'We Have It All' Message Aims To Attract Millennials And Empty Nesters To Westchase Area
Westchase is historically known as an office market, but reinvestment in the older multifamily product is aiming to position the Westchase submarket to attract residents from both sides of the demographic spectrum: millennials and empty nesters.
Along with the residential investment, developers are constructing new hotels, restaurants and shopping centers. Meanwhile, the Westchase District is using city-approved funds for major capital projects, such as new streets, parks, trails and landscaping.
"Our message is that we have it all," Westchase District Vice President Sherry Fox said.
With Houston's swelling population and rising demand for multifamily product citywide, an influx of capital investment has poured into the Westchase area multifamily sector. CBRE's multifamily team has closed on six apartment properties in and around the district within the last three months.
The PPA Group purchased Olympia Flats and Westside Flats 2201. Before that, The Valcap Group LLC, TRI Consulting Group and Next Investment purchased three assets, Westchase Estates, Westchase Grand and Westchase Preserve. TPEG bought Madison Park Apartments.
“You can really see the enthusiasm from investors for the Westchase District," said CBRE Senior Vice President Matt Phillips, who arranged the deals along with Clint Duncan. "They continue to be attracted to the large employment base and mobility in the west Houston area, plus there is still affordable workforce housing.”
Yet, high-end residential development has been slower. Only two new luxury apartments — Folio West and the Heights at Westchase — have entered the market within the last three years, though Portico at West 8, a 526-unit complex, nearly doubled in units after its initial 2005 delivery.
Most of the current product was built in the 1970s, Fox said. However, it remains a robust residential market with more than 50 apartment properties totaling 16,500 units. The occupancy rate stands at 92%, according to the Westchase District apartment report.
One section in particular that houses about a third of the multifamily product in Westchase will be a hub for future redevelopment, Fox said.
The Westchase District plans to reconstruct Walnut Bend Lane, one of the busiest streets in the area, using funds from the 380 Area Agreement, which is similar to a tax reinvestment zone where the city collects and sets aside money from capital improvements.
The $20M project will provide new sewer and water lines, reconstruct the sidewalks and create designated bus turnouts and bike lanes. The design was completed in July, and construction is slated to begin in November.
“Walnut Bend has a ton of apartment communities along it and a whole bunch of residents, and it is a sad, sad street,” Fox said. "The apartment communities along this area are going to want to invest in their community because it is going to be more valuable because of the work we are doing to the street.”
The renewed investment will prompt significant renovations and upgrades to the outdated properties to aesthetics and to amenity offerings, Fox said.
Between the older properties and the dwindling number of vacant land plays, Fox also expects to see more redevelopment opportunities.
"At some point, some of the older apartment communities will be torn down to make room for some newer, whether it is more multifamily, office or retail depending on where it is at," she said. "There is not a lot of green space here, but there are certainly opportunities for redevelopment."
Residents are attracted to the Westchase District for many reasons, said Mark Taylor, a Westchase District board member. For one, it is conveniently located near major transportation hubs.
Westchase is between the Galleria and the Briar Forest submarkets with quick access to the Westpark and Beltway 8 toll roads, interstates 59 and 10 and major citywide thoroughfares such as Westheimer, Richmond, Gessner and Wilcrest roads.
The submarket also has a diverse population in terms of age and ethnicity and offers affordable rents, he said.
According to district information, more than a half-million people live within 5 miles of the Westchase District. The median income is 6% higher than the city average and 40% of the residents have at least a college degree.
Westchase is one of the least expensive areas in the city. Rent averages $986, according to Berkadia's Q3 '18 multifamily report. In comparison, Midtown stands at $1,695 and the Medical Center at $1,303.
Even with the apartment renovations, Taylor doesn't expect a drastic increase in rental rates but a steady increase in line with the citywide trend. The citywide average is $1,030.
“[Westchase] is still going to be an affordable option for many residents," he said. "But by spending a little bit of money, [developers] can create a much nicer environment, get the rent that can pay for that and still be affordable."