Mixed Use Development (or not) in Midtown Houston

Posted on February 19, 2012 by Greg Martin

We believe in mixed use, but in order for a mixed use project to be successful, all components must succeed themselves. Over the past 12 years, the principals of Milhaus have developed projects with and without mixing uses. Some have worked well and others have not so well (during 2007-2009). Last Thursday we received approval for multiple setback variances in Houston for two city blocks in the Midtown neighborhood. Over the course of the last week, several blogs in Houston have been discussing our project, the neighborhood, and the rapid development currently underway in their great city. You can find their continuing discussions here:

Indeed, Houston is not a mid-tier city by any measure. As the 4th largest city in the country with 23 of the Fortune 500 companies in the metro area, we think its is on the path to becoming a 24 hour city, to be mentioned in the same breath as Chicago, New York, Los Angeles and Miami. When we looked at Houston, we chose to focus on the Midtown area for a variety of reasons. It has easy access to jobs downtown as well as the medical center. By its transit service, block patterns, and ongoing streetscape improvements it has the potential to be the most walkable of all neighborhoods in the city. To the west of Main Street: the funky shops, number of new residents, and the type of nightlife and dining options attracted us as well. As we explored the area east of Main Street, it reminded us of other urban areas attractive to redevelopment. While it is lacking in retail uses, it does have a large component of home ownership. From discussions with retail brokers and tenants in Houston, there just isn’t enough housing density east of Main Street to justify new commercial space. However, we believe that if enough residents move into the neighborhood that will change. Our project includes 280 units. It’s hardly enough to warrant new commercial space on it’s own, but we think it will help set the stage for more development there.

In order to complement what the Midtown Redevelopment Authority is planning in the area, we designed the first floor of the building along Gray Avenue, between Austin and La Branch to be built to hold commercial tenants if the demand is ever warranted. Until then, we will locate all of the building’s leasing and club rooms/amenity areas along the street front. It’s not retail, but it will help create a pedestrian experience along Gray Avenue. Since the apartment market is currently very hot, the common perception might be that it would be easy to obtain equity and debt financing for a mixed use project, let alone an apartment project. However, this is not an accurate perception in today’s financing world. In the past many financial firms and banks have been burned by investing in Houston, due to the boom and bust cycle that tends to predominate the real estate market here. We are facing challenges just like everyone else, which is somewhat complicated by focusing east of Main Street. Nevertheless, we are committed to Midtown and we will continue to focus on making this project a reality.

This entry was posted in Our Philosophy, USA West

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