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Houston job growth spurs large residential project ramp-up

Posted by: In: Industry Insights 03 Feb 2012 Comments: 0

(Houston Business Journal) Companies are shopping for land and moving forward with big development plans for new home lots to meet demand created by Houston’s thriving job market.

Developers of master-planned communities and residential subdivisions and homebuilders are getting active as the Houston market faces a diminishing supply of home lots in desirable areas, such as Katy, The Woodlands and Sugar Land, real estate sources say.

“There are no lots sitting around,” said Will Holder, president of Trendmaker Homes    in Houston. “They’re committed before they’re even developed.”

Five residential projects with 600 acres or more are currently on the drawing boards of five different developers, said land broker Kirk Laguarta of Land Advisors Organization    , who noted these are not extensions of existing master-planned communities. Another eight to 10 smaller residential subdivisions, with 200 acres or less, are also in the works, he said.

“The market is coming back big-time,” Laguarta said.

Developers are being cautious, but a lot are eager to get back in the game, said Ed Taravella, principal with Houston-based Taracorp.

“This is like a year of awakening,” Taravella said. “I’m working with some developers who are looking at bigger tracts.”

Once job figures are revised, Laguarta expects Houston will have added 100,000 jobs in 2011 instead of the 80,700 that were reported.

If Houston adds another 80,000 jobs this year, it will need approximately 30,000 to 32,000 new single-family homes and 12,000 to 15,000 new multifamily units to accommodate the growing population, said Laguarta, who speculates the current level of new job activity is bringing 140,000 to 150,000 people to town each year.

The Houston region had 18,500 home starts in 2011, but only developed 13,500 home lots — a deficit of 5,000 lots, according to Houston-based Metrostudy research firm. That followed a shortfall of 10,000 home lots in 2010. And Metrostudy projects 20,000 new home starts in 2012.

“There are currently not enough lots under construction to meet current demand,” said David Jarvis, Metrostudy’s Houston director. “We need these deals to get done.”

It takes 12 to 24 months to get a new lot ready from the time the land is purchased.

“Keep in mind, we’re making sausage,” said Laguarta. “It takes a year to make sausage.”

Some of the projects in various stages of development:

• Cane Island, an 820-acre tract in the Katy Independent School District, is under contract to an undisclosed developer. David Minze, the primary landowner of the acreage, has done entitlement work on the property, said Lance LaCour, CEO of the Katy Area Economic Development Council. Minze created a land plan for a community called Cane Island that would have nearly 2,000 single-family homes, an elementary school and commercial acreage. The Katy area was called “Cane Island” before it was the city of Katy.

The acreage is being marketed by Laguarta and Duane Heckmann of Land Advisors Organization.

• A 1,100-acre tract, the former clay mining site for cement-maker Texas Industries Inc.    (NYSE: TXI), is back on the market after an attempt to develop the property as TerraVista Lakes did not come to fruition. Laguarta, who represents the land owner with Heckmann, said he is negotiating a letter of intent with a buyer on the 627-acre residential portion of the property. Grubb & Ellis Co.    has the listing on the approximate 470 acres of property earmarked for commercial use.

The Fort Bend County land is between Harlem Road and FM 1464, south of the Westpark Tollway and east of the Grand Parkway.

• Legacy Trust Co. NA owns a 1,100-acre tract poised for future development in the Magnolia area. Houston-based Legacy Trust was originally created by the family of Hugh Roy Cullen, the Houston wildcatter and entrepreneur who became one of the richest men in America. But the firm has evolved into a full-service trust company with $1.5 billion in assets that also manages other people’s money.

Legacy Trust added the large land tract into Magnolia’s extraterritorial jurisdiction late last year, said Deborah Rose Miller, economic development coordinator for the city of Magnolia. Two upcoming road projects by the Texas Department of Transportation    will increase mobility to the property.

“Legacy Trust is not moving forward currently with the development,” said consultant Roger Galatas, who spent 20 years working with The Woodlands Development Co.    “They’re waiting on the market to come back.”

• McKenzie Park is a new residential community in The Woodlands area being built by KPS Land Investment. Home lot development is scheduled to start in April or May, with delivery planned in December. The 193-acre development, which will have 294 homes lots, is west of Springwoods Village and north of the future Grand Parkway.

“McKenzie Park is in a very hot area,” said Perry Senn, president and owner of KPS Land.

• Lennar Homes of Texas Land & Construction Ltd. bought nearly 110 acres in the Katy area in December from Woodcreek Green Meadows 1 Ltd. The tract includes the former Green Meadows golf course in Katy that closed in the 1990s.

Robert Anthony with Landstar Realty Advisors Inc. represented the seller, while Lee Jones with Betz Commercial Brokerage Inc. represented the buyer.

Lennar plans to do a single-family development on the site, said Jones, but final plans are not complete.

• Austin-based Legend Communities is paying an undisclosed amount to BBVA Compass bank    for Harborwalk, a stalled residential development in Hitchcock. The 9-year-old property was originally designed for 700 homes, but fewer than 70 have been constructed, according to Philip Jalufka, president of Austin-based Legacy International Resort Properties, which will market homes in Harborwalk for the new owner.

After the acquisition closes this month, Legend plans to spend more than $2 million on new amenities and increase the number of boat slips at the marina from 167 to 400, Jalufka said.

To view the Houston Business Journal article, click here.

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