Pelican Builders developed the first ever residential highrise in Houston, The Woodway, in 1974.
Over the following 50 years, the firm founded by Robert Bland Sr. carved its niche in multifamily in Greater Houston. It has developed 880 highrise and mid-rise condo units, 700 garden-style townhomes and 800 apartment projects, according to its website.
In a sprawling metro, where suburban home sales are king, the firm is betting big that there’s an appetite for condos in the Bayou City, too. Pelican recently opened a 17-story condo building with 67 units, the Hawthorne, at 5656 San Felipe Street in Tanglewood, less than 2 miles from the Woodway. Homes in the building range from about $1.5 million to $3 million, or $734 to $993 per square foot, according to an online listing.
Pelican recently scored a $111 million condo inventory loan from Northwind Group, which allows it to leverage the Hawthorne’s unsold units as collateral to refinance existing debt. Derek Darnell, president of Pelican Builders, said he expects the Hawthorne to be 75 percent occupied by the end of June.
The upscale condo market in Houston is so small that it’s hard to get a read on the market.
While mid-rise and high-rise condo sales were down more than 18 percent year over year in 2023. Only 878 were sold in 2022, and 716 were sold last year, according to the Houston Association of Realtors. The housing type represented less than 1 percent of the Greater Houston market last year.
“The new trend emerging in the condo market has been suburbanites,” Darnell said. “We’re getting a lot of people who spent 20 years raising their families and working for big companies in the Woodlands, Katy or even Sugar Land wanting to come back to the city life … the suburban markets have parks, trails and thoughtful planning, but they don’t have the arts, restaurants and museums.”
Traditionally, residents transitioning away from the upkeep of larger homes or extensive yards would downsize to what Darnell calls “patio homes,” offering convenience without straying too far. These townhome developments, often featuring first-floor living spaces and minimal yard maintenance, were once a staple in the city proper. However, their construction has dwindled, Darnell said, and those that are built often come with hefty price tags.
The high cost of land makes that housing type less appealing to developers.
“It’s all math. If you only build a patio home or townhome that’s three stories, there’s just only so much you can afford to pay for the land. If you build a high-rise with 60 or 80 units on the same property, then you can pay more for land,” he said. “Our company has always done both high-rise condos and these townhome, patio home products, but in the inner core, where land is so valuable, we’re just not doing the latter anymore, or at least not nearly as much.”
Houston’s inner core is slowly adopting the foundations of a vertical city, said Douglas Elliman broker Misty Meredith. She is the exclusive developer’s agent for the luxury Giorgetti Houston condo, at 2710 Steel Street.
“Houston is now starting to catch up to other big cities,” she said. “I do think the trend of condos is slow, but it’s something that’s been coming. I’m very optimistic about the condo market this year, especially having such a great second half of last year.”
Houston’s overall luxury market is surging, and sales are increasing in submarkets that are within the city limits but toward the outer ring, where luxury is more affordable than in established enclaves like Memorial and River Oaks. Spring Branch, in Northwest Houston, saw a four-fold increase in sales of more than $1 million between August 2022 and 2023, and just east of that, sales in Oak Forest multiplied by six.
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The luxury market contrasts with the 19-month slump in sales among average homebuyers in the metro, attributed to high interest rates and low inventory that left would-be buyers on the fence or pivoting to the rental market.
Pelican Builders is set to start construction this year on a mid-rise luxury condo complex in River Oaks, called the Lexington. It is slated for 40 units ranging from $1.6 million to $4 million.
Luxury hotel-branded condos are also on the way to Houston. Marriott and Satya are planning Texas’ first St. Regis Residences, a 35-story tower expected to begin construction in Upper Kirby next year. And Howard Hughes Holdings is bringing the Ritz-Carlton Residences to Lake Woodlands.