Houston starting to follow: Turning from sprawl

IN a city known for suburban sprawl, competing developers are testing a different concept: master-planned, high-density projects combining residential, retail, offices and hotels.

While these trendy developments, where people can walk from their homes to shops, restaurants and even their workplaces, have taken root in other parts of the country, they've been slow to show up here.

That's about to change. In the Houston area, at least nine of these projects are planned or under construction. Most of the sites are in the heart of town. Land is just now being cleared for some of them, while others in the suburbs are further along.

The trend is driven by affluent young professionals and empty nesters tired of long commutes. Rising land costs also factor in by requiring developers to build more on smaller spaces.

One project will feature Houston's only flagship Whole Foods Market, while another will span 37 acres and include a movie theater and upscale fitness center.

Another factor fueling this development shift is the explosion of wealth in the U.S., said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm in New York.

Luxury retail, hotel and residential markets are "on fire," and those sectors are perfect fits for mixed use, he said.

But some observers wonder if all these projects, three of which are just a few miles from each other, will end up as they're envisioned or be turned into something less ambitious. They question whether there are enough high-end tenants to go around and if they can turn a profit on projects that can cost a half-billion dollars.

Developers and architects say these projects are expensive to build because they often include pricey underground parking garages and have high upfront construction costs.

Taking risks

The impending wave of mixed-use construction reflects the willingness of developers to take risks based on the city's current prosperity and projections that the Houston area's population will grow by 3.5 million in less than 30 years, said Kent Dussair, president of CDS Market Research, a Houston-based consulting firm.

Cities such as Dallas, Atlanta, Phoenix and Austin are already in various stages of building urban-style projects, while Houston, "with the strongest economy of the bunch," is playing catch-up, he noted.

These projects foster a sense of community, noted David Crossley, president of the Gulf Coast Institute, a nonprofit Houston group advocating quality of life issues.

"For half a century, we've been building spaces with separate uses: a mall here, houses there and offices somewhere else," he said, while the mixed-use movement is "an attempt to put all those uses back together again."

Most commercial developments in Houston are more accommodating to the car than those in older, transit-dependent cities.

Development "will happen in a Houston way," said urban historian Joel Kotkin, who recently heard about the new mixed-use project at the old Town & Country Mall site, which he noted is located at the intersection of two major freeways far from downtown.

Good neighbors?

The large scale of these multi-use projects raises the question of what kind of neighbors they'll be when they're built in established neighborhoods inside the Loop.

A potential downside to a surrounding neighborhood will be increased traffic, Crossley said. While these projects will likely raise nearby land values, that typically means higher taxes.

Whether surrounding property owners will embrace the mixed-use model, allowing it to spread, is an open question because Houston has so few regulations, Crossley said: It's strictly up to the surrounding property owners.

Overall, he believes the projects will benefit a neighborhood.

"It gives you all these places to go," he said, and the developers "work hard to make their private streets seem public. It's hard to see how it wouldn't be anything but a good neighbor."