Trendy Houston neighborhood is getting a 400-unit apartment development

Houston’s self-proclaimed “design district” on the western edge of the Bayou City’s trendy Heights neighborhood is getting a 400-unit apartment complex.

McGrath Real Estate Partners, a Houston-based developer with significant interests in student housing and multifamily development, plans to break ground on the complex by October.

The complex — branded as Artistry Design District — will be located on a 9.16-acre site at 3939 W. 12th Street, right inside Houston’s 610 Loop freeway.

McGrath has previously avoided pursuing projects in Houston’s inner loop because of the high costs associated with high-rise development, but the large site W. 12th Street piqued McGrath’s interest because it would allow the company to build a cheaper, low-rise project in one of Houston’s coveted inner-loop neighborhoods.

“That infield development has required highrise or podium development, which really drives up construction pricing, and where we’re at with pricing these days, it takes a big rent check to pay for that type of construction,” Barrett Kirk, McGrath’s chief investment officer told The Real Deal. “[This site] allowed us to design a four-story surface park development that will be more affordable,” he said.

The lower construction costs should help McGrath’s because Houston’s multifamily landlords are expected to see a 24 percent rise in property tax bills for 2022.

But higher property taxes, rising interest rates and a potential recession aren’t keeping multifamily developers away from Texas’ big cities, which have favorable demographic and economic conditions.

Kirk declined to comment on the development’s cost but the two parcels of land McGrath acquired for the project have a combined market value of about $6 million, according to Harris County Appraisal District records.

Both parcels were previously owned by real estate developer John Beeson, who has built office buildings, warehouses and shopping centers across Houston.

McGrath’s Artistry project, which will target young professionals who are moving to the Heights, will feature seven floor plans ranging in size from 496 to 1,283 square feet, a resort-style pool with cabanas, green space, and an outdoor amphitheater.

Kirk wouldn’t say how much each unit will rent for but said rents would be at the market rate for the three sub-neighborhoods of Houston’s Heights, which according to data compiled by Rent Cafe averages $1,277 to $1,863 for an 881-square-foot apartment.