Surge in Houston’s luxe market ripples in Spring Branch, Oak Forest East 

October 4, 2023 / no comments

What’s with the recent spike in Houston’s luxury market? 

New construction, home appreciations and increased interest in high-end enclaves such as Spring Branch and Oak Forest East seem to be key parts of the answer. The two northwest Houston suburbs, separated by about five miles,  have been on the receiving end of increased attention from developers, builders and home buyers.

Longer-established submarkets such as Memorial and River Oaks are better known for their luxe home listings, which remain popular. Meanwhile, Spring Branch and Oak Forest East are making upscale moves with newer builds.

According to data obtained from HAR, there has been a four-fold increase in sales of more than $1 million in Spring Branch, with a six-fold hike in Oak Forest.

While Spring Branch only saw two homes sell for over $1 million in August 2022, it jumped to 12 homes this year. Similarly, Oak Forest East logged a quartet of million-dollar transactions during the same time frame last year and followed up with 13 in August 2023.  Both areas appear to benefit from offering more land compared with neighboring communities.

“We’re seeing a lot of new construction in Spring Branch and Oak Forest and a lot of it is they have good lot sizes that are allowing builders to come in and build larger houses for cheaper,” said Caroline Schlemmer, a luxury real estate agent who works in the areas. “Oak Forest is traditionally a bit more affordable than the Heights, and Spring Branch is a little more affordable than Memorial. So, we’ve just seen a big surge of development, and [Oak Forest and Spring Branch] are getting to be more and more desirable.” 

Northwest Houston has seen a lot of increased development as the population center of the metropolitan area continues to shift in that direction. The luxury market has been seeing those gains as well. Oak Forest East, specifically, is heralded as one of Houston’s best communities for home appreciation. Median home prices in the area have increased by 47 percent over the past decade and upwards of 26 percent since 2018, according to HAR data compiled by Houston Properties. 

“The appreciation in the air, even now, is really crazy,” said Ellen Krantz, co-head of real estate team Krantz Linn Group. “But also a lot of people have realized that if they want to get into a certain area, they may have to give up things that they weren’t willing to give up a year ago, and they’ve been waiting for the market inventory to get better, and maybe they’re more willing to take a house that needs updating versus looking for the perfect house.”

The submarkets’ abundant supply of newer homes allow for expansive customization options for buyers seeking curation. Particularly, the younger homebuyers who Krantz and Schlemmer say are some of the more prominent seekers in Houston’s surging luxury market. In any case, Coldwell Banker’s Global Luxury Report found that roughly 70 percent of luxury agents saw a growing preference for newer supply from their clients. 

Spring Branch and Oak Forest East,, have long retained their suburban identity characterized by post-World War II residences, midcentury shopping plazas and 70s-style apartment complexes. They have experienced a resurgence in recent years as new generations of homeowners have taken the stage and made considerable inroads to revitalize and expand existing properties due to their preferential location near major highways, downtown Houston and the Energy Corridor. 

Developers like Braun Enterprises have undertaken ambitious projects to redevelop parcels that were once occupied by aging apartment buildings and commercial centers. For instance, “Master Chef” season 3 winner Christine Ha recently brought two new eateries to these areas citing the submarket’s growing consumer base. The Spring Branch Management District offers a number of grants to help its revitalization efforts including a  “Demolition Grant” for commercial property owners to bulldoze “unsightly” and aging projects in order to help fund redevelopment ambitions.

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Universities Gobbling Up Office Buildings In A Bid To Expand Footprints At A Discount

October 4, 2023 / no comments

Dozens of schools are picking up vacant office buildings, making the most of the sector’s pain by increasing the size of their campuses and real estate portfolios at a low price. 
The group of schools snagging properties since 2018 includes 49 four-year private institutions and 16 four-year public universities, according to The New York Times. The acquired buildings often need renovations, but these improvements are typically less expensive and time-consuming than constructing new buildings from scratch, per the NYT.

Steve Ross’ Related scoops up affordable rental complex in Miramar for $48M

October 4, 2023 / no comments

Steve Ross’ Related Companies bought an affordable apartment complex in Miramar for $48.2 million. 

The New York-based firm scooped up the 320-unit, garden-style Sorrento complex at 8991-9577 Southwest 41st Street from an entity tied to ZOM Living and NRP Group, according to records and real estate database Vizzda. The deal breaks down to $150,625 per apartment. 

Related took out a nearly $25 million loan from Fannie Mae that matures in 2030. The firm also assumed existing debt, consisting of a $3.9 million mortgage from the Florida Housing Finance Corporation and a $1 million loan from Valley Bank, according to Vizzda. 

ZOM and NRP’s affiliate completed Sorrento in 2012, after purchasing the 16-acre site for $5.6 million in 2011, records show. The developers’ entity took out the FHFC and Valley Bank loans in 2011. 

Sorrento consists of 13 three-story buildings and a one-story building offering one- to three-bedroom apartments, ranging from 651 square feet to 1,187 square feet, according to Vizzda. 

The complex is nearly fully leased, according to a ZOM news release. 

It’s restricted to households earning no more than 60 percent of the area median income, with monthly rents ranging from $826 for a one-bedroom to $1,382 for a three-bedroom apartment, ZOM’s release says. Broward County’s AMI is $88,500 annually, FHFC data shows. 

ZOM is a multifamily development firm that has completed over 24,000 units nationwide valued at $5 billion, and has another 4,500 units in the pipeline, according to the release. Led by Greg West, the firm lists offices nationwide, including in Orlando and Dallas. 

Cleveland, Ohio-based NRP also is a multifamily development firm that has a hefty focus on below-market rate units, according to its LinkedIn. Founded in 1995, the company has completed more than 35,000 units and has 19,000 apartments under management. J. David Heller leads NRP. 

The Sorrento deal marks at least the second affordable housing community Related purchased from ZOM and NRP over the past year. In November, Related paid $55.5 million for the Monterra complex at 2601 Solano Avenue in Cooper City, which ZOM and NRP completed in 2012. 

While Related has a hefty portfolio of high-end residential and commercial projects, the firm started out as an affordable housing developer in 1972. Its portfolio of affordable and workforce housing consists of roughly 60,000 units nationwide, according to Related’s website. 
In 2021, Related bought a pair of affordable housing rental complexes, the Saint Andrews Residence at 208 Fern Street, and the Saint James Residence at 400 South Olive Avenue in West Palm Beach, for a combined $65 million.

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BFC Partners advances 430-unit Coney Island project

October 4, 2023 / no comments

Surf’s up for BFC Partners in Coney Island.

Donald Capoccia and Joseph Ferrara’s firm is moving forward with the final phase of a large affordable housing project in the southern Brooklyn neighborhood.

The developer plans a 12-story building with 430 apartments and 2,800 square feet of commercial space at 1709 Surf Avenue, according to the Department of Buildings.

Construction is expected to begin in 2024, Capoccia said. S9 Architecture and Engineering is the architect of record for the nearly 350,000-square-foot structure.

Reports in July had indicated that 464 apartments would be built, plus 12,000 square feet of retail. 

The new building, to be across the street from the Brooklyn Cyclones baseball stadium, is the third phase of a city-sponsored affordable housing project that will deliver more than 1,200 income-restricted units between West 16th and West 20th streets along Surf Avenue.

Prior phases included a 10-story building with 376 affordable housing units at 1607 Surf Avenue and 446 apartments at 2926 West 19th Street, developed by L+M Development Partners, Taconic Investment Partners and BFC. Wells Fargo provided debt and equity financing.

BFC has a history of pioneering development in emerging neighborhoods including the Lower East Side, East Harlem and Downtown Brooklyn. In Coney Island’s community district, half the population lives below the city’s poverty line, according to government data.

The developer is also nearing completion of a 250,000-square-foot affordable housing development at 475 Bay Street that will bring 270 apartments to Staten Island’s Stapleton neighborhood. 

BFC recently turned the page on a disastrous project nearby, handing over its outlet mall on Staten Island. The 340,000-square-foot Empire Outlets was purchased at auction by one of the project’s lenders.

The mall was expected to help renew Staten Island’s North Shore, but became one of several investments there to fall by the wayside. Mayor Eric Adams recently announced a $400 million investment for the North Shore, promising 2,400 housing units, a school and open space.

Coney Island is demographically similar, but with greater name recognition, a famous amusement district, a much larger beach and better transit connections. Developers have launched a slew of mostly residential projects there in recent years, and Thor Equities has proposed a casino.

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NAR’t so easy: MLS control means partners can’t make a clean break

October 4, 2023 / no comments

Redfin is ditching the National Association of Realtors.

The Seattle-based company is now requiring agents to pull their membership from NAR, according to an announcement by CEO Glenn Kelman. A letter published this week took issue with the group’s rules requiring buyers’ agents fees on every listing — policies that are also at the center of two landmark antitrust lawsuits filed in the Midwest — and rules preventing from showing for-sale-by-owner listings alongside agent listings.

“Redfin does not want to underwrite policies and legal efforts we oppose,” the firm wrote in an emailed statement.

Its breakup with NAR has been a long time coming, Kelman wrote in the letter. The online brokerage resigned its national board seat in June. But the final straw in its membership was sexual harassment allegations against leadership at the trade group. 

“When the harassment issues came to light, that’s when it came to another level,” Kelman told The New York Times.

Despite its sweeping objections against the group, which counts a reported 1.5 million members and $1.5 billion in assets across the United States, the brokerage isn’t able to make an entirely clean break. 

At the heart of a likely messy and protracted breakup process are local Multiple Listing Services, which fall under control of the trade group, and as Kelman said, “impossible to be an agent.”

Without membership in the local chapter — which requires agents also belong to the state and national associations — agents will lose access to the MLS, as well as other services like lockboxes and industry-standard contracts. 

This is the case for about half of cities in the U.S., including Dallas, Houston, Long Island, Nashville, Charlotte, Phoenix and Salt Lake City, where leaving NAR would be detrimental to agents’ business.

“It’s impossible to be an agent if you can’t see which homes are for sale, or unlock the door to those homes, or even write an offer,” Kelman wrote in the announcement, where he said the firm was “asking NAR to decouple local access to these tools” from support in all markets. 

For agents, equation of cost vs. benefits

In the markets where the MLS is decoupled from NAR agents can access listing services without being a registered Realtor, and drop their membership without a threat to business. 

In Miami — the home of the nation’s largest association of Realtors with 60,000 members — agents are allowed to subscribe to local MLS without belonging to the national organization. 

CoreLogic runs the service for the Miami association. Christopher Zoller, former board of directors chairman of the Miami Association of Realtors, said non-Realtor agents in South Florida can also pay a fee to join MLSs in other cities outside their jurisdiction.

Though NAR membership isn’t required to access listings, Zoller said the organization provides other benefits like a connection to industry lobbying and oversight to safeguard its established code of ethics. 

“I believe he’s shooting himself in the foot,” Zoller said of Kelman and his decision to withdraw his firm from NAR. “If I was not a Realtor, there’s no professional standards. Nobody’s looking over my back. Nobody’s policing my actions.”

But NAR isn’t the only national organization that imposes industry standards. 

In New York, where the Real Estate Board of New York operates its own Residential Listing Service, the independent governing body is a member of the Council of Multiple Listing Services and the Real Estate Standards Organization, both of which have policies pertaining to business practices. 

Mike Pappas, president of the Miami-based brokerage Keyes Company, agreed that the benefits of NAR membership extends beyond just MLS access, but acknowledged the recent upheaval at the organization is likely foreshadowing a shift in its relationship with listing services across the board.

“We’re in a new era of MLS-NAR relationships, which will eventually get sorted out,” Pappas said. “My dad used to say, ‘Everybody’s for progress, but nobody’s for change.’”

When it comes to the roughly hundreds of dollars each year that NAR membership requires for associates across a company like Redfin, “we’d probably all make the same decision,” Pappas said. 

As for others that could follow Redfin’s lead away from the group, a spokesperson for the brokerage said it didn’t want to speculate on what other firms would do.

Zillow, which joined NAR in 2020, is planning to continue its relationship with NAR and local listing services. 

“We believe part of the current path for modernizing the industry is through engaging at the local and national level with both MLSs and NAR,” a spokesperson for the tech platform wrote in an emailed statement. “If we determine we can no longer affect change for the good of the industry and consumers, then we will re-evaluate our approach.

Redfin also acknowledged that it was easier for the firm to pull its agents out of NAR, as they’re employees and not independent contractors. 

“We hope this begins a conversation in the industry about decoupling NAR and MLS access,” the Redfin spokesperson wrote. “We also would like to see more flexibility in terms of membership options that would allow individual agents to decide for themselves if they want to join a local, state or national association.”

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International Investors Tell Sellers In Dublin It’s Time To Get Real

October 4, 2023 / no comments

International investors in Dublin’s commercial real estate market remain enthusiastic about the city’s fundamentals but are being put off by the unwillingness of sellers to drop prices to realistic levels.
That is the view put forward by Miles Skinner, Union Investment Real Estate head of investment management in the UK and Ireland, at Bisnow’s the Future of Office in Ireland: Weathering the Storm event at the Alex Hotel in Dublin on 27 September. 
“It’s incredibly tough to get deals over the line,” Skinner said, citing pricing as the major block to transactions.
Union has been one of the largest international investors in Dublin over the past five years. 

New Jersey Landlord To Compensate Service Members For Charging Illegal Lease Termination Fees

October 4, 2023 / no comments

Landlord JAG Management Co. is expected to pay compensation to nine members of the U.S. military who JAG unlawfully charged lease termination fees of as much as $2,750 when the service members were required to move after receiving military orders, according to the Department of Justice.
Charging such fees is illegal under the Servicemembers Civil Relief Act, passed in 1940, which allows members of the armed forces to “terminate a residential lease without penalty upon entering into military service or upon receiving qualifying military orders,” Military Times reports.
As property manager of Jefferson Place, a 490-unit rental community in Mount Laurel, New Jersey, JAG Management demanded that…