Like a lot of things, single family and multifamily construction development is expected to slow down this year. But another kind of development is expected to rise and carry the residential development market through the slump: Mixed-use, walkable urban projects. According to chief economist for CMD construction research group, Alex Carrick, there’s a shifting trend in both younger and older people wanting to live in denser, walkable urban environments. He has some insights into why these developments are taking off in Houston, why people want to live there right now and what it means for the future. Paul Takahashi of the Houston Business Journal reports:
Developers are building more residential projects with a mixed-use component to cater to a growing number of Houstonians who desire an urban, walkable lifestyle.
Several mixed-use projects have been planned or underway in Houston’s central neighborhoods in recent years, including Midway Cos.’ CityCentre’s expansion, Camden Property Trust’s (NYSE: CPT) Midtown Superblock and Tillman Fertitta’s The Post Oak in Uptown.
Other developers are planning mixed-use projects in the suburbs, including Sandy Aron in Baytown and Ryan McCord in the west Lake Houston area. Residential developers also are building mixed-use projects in master-planned communities like Caldwell Cos.’ Towne Lake in Cypress, The Howard Hughes Corp.’s (NYSE: HHC) Bridgeland and Signorelli Cos.’ Valley Ranch.
Although Houston’s single-family and multifamily construction market is expected to slow down in 2016, this rise in mixed-use development will likely buoy residential development in Houston through the oil slump, according to CMD Group, an Atlanta-based construction research group.
“There’s a societal change where mixed-use projects are where people want to live right now,” said Alex Carrick, CMD Group’s chief economist.
The idea of living in an urban, mixed-use environment wasn’t always a popular one, Carrick said. Even just a decade ago, central business districts, including Houston’s, weren’t receptive to the idea of high-rise residential projects and mixed-use developments with dense housing options, he said.
“People wanted to live in the suburbs, not downtown,” Carrick said. “Living downtown is now quite a different experience. There’s a lot to like about living downtown.”
In Houston, tax incentives, such as the Downtown Living Initiative, as well as changing demographic preferences has propelled this national trend toward urbanization. Today, 18 new residential projects are planned for downtown Houston.
Now, developers are looking to replicate downtown’s urban, walkable environment in mixed-use projects across the Bayou City. These mixed-use projects — which typically feature a combination of apartments, retail, restaurants and offices — will likely appeal to Houstonians young and old, Carrick said.
“Seniors like to live in mixed-use projects because it’s convenient to hop in a cab to visit friends and go to restaurants,” Carrick said. “Young people like living downtown because they can bike and walk to work and establishes their green cred. This is the trend, and it’s going to affect all categories of construction, not just the residential side.”
Paul Takahashi covers residential and multifamily commercial real estate for the Houston Business Journal.
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