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Flashy Amenities Are Driving Crowds To Master-Planned Communities, But They Don't Come Cheap

Houston may be one of the largest cities by area in the U.S., but for Duane Heckmann, MSA adviser with the Land Advisors Organization, that doesn't mean his company has unlimited options for new development.

For one thing, Heckmann said, large swaths of land outside Houston are unsuitable for purchase. The land that the company began eyeing decades ago, for instance, is now controlled by the original owner's multiple children, which means many individuals to negotiate with. Even when land is readily available, it could be difficult to drain to mitigate risk in flood-prone Houston. Then there are the costs.

"If you find a piece of land with a willing seller with a relatively realistic pricing expectation [and] you can drain it, it's going to be an active property, for sure," Heckmann said at Bisnow's April 7 Houston Master-Planned Communities & Homebuilding event. 

Land Tejas' Uri Man

And that's easier said than done. It's a seller's market, Heckmann said — so much so that he doesn't know what the future looks like for land.

"We have never, ever seen the land market like it is right now," he said. "This is as hot as it could possibly be, pretty much across all disciplines. There's a lot of money chasing deals right now. Homebuilders are building at record levels."

With potential homebuyers snatching up new homes and the sheer growth of master-planned communities around Houston, developers are looking at including flashier amenities and more modern green spaces to incentivize buyers amid growing competition. That isn't coming cheap.

"People are able to work from home a lot more, don’t have to get in the car quite as much, drive so far. So they really want amenities that are going to serve them and their lifestyle," Clark Condon Managing Principal Elizabeth Gilbert said. "I think a big part of that is convenience, especially when you're looking at some of the retail and some of the things that they want surrounding them."

Uri Man, executive vice president with Land Tejas, said its Crystal Lagoons  multiacre lagoon amenities that serve as small beaches for Land Tejas communities in Balmoral and Sierra Vista, among other locations — fit that bill. Land Tejas places the beaches so that people driving by nearby highways can see them, and Man said it is a huge incentive for homebuyers to choose Land Tejas developments.

Goree's Stefano Poisl, The Howard Hughes Corp.'s Heath Melton, The Signorelli Co.'s Danny Signorelli, Clark Condon's Elizabeth Gilbert, Land Advisors Organization's Duane Heckmann and Land Tejas' Uri Man.

"We're getting about 10 times more foot traffic to the builders' models compared to those projects without the Crystal Lagoons," he said. "If [potential homebuyers] come to a builder, they get a free pass to try the crystal-clear water."

But Land Tejas must create communities of a certain size to keep the water that clear. Man said the company's developments need about 1,000 acres of land and 3,000 homes to get off the ground because it takes at least that level of homeowner association fees to cover the deficit from the lagoons.

"I think these developers have different approaches on this. Do you go in and do a large amenity … put a lot of your amenity dollars [in one basket] or do you spread them out around?" Gilbert said. "I think you're seeing a lot of approaches on that, and the developers handling that differently. I really think that's about the market and who you're trying to draw."

Aside from lagoons, Land Tejas is offering amenities like the Green Bolt trail, which Man described as a 12-foot-wide sidewalk winding throughout Land Tejas' Lago Mar development that accommodates golf carts, bicycles and pedestrian traffic. With people increasingly working at home, developers like Land Tejas are adding dog parks, clubhouses, lazy rivers and other sprawling, high-profile amenities to draw people in.

"From a higher level, what we're trying to do as master-planned developers is create a better experience for the customer so that can we compete against [people in] the city," The Signorelli Co. CEO Danny Signorelli said.