioned concrete-frame building. Glass window wall with stucco accents grace the exterior. Final punch-list items remain, but the project is substantially complete.

San Antonio projects The Broadway began starting to come out of the ground earlier this year. Koontz McCombs Construction of San Antonio is building the 20-story, $55 million project for The Broadway Tower San Antonio Ltd. of San Antonio. Ziegler Cooper designed the curved building. The exterior combines stone, stainless steel, glass and aluminum.

C.F. Jordan of San Antonio began construction in 2007 on Vidorra for developers Presidian and DTMLS, both of San Antonio. The first $62 million, 22-story, 275,000-sq-ft tower, designed by Humphreys & Partners Architects of Dallas, will contain 144 condominium units. A 107,264-sq-ft parking deck, wrapped with six town homes, sits adjacent to the tower.

Gulf Coast projects G.T. Leach Construction is nearing completion for Houston-based developer Randall Davis’ $91 million Sapphire Condominiums on South Padre Island, designed by Ziegler Cooper. The two 31-story towers are connected for the first 19 floors and contain more than 200 units, ranging in size from 1,400 to 1,900 sq ft. The 20th floor features private terraces with 6-ft-high wind screens.

Davis’ 15-story resort project in Galveston, The Emerald by the Sea, was recently completed by G.T. Leach.

“Those who do break ground in this economy, if they have a good team and a good product, will do well,” Ziegler says. “But there will be fewer projects coming to market because of financing.”