Southern Land Angling for Record Rents in Houston

Southern Land Company is aiming to reset the bar for both office and apartment rents in Houston with its long-awaited River Oaks-area debut.

The Nashville-based developer broke ground this week on its $270 million mixed-use project at 2811 Kirby Drive, according to Bisnow. The 38-story development, dubbed Lily River Oaks, will pair a luxury apartment tower with a boutique office component — and aggressive pricing to match.

At the center of the strategy are office rents starting at $55 per square foot triple net, a level that would rank among the highest in Houston and well above the market’s $30.57 average in the first quarter. Chief Investment Officer Dustin Downey told the outlet that the pricing is a function of scarcity, noting that comparable rents are typically confined to small blocks of trophy space downtown.

The project will span roughly 953,000 square feet, with 812,000 square feet of apartments, 107,000 square feet of offices and 15,000 square feet of ground-floor retail. A 10-story office building will connect to the apartment tower, with four floors dedicated to high-end workspace aimed at what the firm describes as a “boutique” tenant base, according to the outlet. It was designed by Chicago-based Solomon Cordwell Buenz architects.

To launch the project, Southern Land injected about $40 million more in equity than originally planned to get the deal moving, while trimming roughly $7 million from the budget to offset rising construction costs and tariffs that delayed the project by a year, according to the outlet.

The office amenities will include a full-floor wellness center, outdoor terraces and structured parking. The Upper Kirby site sits near River Oaks, within close reach of executive housing and a tight cluster of high-income tenants, a dynamic the firm believes will justify premium rents.

Dallas-based Stream Realty Partners is handling leasing and has already fielded early interest. The project is one of only a handful to break ground inside Houston’s Inner Loop in recent years, according to the publication.

On the residential side, Lily River Oaks will have 331 units, including 18 penthouses, with rooftop amenities and a landscaped garden deck. That timing is notable for central housing, as Houston’s multifamily pipeline has shrunk to its lowest level since 2011, with just 638 units started in the first quarter, according to CoStar.

— Eric Weilbacher