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Houston: Rise to DT residential projects

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Investor gives rise to downtown residential projects

Nancy Sarnoff

Houston Business Journal

Real estate investor Tracy Suttles is converting a derelict downtown office building into apartments, while also erecting a top-class condominium tower just down the street.

Suttles, who made headlines after purchasing such one-off properties as a suburban shopping mall and a $6 million swankienda in River Oaks, is launching the two new residential projects on prime Main Street sites.

The first project calls for Suttles, president of multifamily firm NBC Holdings, to team up with The Randall Davis Co. to redevelop the 11-story Kirby Building into rental units.

Located at 917 Main St. between Walker and McKinney, the property was built in 1926.

Davis says approximately 70 apartments are being developed in the building, which once housed offices and a Palais Royal department store.

Suttles, who could not be reached for comment, purchased the building in 2002.

Sources familiar with the project say it has gone through several incarnations since the local investor purchased it two years ago.

Plans went from luxury apartments, to condominiums, to a boutique hotel.

After finally settling on upscale apartments, construction work recently began on the conversion.

G.T. Leach is the general contractor on the project. Irving Phillips is the architect.

Units will average 1,200 square feet and include high-end finishes like granite countertops and hardwood floors, says Leach.

Retailers will occupy the street level of the building, as well as the basement and part of the second floor.

CVS Corp. has begun building out a drug store on the ground floor, which will be linked to the tunnel system.

The building will be the second residential project with tunnel access -- the first one being the nearby Commerce Towers.

Meanwhile, the Holy Cross Chapel, which abuts the Kirby Building, has a keen interest in what happens to its neighbor.

Father Michael Barrett, director of the adjacent Catholic church that operates out of the basement of the 905 Main building, is in discussions with Suttles about linking the two buildings so that the chapel has tunnel access.

"It would make us so much more accessible to our worshippers," says Barrett.

Holy Cross is in the midst of a capital campaign to raise $1.5 million to relocate the chapel from the basement to the first floor, requiring a significant renovation.

The 1920s building was purchased by the Catholic Diocese of Galveston-Houston in 2001.

The church is considering leasing out the top floors of the building to defray some of the operating costs.

Barrett says the revitalization of downtown has brought more awareness to his congregation.

"I think downtown housing, plus the extraordinary transformation of Main Street, has drawn a lot more attention to our presence," he says. "The light rail stops right in front of our building. People are discovering we're here."

High on condos

While construction dust flies at 917 Main, another residential project is being conceived just blocks away.

Last week, Suttles started selling units in a proposed high-rise slated to be built on Main Street between Texas and Capitol.

Suttles purchased a portion of the site last summer from McDonald's, which operated a restaurant there for years.

A sales trailer is now planted on the parcel, with brokers hawking condominiums with price tags ranging from $168,800 to $1.2 million.

Once 30 percent of the units are sold, a 32-story building will go up on the site, says Roger Huffine, a broker with Keller Williams Realty, which is marketing the condominiums.

The project is being called Shamrock Tower, named after one of Houston's erstwhile landmarks, the Shamrock Hotel. The hotel was located near the Texas Medical Center until it was demolished in the late 1980s.

"The Shamrock Hotel was the beginning of the grace and elegance of Houston, and this was the No. 1 sought-after lot in Houston," says Huffine. "And the way it's going to look is a little bit reminiscent of the Shamrock's roofline."

After only one week, Huffine says 10 percent of the units have been reserved by potential buyers.

"I have no phone line, no fax line, and I'm in a mobile home. It's been phenomenal," he says. "We've already had a bit of a price increase on some units."

Laura Van Ness, director of business development for Central Houston Inc., says the announcements of new residential developments signal positive signs for the downtown housing market.

"This shows that the boom in residential hasn't stopped," she says. "We might need some time to absorb the product coming onto the market, but this shows confidence in downtown residential."

Indeed, Craig LaFollette of CB Richard Ellis says apartment leasing in the Central Business District has been ramping up over the past few months.

"As street (construction) projects come to a close and as the light rail becomes more of a known quantity, I think the momentum downtown will absolutely continue," says LaFollette, an investment broker specializing in the multifamily sector. "Downtown Houston is a great spot long-term. It's not a trend, it's here to stay."

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What else is going on in Downtown Houston. I was there back in December for Christmas. Projects and planned projects.

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About 3 residential skyscrapers, and maybe, I wanna say 4, commerical skyscrapers. There is no judging how many low rises.

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