This Is Who Uptown Houston Is Trying To Attract
Uptown Houston has all the parts of a city-center atmosphere — high-rise living, a strong mix of retail, the amenities of Memorial Park, posh hotels, a strong office base — but has turned to improving the walkability and connectivity as the final piece of the puzzle.
The major redevelopment plan, which includes a few more years of major road construction and several luxurious projects both planned and under construction, seeks to meet the demands of the modern and higher-wage-earning population (surprise! it's not all about millennials!) that live, work, play and stay in Uptown Houston.
“If we didn’t have a downtown, [Uptown] would be our downtown, and it would be the envy of all downtowns in the United States," Colliers International President Patrick Duffy said. "When downtown markets are trying to revitalize themselves, what are they trying to do? They are trying to attract retail, residential and become a 24/7 live, work and play."
The economic stability, the centralized location and the ongoing improvements to mass and regional transit are among the reasons Martin Fein Interests bought a 3.4-acre tract at River Hollow Lane and Post Oak Park Drive in Uptown, Vice President of Development Rebecca Luks said during Bisnow's Future of Uptown Houston event April 17.
Reverie at River Hollow, a 304-unit, mid-rise community with five- and six-story buildings, will target mature renters given its prospective high-end rents, Luks said. The luxury community will feature studios to three-bedroom apartments at an average size of 912 SF.
Many elements, such as the steel and concrete construction and the slew of on-site amenities, were selected to accommodate that mature prospective tenant market, Luks said. Community offerings include a pet spa, a dog room, a bike repair room and storage, a large party room with a catering kitchen, a children's room adjacent the fitness center and an Uber waiting room near the clubhouse. Construction has begun and move-in will begin in May 2020.
The Post Oak Hotel at Uptown also caters to a sophisticated clientele, Landry’s Inc. Vice President of Real Estate Rodney Lerner said. Typical guests range from business travelers, international shoppers, sports and entertainment guests and staycation locals.
Could Uptown be the home of another big-name tenant: the Houston Rockets, Evergreen Commercial Realty principal Lilly Golden asked Lerner.
When Fertitta Entertainment Chairman and CEO Tilman Fertitta bought the Houston Rockets in 2017, he discussed the team's need for a new practice facility. (It is one of a few teams without a stand-alone practice facility, which makes practice less efficient and subjects practice to time conflicts at the Toyota Center, he said.) With Fertitta's construction underway on the Post Oak Hotel and his restaurant giant Landry's headquartered in Uptown, rumors flew that Uptown could be the new home of the Rockets.
“Never heard anything about that,” Lerner said.
When pressed if Landry's planned on adding more facilities at the Post Oak Hotel or constructing more Post Oak-branded hotels, Lerner stayed coy.
“Yes. No. Maybe,” he said. “You never know what we are going to do next. We don’t publicize our plans for the future. But, there is always something baking in the oven.”
Expansion and redevelopment are paramount development tools in Uptown.
In 2017, Whitestone REIT purchased BLVD Place, a 17K SF mixed-use development anchored by Whole Foods on South Post Oak and San Felipe Street. The company has invested $160M and expect to build at least another 140K SF, Chairman and CEO Jim Mastandrea said. The next phase will be 60% office and 40% retail. The company is also actively looking for nearby land to acquire.
Whitestone has used data-driven research to measure which type of tenants to bring on at BLVD Place, such as a rooftop movie theater. A few months ago, it announced plans to swap Peska Seafood & Prime Steaks Restaurant with The Original Ninfa’s Uptown Houston.
“We found another steakhouse wasn’t necessary for the property,” Mastandrea said.
Oil Is Still King
As the Houston economy diversifies, the Uptown Houston office market has added major sectors such as financial institutions, law firms, real estate and engineering firms. But it still depends on the oil and gas industry, similar to many submarkets, Duffy said.
“Welcome to Houston," he said. "You can take that statistic anywhere other than Sugar Land, which is far less intense when it comes to oil and gas."
Roughly 15% of the tenants in the Uptown market are oil and gas-related companies that represent 37% of the occupied square footage, he said. Those firms absorbed 50% more space than most tenants.
The Uptown Market is less energy dependent than other Houston submarkets such as Downtown at 20%, Katy Freeway between 35% and 40% and The Woodlands at about 35%, according to Colliers' research.
The Houston office market is slowly improving from the 2014 energy downturn. The overall vacancy rate was 19.5% in Q1 19, a decrease of four basis points from the same period the previous year, according to Colliers' quarterly office report.
“We have a very diverse market compared to where we used to be,” Duffy said. “[But] the big users are still the oil and gas companies. If you are trying to take down big blocks of space that is where it is going to come from.”