HOUSTON, TX - The developer behind Titan, a 25-story luxury condo tower proposed for a site on Post Oak Boulevard, has scrapped plans to build the project in the wake of the economic crisis rippling through Houston's commercial real estate market. Randall Davis said his ability to obtain financing for the building will expire early next year and he hasn't met his lender's 40 percent pre-sale requirement. "In the last four or five months, I haven't had any sales as the world stood still," he said.
The cancellation is the latest in a slew of announcements from developers hit hard by the national recession. Several condo projects, mixed-use developments and at least one large corporate headquarters have been shelved this year as builders have had difficulty getting financing and consumer demand has plunged.
The developer of the High Street mixed-use project on Westheimer near Highland Village recently halted construction on the nearly seven-acre site, the first major development to be put on hold after it broke ground. Trademark Property Co. said the project will resume when the economy is shored up and capital markets improve. "I am hopeful that conditions will stabilize some time in 2009, but we will have to wait and see," Trademark's Tommy Miller said earlier this month.
This is Davis' second big disappointment this year. He was also affiliated with Sonoma, a much anticipated retail and residential development proposed for Rice Village that was put on hold last month. "Banks don't want to make loans at the present time," Davis said. "I don't feel specifically victimized. I'm just caught up in the chaos of the financing market."
Titan was planned for a 25,000-square-foot tract on Post Oak Boulevard and Garrettson, just north of San Felipe. Davis had an option to buy the land from McDonald's, which has a restaurant on the site. Despite a good location, the project's timing was off, said Edith Personette of Personette and Associates, a residential realty firm that specializes in high-rise condo developments.
Titan was announced in the fall of 2007, when Houston-area home sales had started to suffer. For months, though, most of the decline was in the lower end of the market, which was dragged down by tougher lending standards that eventually came to affect all property types. High-end condos can be the first to suffer when the market turns down, Personette said. In Houston, where demand for luxury towers is relatively small, buyers become reluctant when the market slows. particularly when they hear of other projects being canceled. "It's usually a very emotional buying decision," Personette said.
Since Davis announced the 80-unit project last year, he had sold about 20 units. The land will return to the hands of McDonald's, but there are talks to extend the sales contract, Davis said. "I hope to resurrect it again," he said.
To be sure, the developer spent bundles to market the project, which was going to be his swankiest yet. The units, designed with top-of-the-line appliances and some with private pools, were selling for an average of $425 per square foot. Financially, Davis said, "it was a significant loss."
Source: chron.com