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Developer Jacob Sudhoff remembers when Houston had a much different profile when the Texas metropolis was considered just a “cow and oil town” built around sprawl, suburbs, and anything-goes zoning.

But in the last few years, Houston has seen a boom in a high-rise, multifamily living that’s transforming neighborhoods around the famously decentralized city with numerous new 40-story towers taking root. Walkable neighborhoods and the condos and apartments drawing residents to these areas are revitalizing the Heights, Midtown, downtown, the Outer Loop, and the forthcoming McKenley Memorial City as well as the neighborhoods near the new Buffalo Bayou Park and the Allen Parkway.

Houston is projected to add roughly 16,000 units this year alone, according to a report from commercial real estate firm JLL, with another 23,000 in the pipeline. As prices have crept up to historic heights—$1,050 a month on average, making Houston one of the nation’s best rental bargains among big cities—occupancy remains at 90 percent, leading to strong rental demand and a positive outlook for the future. For the first time this year, according to the long-running Kinder Houston Area Survey administered by Rice University, a majority or near majority of local respondents wanted to live in denser, mixed-use neighborhoods.

“Houston now has an inward migration,” says Sudhoff. “A lot of people are moving to the urban core. We’ve never seen so many high-rises going up in the city, and every submarket has more going up.”

Vertical living taking root in Houston

While Houston isn’t changing overnight—the city’s expansive system of interstates and expanding rings of suburban development aren’t going anywhere, and more than 60 percent of the cities housing stock is single-family homes—there’s been a noteworthy shift toward apartments and condos, both as a lifestyle choice and an investment opportunity. In a metro were building out has been gospel—teachings challenged as the city’s highways become increasingly congested and Hurricane Harvey flooding brought issues with the city’s floodplain maps and development patterns to the fore—many Houstonians are looking for something different.

Transwestern Commercial Services completed 187,054 square feet of office leases at Westchase Park I and II at 3700 and 3600 W. Sam Houston Parkway North. LJA Engineering, represented by Anthony Squillante and Dustin Devine of Stream Realty Partners, leased 90,989 square feet; Centurion Pipeline Co., represented by Lonna Dorman of Transwestern, leased 28,078 square feet; and ABB, represented by Beau Bellow and Josh Hirsch of JLL, renewed its lease for 67,987 square feet. The new tenants will take occupancy in the first half of 2020. Transwestern’s Eric Anderson, Parker Burkett, and Katy Gragg represented the owner, Clarion Partners. The 569,825-square-foot Westchase Park office complex has a freestanding amenity center with a Citrus Kitchen restaurant, fitness center with locker rooms and tenant conference center with seating for up to 100.

American Cross-Dock & Storage, a family-owned and operated logistics company led by president and CEO Deborah Bressie, signed two leases totaling 146,863 in Pasadena. The company leased 102,863 square feet of industrial space at 9701 New Decade Drive in the Bayport North Logistics Center I, from Triten Real Estate Partners, for storage and distribution, and subleased 44,000 square feet at 13225 Bay Park Road for drayage and cross-dock services. Bob Berry and Grant Hortenstine of Avison Young represented the tenant, while Jason Dillee and Andrew Jewett of CBRE represented the landlord. The company has more than doubled its space since being founded in March 2018. It provides warehousing, trans-loading, fulfillment and packaging services to the Greater Houston area.

Houston-based Hartman Income REIT purchased a three-property office portfolio totaling 254,225 square feet from New York-based HighBrook Investors. JLL Capital Markets, led by Martin Hogan, marketed the property on behalf of the seller and procured the buyer. The portfolio consists of 16420 Park Ten and 1400 Broadfield in the Energy Corridor’s Park 10 Business Park, as well as 7915 FM 1960 near Willowbrook Mall in northwest Harris County. The portfolio is 55 percent leased.

Metro Houston added nearly 1.3 million residents between ’08 and ’18, a 22.3 percent increase. A little more than half the growth came from migration, a bit less than half from natural increase. Metro Houston created 81,900 jobs, a 2.7 percent increase, in the 12 months ending August ’19, according to the Texas Workforce Commission (TWC). Nonfarm payroll employment was 3,166,900 in August, flat from July, and down from 3,185,200 in June. The drop reflects the temporary loss of jobs associated with education.

Sectors adding the most jobs over the past 12 months were professional, scientific, and technical services (21,100); manufacturing (11,500); other services (9,700); transportation, warehousing, and utilities (8,600); and health care and social assistance (8,200). Employment in oil field services peaked in May and has declined steadily since. This is not surprising given the loss of more than 200 working rigs since the first of the year.

The jobs gained in manufacturing are likely an overestimate given that three-fourths of the gains have been in equipment manufacturing and fabricated metals, sectors closely tied to upstream energy. Houston’s unemployment rate was 3.9 percent in August, down from 4.0 percent in July and 4.4 percent in August of last year. The Texas rate in August was 3.6 percent; the U.S. rate, 3.8 percent. The rates are not seasonally adjusted.

City of Houston building permits totaled $7.2 billion for the 12 months ending August ’19, up 16.3 percent from $6.2 billion for the same period a year earlier. Commercial permit values rose 31.8 percent to $4.4 billion, while residential permit values decreased 1.8 percent to $2.8 billion. The closing spot price for a barrel of West Texas Intermediate (WTI), the U.S. benchmark for light, sweet crude, averaged $56.67 per barrel in September, down 18.7 percent from $70.15 for September last year.

The 48-story tower is expected to fetch about $700 million or $650 per SF, according to Real Estate Alert. That sales price would make the building one of the richest deals in Houston’s real estate history..

The building, which opened in 2017, is 94 percent occupied with Unired Airlines, Kirkland & Ellis and Goldman Sachs as tenants. Colvill Office Properties leases the 601 Main at Travis, which is catty-cornered from the historic Rice Hotel building which is now residential lofts.