downtown texas housing · downtown texas housing jennifer s. evans research associate steve...

Dr. R. Malcolm Richards Director

The Real Estate Center was created in 1971 by the Texas Legislature and placed at TexasA&M University.

The Center conducts a comprehensive program of research and education to meet the needsof many audiences, including the real estate industry, instructors and the general public.

A catalog describing hundreds of publications and computer programs is free for the asking.Write the Real Estate Center, Texas A&M University, 2115 TAMUS, College Station, Texas77843-2115 or telephone 1-800-244-2144. Timely real estate information also is available on theInternet at http://recenter.tamu.edu.

Advisory CommitteeGloria Van Zandt, Arlington, chairman; Joseph A. Adame, Corpus Christi, vice chairman;Celia Goode-Haddock, College Station; Carlos Madrid, Jr., San Antonio; Catherine Miller,Fort Worth; Angela S. Myres, Houston; Nick Nicholas, Dallas; Jerry L. Schaffner, Lubbock;Douglas A. Schwartz, El Paso; and Jay C. Brummett, Austin, ex-officio representing theTexas Real Estate Commission.

Solutions Through Research

January 2000

© 2000, Real Estate Center. All rights reserved.

Downtown Texas Housing

Jennifer S. EvansResearch Associate

Steve SpilletteGraduate Research Assistant

Texas A&M University2115 TAMUS

College Station, TX 77843-2115

Contents

Summary ......................................................................................................................................... 1

Introduction .................................................................................................................................... 1

Large Cities .................................................................................................................................... 2

Dallas ........................................................................................................................................ 2

Houston ..................................................................................................................................... 8

Fort Worth ............................................................................................................................... 13

Austin ...................................................................................................................................... 16

San Antonio ............................................................................................................................ 18

Small and Mid-sized Cities .......................................................................................................... 21

Tyler ........................................................................................................................................ 21

Galveston ................................................................................................................................ 23

Lubbock ................................................................................................................................... 25

Waco ....................................................................................................................................... 25

Wichita Falls ........................................................................................................................... 26

Bryan, Denton, San Angelo and Beaumont ........................................................................... 26

Summary of Market Characteristics ........................................................................................... 27

Challenges to Developing Downtown Housing ......................................................................... 27

Conclusion ................................................................................................................................... 28

1

Summary

Introduction

In the early part of this century, downtownswere the bustling hubs of city life andcenters of retail and office activity.

Merchants often lived in apartments abovetheir shops, and other residential buildingswere an integral part of the downtownlandscape. Over time, downtowns declined asbusinesses moved away from city centers andretail and housing centers shifted to thesuburbs.

Today, a variety of market forces arespurring downtown housing projects acrossTexas. Many cities that currently do not haveresidential development downtown eitherhave officials in favor of downtown housing orhave rumors circulating about possibledowntown housing. For example, in Abilenethere are unconfirmed reports of a 17-storybuilding to be converted into condominiumsor apartments. A number of major apartmentdevelopers currently are involved in developing

To gather data for this report, Real Estate Center staff contacted downtownorganizations, leaders and developers in each community. Cities were selectedfor this study because of available information on existing downtown housing.Two primary types of cities have downtown housing: large urban areas, such asDallas and Houston, which have large buildings that easily are converted intohousing, and smaller cities with a traditional downtown square or main street.

This report identifies which Texas cities have downtown housing, thenumber of housing projects and information on specific developments. In somecases, traditional apartment developers also are developing in downtown. Inother cases, individuals are converting space for personal housing.

downtown housing. JPI has developed BryanPlace, Jefferson at Gaston Yards and Jeffersonat the North End in downtown Dallas. PostProperties has developed a number of proper-ties in Houston and Dallas. In Houston,Midtown Square opened with 479 units andground floor retail. In Austin, Post Propertiesplans to open West Avenue Lofts by the thirdquarter 2000. The 243 units will includecourtyards and rooftop decks.

Rental rates for downtown housing arehigher than for the city as a whole. This islargely the result of higher land costs andhigh costs of renovating properties. Down-town rents start at 50 cents per square footand go as high as $1.35 per square foot. Theaverage downtown apartment rents foraround $1 per square foot. In larger cities, theaverage rent is $1.17, 25 cents more than thecity-wide average. In smaller cities, theaverage downtown rent is 85 cents per squarefoot, only slightly higher than city-wide rents.

Current Major Downtown Housing Developers

Existing DowntownDeveloper Housing Projects Planned

JPI Dallas, HoustonGables Residential Trust Dallas, Houston AustinPost Properties Dallas, Houston AustinGrenadier Group DallasRandall Davis Houston, Galveston AustinTrammell Crow Fort Worth Houston, AustinPerry Homes Houston, Fort Worth

Source: Real Estate Center at Texas A&M University

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Large CitiesAs expected, Texas’ largest cities lead the

downtown housing market in terms of quantityand variety. Dallas, Houston, Austin and Fort

Comparison of Downtown to City-wide Rental Rates

City-wide AveragesDowntown—Typical Ranges (Units built after 1990)

City Rent Rent/sq.ft. Rent Rent/sq.ft.

Dallas $700–$1,400+ $1.15–$1.35 $901 $1.00Houston 500–1,400+ 1.10–1.30 909 0.98Fort Worth Avg. 1,200 (’98) 1.05–1.20 857 0.91Austin 850–1,800 1.10–1.50 911 1.00San Antonio 320–1,200 0.90–1.10 813 0.89Bryan NA 1.10–1.25 755 0.86Denton NA 1.00 NA NAGalveston 700–1,500 0.83–0.93 796 0.93Tyler 450–1,000 0.70–0.90 606 0.74Lubbock 700–1,200 0.50–0.60 545 0.61Wichita Falls 450–575 0.65–0.70 608 0.58Waco 600–1,675 NA 675 0.73

Sources: Apartment MarketData Research and Real Estate Center at Texas A&M University

Worth are particularly notable for their down-town residential development in the 1990s.Interest in downtown residential developmentis occurring in San Antonio as well.

DallasDowntown Dallas Housing Projects (opened 1997 or later)

Source: Real Estate Center at Texas A&M UniversityNote: All locations are approximations

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Project, Address, Number OpeningMap Owner or Developer of Units Date Type

Completed Projects

1 1900 Elm 129 1997 Lofts/rental2 1001 Ross Avenue 12 1997 Lofts/rental3 509 Elm 29 1998 Lofts/condos4 Santa Fe Terminal 205 1999 Lofts/rental

1122 Jackson5 The Kirby—Residences on Main 157 1999 Lofts/rental

1509 Main6 Wilson Building 135 1999 Lofts/renta

Main & Ervay7 C & I Lofts—Phase I 25 1997 Lofts/rental

101 S. Walton8 Deep Ellum Lofts 124 1997 Lofts/rental

3300 Main, 3401 Commerce9 Mirabella 126 1997 Apartments

2800 Cole10 Adam Hats 90 1997 Lofts/rental

2700 Canton11 Gaston Yards 480 1997 Apartments

Gaston—Good Latimer12 4130 Commerce 21 1997 Lofts/rental13 Eban Village 110 1997 Apartments

2929 Park Row Avenue14 Treymore at Cityplace 180 1997 Apartments

2101 Haskell15 Cole’s Corner 182 1997 Apartments

3402 Cole16 Magnolia Hill 20 1997 Townhomes

1607 Lyle Street17 China Alley Lofts—Phase I 20 1997 Lofts/rental

2425 S. Central18 Colby Row 6 1997 Townhomes

2601–2611 Colby19 Heights of State-Thomas 196 1998 Apartments

2414 Allen20 America Beauty Mill 80 1998 Lofts/rental

2400 S. Ervay21 Piggly Wiggly Building 20 1998 Apartments

1108–20 S. Akard22 Jefferson at the North End 540 1998 Apartments

Field at Cedar Springs23 Porto Bello by the Creek 30 1998 Townhomes

Blackburn at Travis24 Homes of Thomas Court 25 1998 Townhomes

Thomas at Worthington25 Cedar Springs Condos 12 1998 Lofts/both

1925 Cedar Springs at Akard

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26 Treymore North 70 1998 Apartments4144 Office Parkway

27 Mayor’s Way 17 1998 TownhomesWolf at Bookout

28 Cabell & Haskell Townhomes—I 5 1998 Townhomes29 Maple Villas 252 1998 Apartments

3200 Maple30 Five Seven Nine Townhomes 13 1998 Townhomes

Allen Street at Woodside31 7-Up Bottling Company 13 1998 Lofts/rental

2700 Live Oak32 Uptown Dallas Townhouses 9 1998 Townhomes

Colby at Bolt33 China Alley Lofts—Phase 2 22 1998 Lofts/rental

2425 S. Central34 Heights of State-Thomas—Phase 2 170 1998 Apartments

2414 Allen35 The Linden in Town 170 1999 Apartments

2802 Carroll Avenue36 Park at Turtle Creek 305 1999 Apartments

3377 Blackburn Street37 Live Oak Lofts 114 1999 Lofts/rental

Live Oak at Good Latimer38 Jefferson at Bryan Place—Phase I 420 1999 Apartments

Texas at Live Oak and San Jacinto39 The Gallery 34 1999 Apartments

Woodside and State40 Turtle Creek Villas 331 1999 Condos

McKinnon at Ivan41 Fairmount Mews 4 1999 Townhomes

Thomas between Bell and Fourth42 Futura Lofts 88 1999 Lofts/rental

Main and Trunk Streets

Total 4,991

Under Construction

43 Park at Farmers Market—Phase I 620 2000 ApartmentsCanton and Central

44 Metropolis 70 NA Condos511 North Akard

45 Bryan Place Commons 7 1999 TownhomesBryan at Villars

46 Bryan Heights 40 1999 TownhomesWashington and Pecos at Bryan

47 State-Thomas Residences 104 1999 ApartmentsThomas at Bell 6 1999 Townhomes

48 Lofts at 588 127 1999 ApartmentsThomas St. at Hugo/Griggs Park

49 Cole & Bowen Townhouses 5 1999 TownhomesCole at Bowen


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50 Mitchell Lofts 79 1999 Lofts/rental3600 Commerce

51 Peak & Munger Homes 16 1999 Single-familyPeak at Munger houses

52 C&I Lofts—Phase 2 20 1999 Lofts/rental101 S. Walton

53 Cambrick & Cole Townhomes 14 1999 TownhomesCambrick at Cole

54 Five Seven Nine Townhomes—II 5 2000 TownhomesState Street at Clark

55 2011 Cedar Springs 45 2000 CondosCedar Springs at Harry Hines

56 Howard Wolf Building 71 2000 ApartmentsCommerce and Perry

57 Southside on Lamar 450 2000 Lofts/rental1409 S. Lamar (Sears)

58 Quarters at Cityplace 244 2000 ApartmentsN. Central Expwy. at Lemmon

59 Uptown Village—Phase 2 198 2000 ApartmentsBolt at Woodall Rodgers Freeway

60 2802 Thomas 13 2000 Townhomes61 Allen Townhomes NA 2000 Townhomes

Allen at Thomas and Hallsville62 Gable State Thomas Mid-Rise 290 2000 Apartments

2610 Allen at Clyde63 Jefferson at Bryan Place—Phase 2 300 2001 Apartments

Texas at Live Oak and San Jacinto64 1801 S. Ervay 26 NA Apartments

Total 2,750

Planned or Proposed

65 Carmel Lofts 81 2000 ApartmentsLive Oak at Liberty

66 Clyde Lane Housing 140 NA ApartmentsMcKinney and Oak Grove

67 Eban Village—Phase 2 220 2000 Apartments(adjacent to Eban Village)

68 Haskell & Lafayette Townhomes 31 NA TownhomesHaskell at Lafayette

69 Jefferson at Kessler Heights—I 306 2000 ApartmentsTilden & Beckley Avenue

70 Manhattan Flatiron 30 NA CondosMcKinney and Oak Grove

71 Pan American Townhouses 16 NA TownhomesCommerce Street (3800 block)

72 Pecos Brownstones 4 2000 TownhomesPecos at Bryan and San Jacinto

73 Porto Bello by the Creek—Phase 2 69 2000 TownhomesBlackburn at Travis


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74 Records Building 65 NA Lofts/rental3221 Commerce

75 Tescada 20 2000 TownhomesBlackburn at Katy Trail

76 Texas Lofts 67 2000 ApartmentsTexas and Bryan Street

77 Travis Terrace (formerly) 18 2000 TownhomesHaskell and Travis

78 Union Bankers Trust 200 NA Lofts/rentalElm at Good Latimer

79 Victory 1,000 NA NAHouston at Griffin

80 Villa Trevi 60 2000 CondosCarlisle at Cedar Springs

81 West Village 160 2001 ApartmentsMcKinney at Lemmon and Blackburn

Total 2,487

Dallas Metropolitan Area

Population 3,209,886Total employment 1,809,724Median household income $41,133Number of single-family units constructed since 1990 143,496Number of multifamily units constructed since 1990 77,719Number of downtown units completed since 1990 8,603



History and Development PatternsAmong Texas cities, Dallas has the most

highly developed central city residentialmarket. The City of Dallas reports 8,603residential units in 83 projects have beencompleted since 1990. Another 4,223 units in105 projects are planned or proposed.

Until the past few years, residential devel-opment was occurring mainly in neighbor-hoods and districts adjacent to the centralbusiness district. The Deep Ellum area east ofdowntown, known as an offbeat and trendyarea, contains numerous older warehousesthat have been renovated into loft units. TheState-Thomas and Uptown Dallas areas,located across the Woodall-Rodgers Freewayfrom downtown, have been prime locationsfor larger upscale apartment complexes. Sincethe mid-1990s, however, developments havebegun to appear within the central business

district and south of Interstate 30. These haveprimarily been conversions of historic com-mercial buildings into loft developments.

Many projects have received some form ofpublic financial support. The city’s IntownHousing program offers incentives such asdevelopment cost reductions, rebates, taxabatements, tax increment financing and“gap” financing funded through a HUDSection 108 loan. Historic tax credits wereused in a number of projects, including theKirby Building. In 1988, the Tax IncrementFinancing (TIF) district was first set in place,and the city provided a $2.1 million loan forpublic improvements in the State-Thomasarea. The TIF is expected to provide $43 millionfor upgrading streets and lighting and forredevelopment of downtown buildings.

Several urban apartment developers haveimplemented significant projects aroundcentral Dallas. Post Properties, Gales Resi-

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dential Trust and JPI have built numerousupscale complexes in the Uptown and EastEnd-Deep Ellum areas. The Grenadier Grouphas constructed townhomes, lofts and apart-ments in these areas as well.

Market SurveyThe Downtown Improvement District, the

public improvement district for the centralbusiness district of Dallas, conducted a 1999survey of residents in various residentialcomplexes.

Nearly three-quarters (74 percent) of therespondents were unmarried. About half wereyounger than 35 years old, while 35 percentwere between 35 and 55. Fifty-eight percentwere male. A remarkable 78 percent had acollege or postgraduate degree, and 65 per-cent indicated they were employed in profes-sional or management positions. The medianhousehold income of respondents was$88,000, with 58 percent making more than$75,000 annually. These statistics may havebeen biased by the selection of complexessurveyed. However, the resident profilegenerally is considered typical of the down-town market.

Of more than 200 Dallas residents sur-veyed, more than two-thirds (69 percent)chose to live downtown because they wantedan urban lifestyle. Slightly more than halfwanted the central location, and about thesame number (55 percent) wanted to be closeto work. About one-third mentioned thecloseness of arts, cultural and entertainmentactivities. Slightly less than one-fifth (18percent) were looking for an historical archi-tectural environment.

More than 70 percent of residents indicatedthey would like to see more parks, openspace, retail shops and restaurants in

downtown Dallas. In fact, 88 percent said theywould use a downtown grocery store. Nearlyhalf would prefer that national name retailersbe present downtown.

ProjectsPost Properties has been active in the

Dallas market. The Lofts at 588 is an 11-storyloft-style apartment complex just west ofNorth Central Expressway and WoodallRodgers Freeway. The $22-million project has127 apartments and two levels of under-ground parking and is expected to be com-pleted during 2000. Post Properties also hasdeveloped the Wilson Building at Main andErvay, which opened in 1999 with 135 loftapartments and 10,000 square feet of street-level retail. The former office building cost$19 million to renovate. The apartments rentfor an average of $1,200 a month for a 1,000-square-foot apartment. Amenities includegranite counters and whirlpool baths.

Historic tax credits and community devel-opment block grants were used in the conver-sion of the Kirby Building. Developers wererequired to set aside 30 percent of theproject’s units for low-to-moderate incomehouseholds. Rents in the building range from$500 per month for a studio loft to $4,999 permonth for a penthouse apartment.

Southside on Lamar is a $75 million projectthat will convert 1.4 million square feet intoliving units. The Sears Building on LamarStreet, which had been vacant since 1993, isbeing converted into 450 loft apartments. Thecomplex is expected to be ready for occu-pancy in 2000. The smallest apartment, with1,000 square feet, will rent for $800 permonth, while 3,300-square-foot units will run$4,000 per month.

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HoustonDowntown-Midtown Houston Housing Developments

Source: Real Estate Center at Texas A&M UniversityAll project locations are approximations


Completed Projects

1 Beaconsfield Condominiums 18 1908 Condos1700 Main Street

2 2016 Main 353 1964 Condos2016 Owners Association

3 Houston House 403 1965 Apartments1617 Fannin Street

4 Four Seasons Place 120 1982 Apartments1300 Lamar Street

5 Dakota Lofts 53 1993 Lofts/rental711 William

6 Foley Building 2 1995 Lofts/owned212 Travis

7 Hogg Palace 79 1995 Lofts/rental401 Louisiana

8 White Oak Lofts 12 1997 Lofts/rental1011 Wood

9 Hermann Lofts 25 1998 Lofts/condos204 Travis

10 The Rice 312 1998 Lofts/rental901 Texas Avenue

11 Live Oak Apartments 211 1998 ApartmentsWebster at McGowen

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12 Midtown Square 479 1999 ApartmentsBagby at Webster

13 Jefferson at Midtown 419 1998 ApartmentsBagby at Hadley

14 The Park at Midtown 315 1999 ApartmentsMcGowen at Louisiana 22 Townhomes

15 Live Oak Lofts 12 1999 Lofts/rental1719 Live Oak

16 Perry Homes—Midtown 134 1999 TownhomesElgin at La Branch

17 Gateway Homes 18 1999- Single-familyAustin at Dennis 2000 houses

Total 2,987

Under Construction

18 St. Germaine 107 1999 Lofts/rental705 Main

19 The Keystone 34 1999 Condos1120 Texas Avenue

20 Bayou Lofts 100 1999 Lofts/condos907 Franklin

21 One Bayou Park 20 1999 Lofts/rentalFranklin Street

22 220 Main 30 NA NA23 The Americas 15 1999 Lofts/rental

Navigation at Runnels24 Paramount Lofts 12 NA NA

Rosalie at Chenevert

Total 318

Planned or Proposed

25 Capitol Lofts 31 2000 Lofts/condos711 Main Street

26 Humble Building 90 2000 Apartments1212 Main Street

27 The Americas—Phase II 40 NA Lofts/rentalNavigation at Runnels

28 Ballpark Place NA 2001 NACrawford at Preston

29 Commerce Building 100 NA Condos914 Main

30 Sabine Island NA NA NASabine Street at Buffalo Bayou

31 South End Live-Work Lofts 20 NA Lofts/condosElgin at Jackson

32 Perry Homes—Midtown 91 2000 TownhomesElgin at La Branch

33 Perry Homes—Fourth Ward 160 2000 TownhomesDennis at Helena 90 2001 TownhomesTotal 622


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Houston Metropolitan Area

Population 3,931,688Total employment 2,042,484Median household income $39,592Number of single-family units constructed since 1990 129,179Number of multifamily units constructed since 1990 60,727Number of downtown units completed since 1990 2,093


History and Development PatternsIn the past, Houston’s central business

district lagged Dallas by a few years in newhousing development, but it now surpassesDallas in development within the downtowncore. In addition, the midtown Houston area,a few blocks south of the central businessdistrict across the Pierce Elevated Freeway (I-45), is undergoing a surge of residentialdevelopment.

For many years, the principal market-ratehousing developments in the downtown areawere the Beaconsfield Condominiums, builtin 1908, and two high-rise apartment towers,the Houston House and 2016 Main. In 1982,the Four Seasons Place luxury apartmentsopened adjacent to the posh hotel of the samename.

The current resurgence of housing in thedowntown core began with the Dakota Lofts,which opened in 1993. The success of thisproject led to other loft conversions, severaldone by the Dakota’s developer, RandallDavis. The most notable development hasbeen the loft conversion of the historic RiceHotel at the north end of downtown near theMarket Square Historic District. Localgovernments aided the development of theRice Hotel through the implementation of atax increment reinvestment zone (TIRZ,known as Tax Increment Financing Districts– TIFs – elsewhere in Texas) which defrayedsubstantial costs. The Rice Hotel, with 312units, opened in 1998 and, as of spring 1999,was 95 percent leased.

The midtown area became a hotbed ofresidential projects in the late 1990s followingthe implementation of a TIRZ. The lowerdensity nature of the area has encourageddifferent types of housing from that occurringin the downtown core.

Apartment developers Camden PropertyTrust, Jenard Gross Investments, Post Proper-ties and JPI have constructed large complexesin the northern portion of the area. Rents in

these complexes typically are $1.10 to $1.25per square foot. Builder Perry Homes isdeveloping townhome projects as well.

Compared with downtown, midtown lackshistoric buildings for potential loft conver-sions. Developer Caspian RenaissanceVenture instead will build a 20-unit loftproject, the South End Live-Work Lofts, fromthe ground up. Caspian also is renovating anold apartment building into lofts. The loftprojects are located east of Main Street,generally considered a more pioneering areafor residential projects in midtown.

Market Studies and SurveysA 1999 study by CDS Market Research

found the potential market for downtown andmidtown dwellers in the Houston area to be137,000 households. Researchers estimatedthat demand for about 56,000 units camefrom households with an adult working indowntown, midtown or the Texas MedicalCenter. About two-thirds of potential down-town residents prefer to own rather than rent.

Potential downtown-midtown dwellersshow a strong preference for renovatedhistoric buildings. About two-thirds say theyprefer to live in a historic building, one-quarter prefer new construction and theremainder have no preference. In the wake ofpublicity garnered by the Rice Hotel andother loft projects, the Houston market forthese types of units has risen. One-third ofpotential downtown residents would select aloft unit as their first choice, with about anequal percentage selecting townhomes. Theaverage monthly payment for rent or mort-gage given by those classified as “very likely”to live downtown or midtown is $770.

A large portion of potential residents ofdowntown and midtown have relatively highincomes. The CDS survey only addressedhouseholds earning at least $30,000 annually.Of potential resident households, one-thirdhave incomes more than $80,000, and 22

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percent have incomes exceeding $100,000.They tend to be well educated, with morethan one-third of those likely to live down-town or midtown having a college education;23 percent have a post graduate education,compared to 13 percent of the general popula-tion. A surprising 40 percent of potentialresidents have at least one child in thehousehold.

Survey respondents were most interested indowntown living for its closeness to work oractivities they enjoy, particularly the arts andentertainment. The most important criteriain choosing downtown-midtown housinglocation was safety and security, followed bythe quality and appearance of the neighbor-hood. These considerations had declinedsignificantly compared with other consider-ations, such as home price and construction-design quality, since a 1993 survey.

CDS also conducted a 1999 survey ofexisting downtown residents (midtownresidents were not surveyed). Interestingly,only one-half (51.1 percent) of the respon-dents worked downtown, slightly more thanthe number who stated proximity to workwas their main reason for moving downtown(48.5 percent). Other reasons for moving tothe area included proximity to theaters andother attractions (20.5 percent) and the desireto live an urban lifestyle (23.8 percent). Infact, the desire for an urban lifestyle waseither the primary or secondary reason formore than half (52.8 percent) of respondents.More than one-quarter, 26.7 percent, reportedthat they had previously lived in the down-town area of a large city.

What downtown Houston residents findmost lacking are grocery stores and generalretail. Only 18 of the more than 300 respon-dents listed a lack of adequate parking, andonly six mentioned security. Albertson’sreportedly is planning a new store in midtown.

Projects

Bayou LoftsThe Bayou Lofts are a conversion of the

Southern Pacific Building, originally con-structed in 1910. When finished, the buildingwill contain 102 residential lofts on eightfloors above first-floor retail space. Theproperty is located one block from MarketSquare in Houston’s historic district at thenorth end of downtown, near Buffalo Bayou.Spire Realty and Threshold Interests aredeveloping the project.

The renovation includes all new electrical,plumbing and mechanical systems. Toenhance its character, however, the buildingwill retain or reflect such original features asexposed brick walls and distinctive publicarea tile patterns. A parking garage will beconstructed on the north (rear) side of thebuilding. Rear-facing units will offer balconies.

The units have 11- to 16-foot ceilings andno full-height interior walls in principal livingareas, only dividers. Buyers may choose fromseveral finishes and semi-custom amenitiesin their units. The units have been designedto facilitate the combining of multiple units,an occasional desire of loft buyers. Buyers canchoose from units that correspond to one- andtwo-bedroom plans, although larger units aresufficiently flexible to allow a variety of livingarrangements. The smallest units contain 692square feet, while the eighth and ninth floorsoffer some units of more than 2,000 squarefeet. The developers chose larger units thanmight be typical of loft projects as these unitsare to be sold instead of leased. As of October1999, prices ranged from $155,100 to as highas about $1.5 million.

Interest in the lofts has been strong, with68 of the units under contract. Financing isavailable for as little as a 5 percent downpayment. Rick D’Amico of Minette BoeselProperties, the project’s marketer, reportsthat buyers typically are single professionalschoosing a downtown lifestyle. Professionalcouples also have purchased units. The unitsare mostly intended for use as the primaryresidence of the buyers, although some saleshave been made to second home buyers andinvestors.

2016 Main and Houston HouseThe recent boom in downtown housing in

Houston has benefited more than just devel-opers of new projects. Two projects from the1960s, 2016 Main and the Houston HouseApartments, have reaped the rewards ofdowntown’s renewed popularity.

The 2016 Main building, opened in 1965,contains 335 units. It is located immediatelysouth of the Pierce Elevated Freeway (I-45) onthe south edge of downtown. It is 26 stories(no 13th floor), with residential units on thesixth and higher floors. Originally a high-riseapartment building, it was converted tocondominiums in 1979, and 57 units weresold. The remaining units continued in arental pool and were upgraded in 1985. In1992, the building owners began selling the

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rental units again. By October 1999, all but 31had been sold.

The units at 2016 Main range in size from283-square-foot efficiencies to 1,170-square-foot two-bedroom plans. With prices rangingfrom $45,000 to $169,900, they are muchmore affordable than new construction in thearea. Prices per square foot range between$105 and $120. Buyers have been equallydivided among single males, single femalesand married couples. Ages of the singlesrange from late 20s to late 80s. Marriedcouples tend to be in their mid-30s throughmid-60s. A significant concentration ofcouples are in their late 40s and early 50s, nolonger have children at home and are movingin from Houston’s suburbs.

The Houston House, opened in 1966, hasalways been a rental apartment property. The30-story tower on Fannin at the south end ofdowntown has 392 units. Units range fromstudios with less than 500 square feet to two-bedroom units with 825 square feet. Rentscurrently range from $625 for the smalleststudios on lower floors to more than $1,000per month for larger two-bedroom apart-ments. While the building includes typicalamenities, such as a parking garage, 24-hourfront desk, balconies, a heated pool and

workout facilities, it stands out among rentalproperties by offering tenants discretion inunit modification. With permission, tenantsmay make substantial capital improvementswithin their units. This feature has attractednumerous long-term tenants. Renovationscurrently are underway at a cost that willexceed $100,000.

The trend toward downtown living has hada major impact on Houston House, whichhad occupancy of less than 80 percent asrecently as 1998. The building is currently 91percent occupied, the highest level in itshistory. Rent increases are expected soon.

New Houston House tenants are about 60percent young singles and most of the re-mainder are “empty nester” couples eitherdownsizing or using their apartment as asecond home to take advantage of downtownattractions. More than half of new tenantsare moving from suburban Houston. Buildingmanager Jo Wood reports that only about halfof the tenants live there because of improvedaccess to work. The remainder are choosingto live downtown purely for the lifestyle andnearby attractions. Tenants represent adiverse range of occupations and back-grounds, from students to professionals toretirees.

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Fort WorthDowntown Fort Worth Housing Projects



Completed Projects

1 Sundance West 59 1992 Lofts/rental333 Throckmorton

2 Sanger Lofts 59 1993 Lofts/NA222 West Fourth Street

3 Historic Electric Building 106 NA Apartments410 West Seventh Street

4 Houston Place Lofts 30 NA Lofts910 Houston Street

5 Hillside Apartments 172 1997 Apartments300 Crump Street

6 Firestone Upper West Side 349 1999 ApartmentsWest Seventh Street

7 The Reserve Upper West Side 189 1999 Apartments1000 Henderson Street

8 Gates of Seventh Street Station 200 1999 Apartments2601 West Seventh Street

9 Remington Place 18 1999 Townhomes1000 West Belknap

Total 1,182

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Under Construction

10 Land Mark Tower 39 2000 Condos711 Houston Street 114 Apartments

11 The Flat Iron NA NA ApartmentsNinth at Houston Streets

12 The Ruins at Summit 10 2000 Lofts/Seventh Street at Summit Condos

13 Cassidy Corner Condominiums 9 2000 CondosFirst Street at Pecan

Total 172

Planned or Proposed

14 The Bluffs 358 NA ApartmentsBelknap at Bluff Street

15 The Marquis 118 NA ApartmentsCalhoun-Weatherford-Jones-Belknap

16 Land Mark Tower Phase II 84 NA Condos711 Houston Street

Total 560

Fort Worth Metropolitan Area

Population 1,592,577Total employment 850,545Median household income $39,278Number of single-family units constructed since 1990 59,457Number of multifamily units constructed since 1990 17,905Number of downtown units completed since 1990 1,182


Downtown Fort Worth was among the firstof Texas’ large cities to revitalize commer-cially. The Sundance Square area provided alively destination for work and entertainmentthroughout the 1990s. The new Bass Hall hasfurther enhanced the area. The success ofbusiness and entertainment ventures hasincreased the appeal of downtown housing.Since the mid-1990s, a total of 1,182 privatelydeveloped residential units have been com-pleted, with another 172 under constructionand 476 in the planning stages.

Residential projects in downtown FortWorth are generally building conversions orlarge apartment complexes developed nearthe edges of the central business district. FortWorth resembles Dallas in the extent towhich new apartment projects, such asHillside Apartments and Firestone UpperWest Side, dominated downtown residential

development in the 1990s. Major real estatedevelopers such as Trammell Crow Residen-tial have developed apartment projects in thearea. Rents in these projects vary from about$1.05 to $1.20 per square foot. The averagedowntown rent at the end of 1998 was $1,200,according to Foley & Puls, a multifamilyresearch firm.

Projects

Historic Electric BuildingThe Historic Electric Building, a late 1920s

building on Seventh Street, was renovatedfrom 1994 to 1996. Because tax credits wereused in the renovation, the building allocates60 percent of its units to moderate-incomehouseholds. Since opening as a residentialbuilding, it has maintained 96 to 98 percentoccupancy, according to building management.

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An estimated 80 percent of its residents workin the downtown area, a higher percentagethan for residents in market-rate projectselsewhere. The higher proportion of down-town workers may indicate that moderate-income residents choose downtown forconvenience to work, while upper-incomeresidents choose downtown for lifestylereasons.

Remington Place and Summit Ruinsat Seventh

Remington Place is an 18-unit townhomeproject built by Perry Homes in the northwestsection of downtown, at Lexington andBelknap Streets. These townhomes have

three bedrooms and range in size from 2,105to 2,802 square feet. Prices range fromslightly less than $250,000 to nearly $290,000.Prices per square foot range from about $99 tomore than $118.

Summit Ruins at Seventh contains tencondominiums in a distinctive seven-storybuilding under construction at Seventh Streetand Summit Avenue. The project has adecidedly upscale orientation, with rooftopgardens and secured subgrade parking. Floorplans range from 3,500 to about 4,200 squarefeet, with either two or four bedrooms.Current prices range from about $604,000 to$755,000.

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AustinDowntown Austin Housing Projects



Completed Projects

1 Brown Building 90 1999 Lofts/rentalEighth and Colorado

2 Brazos Lofts 39 1999 Lofts/condos201 E. Fifth Street

3 Avenue Lofts 38 1999 Lofts/condos400 E. Fifth Street

Total 167

Under Construction

4 The Gardens at W. Seventh 13 NA Condos7th Street between Baylor and Blanco

5 West Avenue Lofts by Post 243 2000 Lofts/rental300 West Avenue

Total 256

Planned or Proposed

6 The Nokonah 85 2001 Condos9th and Lamar

7 Gables Residential 301 NA Apartments910 Cesar Chavez Street W.

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8 AMLI Residential: Block 20 200 2001 Apartments200 W. Second Street

9 Reddy Ice site 100 NA NA9th and Red River

10 Town Lake Condominiums 50 2000 Condos44-54 Rainey Street

11 The Reserve at Congress 256 NA 256S. Congress and East Bouldin Circle

12 AMLI Residential: Block 22 200 2001 Apartments2nd and Guadalupe

13 Tips Iron & Steel 350 NA Apartments304 Baylor

14 Gotham Condominiums 56 NA Condos200 S. Congress

15 Phoenix Residential Development 175 NA Apartments4th and 5th and Rio Grande

16 Sutton Company, 5th and Guadalupe NA 2000 CondosW. 5th Street and Guadalupe

Total 1,773

Austin Metropolitan Area

Population 1,105,909Total employment 663,833Median household income $36,669Number of single-family units constructed since 1990 58,961Number of multifamily units constructed since 1990 32,087Number of downtown units completed since 1990 167

Soucre: Real Estate Center at Texas A&M University


Austin, with its positive image, naturalamenities and active downtown nightlifewould seem to be ideal locale for downtownresidential projects. However, the boom indowntown housing is new to Austin, with thefirst significant projects opening in 1999. Asother developers have followed the trend, asubstantial number of residential projectshave entered the pipeline.

In 1999, three new residential loft projectstotaling 167 units opened: the Brown Build-ing, the Brazos Lofts and the Avenue Lofts.The Brown Building, which offers the onlyrental units, is a renovated ten-story formeroffice building built in 1938. W. Ball Develop-ment performed the conversion with theassistance of a 20 percent federal tax creditobtained after putting the building on theNational Register of Historic Places. Lease

rates for units range from $850 to $1,800 permonth. The Brazos Lofts and the AvenueLofts are conversions of older buildings. Eachproject cost about $6 million.

The short supply of smaller historic build-ings means that many future additions to thedowntown housing supply will be newstructures. One large apartment complex isin the works for Gables Residential Trust.The 243-unit West Avenue Lofts project byPost Properties, a veteran urban residentialdeveloper, is under construction. In addition,Randall Davis, a Houston developer withseveral downtown loft projects under his belt,plans to build Gotham Condominiums, 56units atop an office building on South Con-gress. Currently 2,029 units are under con-struction, planned or proposed in downtownAustin.

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San AntonioDowntown San Antonio Housing Projects


Completed Projects

1 Morris Apartments 52 1949 Apartments128 Main Plaza

2 Towne Center Apartments 120 1976 Apartments601 N. Santa Rosa

3 Soap Works Apartments 261 1978–82 Apartments500 N. Santa Rosa

4 Casino Club Building 39 1978 Apartments102 W. Crockett

5 Losoya Building 5 1978 Condos221 Losoya 3 Apartments

6 Left Bank 24 1988 Condos710 N. St. Marys

7 Riverview Condos 24 1989 Condos1022 Navarro

8 Blue Star Arts Complex 48 1990 Lofts/rental120 Blue Star

9 Exchange Building 41 1993 Apartments152 E. Pecan

10 Majestic Towers–Brady Building 97 1993 Apartments222 E. Houston and 202 E. Houston

11 The Maverick 90 Apartments606 N. Presa


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12 Toltec Apartments 14 1996 Apartments110 Auditorium Circle

13 Cadillac Lofts 153 1999 Lofts/rental317 Lexington

Total 971

Planned or Proposed

14 Rivercenter Apartments 60 NA Apartments(Rivercenter Mall)

15 Scobey Building 150 Late Lofts/rentalN. Medina at Martin (approx.) 2000

16 Friedrich Building 100 NA Lofts/NA1617 E. Commerce

Total 310

San Antonio Metropolitan Area

Population 1,538,338Total employment 731,383Median household income $31,563Number of single-family units constructed since 1990 46,613Number of multifamily units constructed since 1990 12,773Number of downtown units completed since 1990 971



San Antonio’s central business district isendowed with buildings of exceptionalhistoric value. Whereas many of the residen-tial conversions in other cities have takenplace in 20th Century structures, particularlythose built during the 1920s, several 19th

Century San Antonio buildings have beenconverted. San Antonio offers downtownresidents the cultural and tourist attractionsof the River Walk and HemisFair Plaza. Thenearby King William residential district, withits restored historic homes, has become anattraction in itself. Houston Street, formerlythe city’s principal retail corridor, is the focusof a redevelopment effort by Federal Realty.

While the pace of downtown housingdevelopment in San Antonio does not matchthat of other Texas cities, sporadic residentialdevelopment has occurred since the late1970s. One building, the Morris Apartments,has been in residential use since 1949. TheCasino Club and Losoya Buildings wereconverted in the late 1970s. The Soap Worksand Towne Center Apartments, both on the

west side of downtown, cater to moderate-income workers, particularly those at theMedical Center. San Antonio has otherdowntown residential buildings restricted tothe elderly.

In the 1990s, several larger upscale develop-ments were completed. These include theluxury apartment conversion of the Towers atthe Majestic in 1993 and the Cadillac Lofts,which began leasing in 1999. Nearly all ofthese developments are located within thedowntown core, bounded on three sides by acircle of interstate highways and on the southby Durango Boulevard. Several are locatedclose to the River Walk and the Alamo in thecity’s most popular tourist area.

While upscale units are plentiful throughconversions and renovations of historicbuildings, downtown San Antonio lacks mid-range housing. Family housing, too, is scarce,in part because few family-oriented servicesand businesses, such as schools and grocerystores, are located in the downtown area.

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Projects

Losoya Building, Exchange Building,Toltec Apartments and Cadillac Lofts

The Losoya Building, Exchange Building,Toltec Apartments and Cadillac Lofts repre-sent an evolutionary history of downtown SanAntonio housing development. The LosoyaBuilding, which opened in 1978, was one ofthe first modern residential conversions inSan Antonio. Five of its eight rental unitswere sold, so the building is now a mix ofrenters and owners. The Exchange Building,converted to apartments in the early 1990s,and Toltec Apartments, renovated in 1996,represent a more recent era before loftconversions soared in popularity. TheCadillac Lofts, opened in 1999, is the largestdowntown residential project since 1990,with 153 loft-style rental units.

According to Debbi Maltz of CentralProperties, which manages and leases thefour properties, the attraction of downtownSan Antonio living cuts across ages andinterests. Tenants moving downtown includeyoung singles, professional couples and

retirees. As is the case with other cities,some of these residents work within walkingdistance, but many also work at more distantlocations, such as United Services Automo-bile Association.

Scobey BuildingThe need for mid-range loft housing may

soon be addressed by the Scobey Building, aproject of Cross and Company. The project,which includes three historic and three otherbuildings, will have an “industrial” appear-ance similar to the Blue Star Arts Complex. Aparking garage is planned in a former coldstorage building. Rental prices for the loftsare projected to range from 65 to 75 cents persquare foot, making them much more afford-able than the Cadillac Lofts and projects thathave opened in other cities in the 1990s. EdCross of Cross and Company believes SanAntonio’s high-end downtown housingmarket may be limited because of to thecity’s general tilt toward lower income levels.He anticipates his core tenant market will beemployees of the nearby University of Texasat San Antonio and medical center hospitals.

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Small and Mid-sized CitiesGrowing interest in living downtown is not

limited to Texas’ large cities. Entrepreneursare joining the ranks of those developingdowntown housing in small-to- mid-sizedcities as well. Often, the upper floors ofvintage buildings surrounding courthousesquares or along “Main Street” in these cities

become distinctive residential units. Thesetypes of properties often have fewer than fiveunits in a building. In some cases, developersare taking on larger-scale projects, such asthe conversion of older office buildings orhotels. Downtown housing development inthese locales is usually dominated by one ortwo developers in each city who specialize inthese types of projects.

TylerDowntown Tyler Housing Projects


Completed Projects

1 O’Sullivan Apartments 8 NA Apartments119 East Erwin

2 Lloyd Apartments 3 1996 Apartments324 East Erwin

3 W.E. Sword Apartments 3 NA Lofts/rental409 Spring Street

4 O’Sullivan Warehouse Apartments 7 NA Lofts/rental300 East Erwin

5 Lloyd Story-Wright Apartments 5 1997 Lofts/rental211-215 East Ferguson


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6 Shieldes’ TSO Apartment 1 NA Apartments101½ East Erwin

Total 971

Planned or Proposed

7 North Tyler Apartments 26 NA Lofts/rental416 Broadway

Tyler Metropolitan Area

Population 168,783Total employment 85,425Median household income $32,701Number of single-family units constructed since 1990 2,607Number of multifamily units constructed since 1990 816Number of downtown units completed since 1990 27



Tyler is typical of smaller cities with ahistoric core around its courthouse. Thesecond floors of several historic buildingshave been converted into one or two residen-tial units. Several projects have been slightlylarger in scale, ranging from three to eightunits. Two developers in particular, theO’Sullivans and Robert Lloyd, have beenresponsible for the larger projects. TheO’Sullivans purchased and renovated an 1885building on East Erwin into eight apartmentsand a coffee bar. According to Heart of Tyler,Inc., a downtown nonprofit organization,

these apartments all were leased prior tocompletion. The O’Sullivan Apartments,which range from 950 to 1,200 square feet,rent from $650 to $1,000 per month. Thesuccess of this project led them to renovateanother building, the seven-unit O’SullivanWarehouse Apartments.

Robert Lloyd, who developed two loftconversion projects in downtown Tyler, planson reworking a building at 416 Broadway andturning it into the 26-unit loft-style NorthTyler Apartments. The project will haveunderground parking and a swimming pool.

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GalvestonDowntown Galveston Housing Projects


Completed Projects

1 Rosenberg Building 6 Late Lofts/rental2313 Strand 1970s

2 2121 Strand 8 Mid-1980s Apartments3 Commerce Building Early Apartments

2102 Strand 1980s4 Opera House 10 Mid- Apartments

2020 Postoffice Street 1980s5 Diocese Building 6 Late Apartments

406 20th Street 1980s6 Berlocher Building 10 Early Apartments

2309–2311 Ships Mechanic Row 1990s7 Pix Building 4 Early Lofts/NA

22nd at Postoffice Street 1990s8 Galveston Daily News Building NA Mid- Apartments

2108 Mechanic Row 1990s9 Appraisers Building 5 Mid- Apartments

101 21st Street 1990s10 Strand Lofts 37 1995 Lofts/rental

2400 Mechanic Row11 Market–Market Condos 10 1996 Condos

Market between 23rd and 25th


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12 2009 Postoffice Street 4 1996 Apartments13 Telephone Company Building NA 1998 Apartments

525 22nd Street at Church14 Mensing Building NA 1999 Apartments

2116 Strand15 Fish Building 8 1999 Lofts

Postoffice Street

Total 971

Planned or Proposed

16 Hendley Building Lofts 8 2000 Lofts/rental2016 Strand

17 Anaco Building 87 2000 Apartments1 Moody Center (est.)

18 E.S. Levy Building NA 2000 Lofts/rental23rd and Mechanic

19 St. Germain 10 NA Condos2102 Postoffice Street

20 Jean Laffitte Hotel NA NA NA2102 Church

Total 971

Galveston Metropolitan Area

Population 245,556Total employment 116,257Median household income $35,629Number of single-family units constructed since 1990 11,257Number of multifamily units constructed since 1990 1,539Number of downtown units completed since 1990 78


In the 1990s, the revitalization of down-town Galveston went into full swing. TheStrand Historic District is the center ofrevitalization efforts. Numerous residentialprojects are sprinkled among the variouscommercial buildings restored to their early20th Century glory. As in San Antonio, down-town residential projects first appeared about20 years ago. Several projects date back tothe 1980s and early 1990s, and a new round ofprojects began in the mid-to-late 1990s.

Most of the new housing is located on theStrand, Mechanic Street and Postoffice Street.Until 1995, all projects contained ten units orless. That year, Randall Davis, a Houstondeveloper, opened his first building outsideHouston with the conversion of the Clarke

and Courts Building into the Strand Loftscontaining 37 loft-style units. Since then,plans for larger projects have been proposed,including the Anaco Building, which may beturned into 87 units, and the Jean LaffitteHotel, which may become student housing.Nearly all projects are rental apartments.

Because downtown Galveston is locatednear the University of Texas Medical Branchcampus and students live in many of theolder apartments near downtown, area rentsvary considerably. However, newer projectsoffer rents similar to those in larger cities,ranging from $700 to $1,500 per month. TheStrand Lofts, which include in-buildingcovered parking in the rent, range from $800to $1,585 per month. Rents per square foot

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range from 83 to 93 cents per month. StrandLofts management reports they are 96 per-cent occupied. Nearly all occupants use theirunit as a primary residence. Some commuteto the Houston or Clear Lake areas.

LubbockLubbock Metropolitan Area



Lubbock is sharing in the late 1990s trendtoward downtown revitalization. The south-east quadrant of the downtown area hasbecome a lively entertainment district. Anolder residential neighborhood adjacent to thenorth edge of downtown has been undergoingredevelopment, and a large neighborhoodadjacent to Texas Tech University is theproposed locale for a major project. Theuniversity’s recent improvements and stabi-lizing influence have contributed to a positiveatmosphere for downtown development.

Along with the commercial revitalization ofLubbock’s central business district, residen-tial development is beginning to occur withinthe downtown core. One project, Studio 14 onTexas Avenue, opened for occupancy in July1998. All of its 14 loft rental units are leased,with rents for one-bedroom units from $700 to$850 and $900 to $1,200 for two-bedroomunits. The units are typically larger thanthose found in projects in the larger cities;one-bedroom units range from 1,000 to 1,400square feet, and two-bedroom units areapproximately 2,000 square feet. Amenitiesinclude indoor parking, large kitchens, aworkout room and washer and dryer in theunits. The project is two blocks from theDepot District and Buddy Holly Avenue, thefocus of the new entertainment district. Thedeveloper, Kim Morris of Kim Morris Inter-ests, is constructing another 16 units acrossthe adjacent alley. Morris’ future plansinclude renovation of the Green Building onAvenue J into 30 residential units and conver-sion of the historic Pioneer Hotel into 80 units.

The Studio 14 project renovation cost wasabout $750,000, with a local bank providingthe financing. Morris reports that financinghas been the greatest obstacle to proceedingwith other downtown housing projects. Withthe success of Studio 14, lenders may be morewilling to provide financing.

Renters at Studio 14 fit a profile similar tothose in downtown projects in the largercities: childless renters, mostly single andfrom 23 to 55 years old. They choose to live inStudio 14 for the unique urban character ofthe units and the downtown environment.About half of the renters work within two orthree miles of Studio 14 at entities such asthe university and the medical center. Morrisestimates 60 percent moved to Lubbock fromlarger cities where they may have experi-enced a more urban lifestyle.

WacoWaco Metropolitan Area



Waco’s downtown housing projects areunique in their mix of residents, whichincludes a significant number of universitystudents. A total of three projects, all rentallofts, have been or are being constructed. Thebest-known project, Behrens Lofts on FourthStreet, received media attention for notmeeting its construction deadlines forcompletion in summer 1999 despite havingsigned Baylor University students to takeoccupancy for the fall 1999 semester.

Other projects include the 12-unitPraetorian Building at Sixth and Franklin andthe 20-unit Holiday-Hammond on Mary Street.According to Downtown Waco, Inc., rentsrange from $600 per month in some Praetorianunits to $1,675 for the soon-to-be-openedBehrens Lofts. Planned and proposed projectsinclude the Southwestern Drug building onFifth Street, proposed by the Behrens Loftsdeveloper, and the Waco High School, pro-posed for conversion to lofts and office space.

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Wichita FallsWichita Falls Metropolitan Area

Population 137,237Total employment 63,291Median household income $29,653Number of single-family units constructed since 1990 1,830Number of multifamily units constructed since 1990 587Number of downtown units completed since 1990 24


In Wichita Falls, unlike other small cities,downtown residential development hasevolved concurrent with commercial revital-ization, and in some cases preceding commer-cial efforts. In 1994, the Franklin PlaceApartments at 824 Indiana opened with nineunits leased. Plans are in place to convertanother floor of the building into apartmentsas well. Another project, the 15-unit La SalleCrossing Apartments at Seventh and OhioStreets, opened in 1999. The developer ofFranklin Place, Randle Forcher, is buildingthe 29-unit Richmond Condominiums, aconversion of an older apartment complex.Wichita Falls leaders look to projects such asthese to begin a substantial resurgence ofdowntown economic activity.

Forcher plans to sell the Richmond Condo-miniums for about $70 per square foot. Floorplans will range from 624-square-foot one-bedroom units to 1,800-square-foot two-bedroom units. A major selling point will bethe 59 covered parking spaces adjacent to thebuilding.

Forcher found from his earlier FranklinPlace project that people moved downtownpurely for lifestyle reasons. None of theFranklin Place residents work in downtownWichita Falls. Tenants tend to range in agefrom 20 to 35 and are single. Most movedfrom elsewhere within the Wichita Falls area.

Forcher believes his market niche is “wideopen” and is confident that interest in down-town housing will continue to build inWichita Falls. A completed unit at theRichmond Condominiums that opened to thepublic during summer 1999 drew a consider-able number of visitors. He and his son-in-laware examining six more downtown buildings

for residential conversion or renovation.Financing is the major stumbling blockbecause his product is new in the area, andlenders are skittish about getting involved. Infact, he self-financed the $1.1 million Rich-mond Condominiums construction.

Bryan, Denton, San Angeloand Beaumont

Bryan, Denton and San Angelo are typicalof smaller cities where a few small-scaleresidential projects have appeared in historicbuildings downtown. In Bryan, residentialunits are appearing on the second floorsabove office or retail space along Main Streetand on surrounding blocks. One of the mostsignificant projects to date is the Bikini CapBuilding, also known as the Jarrett Pharmacy.Its second floor is being converted into fourloft-style apartments. Unexpected costsencountered during the renovation arepushing asking rents to about $1.25 persquare foot. The Forgey Building, renovatedby a Texas A&M professor, is nearby.

Denton and San Angelo each have seen avariety of small commercial buildings aroundMain Street converted to lofts on their secondor upper floors. According to Denton’s MainStreet Project, a total of 27 loft apartmentsnow exist downtown. Most are in buildingswith one to four units, although one devel-oper is building a six-unit rehabilitationproject and plans a 20-unit new constructionproject. In San Angelo, the Cactus Hoteloffers several apartments. A couple haspurchased an old rooming house on SouthOakes Street for conversion to residentialunits. In Beaumont, a downtown housingstudy is being conducted to determine thefeasibility of redeveloping historic buildingsinto lofts and apartments.

The depth of the downtown residentialmarket in these smaller cities is difficult toestimate. Adding to the challenge for develop-ers in these cities, especially where the trendin downtown living is in its infancy, is theneed to have adequate financing resources tocomplete building renovations. While finan-cial assistance is available through federaland local historic preservation agencies, thecumbersome and restrictive nature of theassistance often makes the project lessprofitable than proceeding without govern-ment help.

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Projects

The Forgey Building, BryanThe Forgey Building on Main Street in

downtown Bryan contains the owner’s homeand a rental unit upstairs, at a rate of $1.10per square foot. Professor Fred Forgey esti-mates that of the 13 downtown residents inBryan one-half live in units they developedthemselves. Professor Forgey reports thatmany of the units in Bryan are occupied bythe developers, typically independentbusinesspeople who often run their businessin a downstairs office or retail shop. Rentersmay work at a downtown business butchoose to live downtown for the lifestyle, notproximity to work. New downtown residentsoften have moved from another city. Theytypically value the sense of familiarity andcommunity that develops among the resi-dents, businesses and others located down-town.

201 and 205 Oak Street, DentonDeveloper Mike Kevlin is planning to

demolish two buildings on 201 and 215 OakStreet in downtown Denton and build twothree-story buildings containing 20 apart-ments. He will orient them to a relativelyupscale market in Denton, with rents run-ning about $1 per square foot, according to aNovember 12, 1999, Dallas Business Journalarticle. The units, ranging from 500 to 1,500square feet, are expected to be ready byspring 2000. Because the historical nature ofthe area attracts residents, Kevlin is design-ing the buildings to reflect the surroundingearly-1900s architecture.

Summary of MarketCharacteristics

Singles and married couples with no chil-dren are the target market for downtownhousing. Empty nesters and retirees areanother source of potential residents. Theowners and managers of many downtownhousing properties stress the diversity of agesfrom early 20s to mid 60, and occupations,from students to highly paid professionals toretirees.

Apart from the absence of children, thecommon factor among the homebuyers andrenters in downtown areas is the desire for anurban lifestyle. Even in cities with heavytraffic congestion, such as Dallas and Hous-ton, the majority of downtown residents have

selected the neighborhood for lifestyle consid-erations. Of course, convenient commutesare an important factor as well, but surveysand interviews indicate that only about halfof employed downtown residents work in thecentral business district or immediate envi-rons.

Many people interested in living downtownare attracted by the diversity and historicnature of buildings and uses. Young profes-sional workers are excited about livingdowntown because of nearby entertainment,recreational and dining facilities.

Public parks and transit also are importantissues for those considering living downtown.Security is another major issue, for residentsinsist on a sense of adequate safety. Addedsecurity features can contribute to a percep-tion of safety. Not surprisingly, as urbancrime rates have declined, downtown housinghas become more popular.

Challenges to DevelopingDowntown Housing

Developing downtown housing can bedifficult, particularly in smaller markets.Financing may not be available becauselenders are unwilling to take on the perceivedhigher risk in downtowns where housing hasnot established a strong foothold. Develop-ment costs may be uncertain, particularly inrenovations of older buildings where unusualfeatures or structural problems may berevealed after rehabilitation has begun.

Most cities have federal and local financialincentives to develop downtown housing,including loans, tax credits, tax abatementsand infrastructure and parking development.In some cases, these incentives can reducethe cost of the project, but in other cases, thered tape associated with the incentives, alongwith development restrictions, negate thebenefits.

Even without using historical preservationfinancial aid, developers can find the require-ments for building code upgrades and thedominance of commercial zoning to bechallenging constraints. Development approv-als are generally time-consuming and difficultto obtain. Assembling property also may taketime. Both local governments and consumerpreferences may require that parking facili-ties (usually structures in major cities) beadded to downtown residential projects,further increasing development costs.

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In addition, downtowns are viewed as beingriskier developments because of the lack ofquantifiable markets. This is in part becausemany cities currently have little downtownhousing, meaning that the market must becreated. Physically comparable property maybe difficult or impossible to find in the samemetropolitan area because downtownhousing’s uniqueness is typically one of itsattractions. Downtown housing demand isdriven by consumer preferences that cannotbe measured from basic demographic data, sothe size of this market segment is difficult toestimate.

The livability of a downtown area can posethe greatest challenge to residential develop-ment. Potential residents must feel thatsafety and cleanliness issues are adequatelyaddressed. Areas dominated by low-incomehousing and social service agencies may havegreat difficulty attracting market-rate devel-opment. And lack of conveniences, such asgrocery and discount stores, discouragesthose accustomed to suburban settings.

Finally, downtown housing can fall victimto its own success. Individual entrepreneursoften start the residential development trendby purchasing historic buildings at relativelylow prices. However, as demand for down-town properties grows and the Texas

economy continues to sizzle, land andbuilding prices may be too high for develop-ment of anything other than luxury residen-tial projects.

ConclusionDespite the challenges facing downtown

housing developers, many projects in citiesall over Texas have been extremely success-ful. Local governments have begun to recog-nize housing as a key ingredient for down-town revitalization. Central business districtsreinvigorated with new commercial andentertainment activity tend to attract newresidents. Even in smaller downtowns, theappeal of older buildings with historic charac-ter can be enough to draw developers andresidents who, in turn, generate new com-mercial activity. Eventually the demandbecomes so visibly strong that new housing isbuilt from the ground up. In Texas’ cities,both large and small, public response hasbeen so positive that many projects are leasedfully or sold before construction has beencompleted. Living downtown may be a newtrend in Texas, but it appears likely tobecome an increasingly attractive option forthousands of urban residents.

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downtown texas housing · downtown texas housing jennifer s. evans research associate steve...

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