Midtown: A Place For Millennials To Eat, Play And Sleep
Millennials get blamed for a lot of things, but Midtown is thriving because of them. Developers and investors are rushing to provide the apartments and retail-driven concepts Midtown millennials want, and though Midtown is a rare Houston submarket with barriers to entry and is running out of space, it remains one of the city's most active apartment and retail markets.
Midtown absorbed roughly 1,400 apartment units in the last year, which represents roughly 10% of all multifamily absorption in Houston during the same time period, according to JLL.
Developers expect the demand to continue. JLL reports there are about 2,400 units under construction in Midtown to be completed by early 2021.
“I think [Midtown] will continue to grow and develop a bit more," HFF Director Dustin Selzer said. "There are some parts of Midtown that are not fully developed. Over the next five years, the micro-neighborhoods will continue to develop and [add] more retail, multifamily. People will continue to move there."
The attractiveness of Midtown includes the city's growing population, the centralized location, the walkability and the accessibility of retail, restaurants and entertainment-driven concepts, JLL Managing Director Greg Austin said.
Midtown is also a short commute to downtown, the Medical Center, NRG Stadium and Montrose. Unlike many other communities in Houston, it is ringed by natural barriers that contain the growth.
“It is a popular spot for the under 40 crowd," Austin said. "There are a lot of restaurants, bars and nice rental housing [developments], and not a huge single-family residential housing stock.”
The young people moving to the Inner Loop community prefer to live in apartments, which can be linked to the convenience of rental properties but also to the rise of student loan debt, higher housing costs and stagnant wage growth.
Many of the mid- and high-rise residential towers dominating the market feature ground-level retail or are near mixed-use environments.
Some of the new developments in the works include the Midtown Superblock, home of McGowen Station, an eight-story, 315-unit luxury apartment project by Camden Property Trust and Mid Main, a six-story, 363-unit mixed-use residential building by RHS Interests.
Last week, Australia-based Caydon Property Group closed on a 30K SF property, its third site in Midtown. The first phase of the Caydon's mixed-use development, which spans over three city blocks, will be completed in mid-2019 and includes The Midtown, a $200M, 28-story residential project with 13K SF for ground-level retail on Drew Street.
Since most of the land in Midtown is already occupied with some type of property, developers will have to repurpose or redevelop land — a growing trend in the Inner Loop spurred by competition and demand, Austin said.
That means Midtown is getting taller. Vertical developments are not only more fiscally responsible with the rising cost of Midtown properties, but also meet millennials' demand for walkability between their homes and retail centers, Austin said.
“[Millennials] want to be able to walk to where they shop, where they eat and where they visit with their friends,” he said.
Walkability is becoming a national phenomenon, Austin said. Most residential real estate developers, especially those building in populated areas, are looking to tie in retail concepts.
"Retail developers come in and want to establish a foothold in that area because they know they are going to have a good pool to draw from,” he said. “In Downtown and Midtown, you will see residential and retail development go hand and hand. If multifamily residential [development] stopped in Midtown; retail would slow down as well.”
Midtown Houston Director Marlon Marshall agreed that walkability is a key component of the area's success.
"With Midtown being one of Houston's most walkable communities and our continued expansion of options for public transportation, we're able to offer connectivity to places of employment, healthcare, arts, entertainment and nightlife," he said in an email. "The new developments will only add to our district's vibrancy while increasing visibility and accessibility for housing, restaurants, services, cultural facilities, parks, and entertainment venues in Houston."
The robust restaurant and retail market is also stimulating investment in Midtown's nightlife scene.
Union Venture Group is opening two new concepts, 77 Degrees and Jack & Ginger's Irish Pub, on Brazos Street near other new bars.
“We always appreciate the walkability of Midtown," Union Venture Group co-owner Darren Van Delden said. "A lot of people can live here, shop here, eat here, dine here, and go to bars here. And, they don’t have to run around town. It is really convenient, and we find it to be very attractive.”