|
Galveston Texas Waterfront
High-rise Real Estate - In the 1800s, Galveston Island was
known as the “Wall Street of the Southwest.” It was a huge financial
area, with the Port of Galveston being the largest port in Texas. It drew
people from all over the United States on a primary or secondary home
basis. But the storm of 1900, the worst natural disaster in U.S. history,
brought success to a halt when one-third of the city was completely
destroyed and 15 percent of Galveston’s population was killed. Though it
has taken decades for the city to rebound, now, more than a century later,
Galveston is undergoing a renaissance with the hopes of becoming the city
it once was.
Galveston Island, with a population of
nearly 60,000, is located on the Gulf of Mexico approximately 50 miles
south of Houston. Its location, underserved population and the amount of
undeveloped land make the city a prime spot for ambitious developers.
Houston-based Falcon Group recognized the potential of Galveston to
attract second-home buyers as well as investors, and purchased a 16-acre
tract on the east end of the island in December 2000. Since then, the firm
has enlisted the help of Toronto-based Kirkor Architects & Planners to
carry out its vision of Palisade Palms, a $165 million club-class
high-rise condominium project that will be rolled out in several phases.
The east end of Galveston Island,
as compared to the west end, is greatly undeveloped. The area contains The
Galvestonian, which was built in 1983, and Islander East, which went up in
1973. “Down on the east end, there’s probably 1,000 acres and only two
buildings,” says Richard Anderson, vice president of development for
Falcon Group, owner and developer of the project. “When I first took our
contractor [from Birmingham, Alabama-based Brasfield & Gorrie] to the
site, he was amazed and remarked that it looked like Destin 25 years ago.
There was nothing there and the land hadn’t been developed.”
Ground was recently broken on the
two-tower Phase I of Palisade Palms, which will include 288 units situated
within an 8-acre tract. The first phase comprises 478,000 sellable square
feet and well over 1 million square feet of gross usable area. The
27-story towers will be built atop a three-level elevated parking
structure and will be connected by a podium lobby that opens up onto the
pool deck.
The development has enough
amenities available to entertain visitors and residents indefinitely.
“We have The Beachcomber’s Club — a hybrid between a daycare and a
day camp for children who come down with their parents for the weekend,”
says Anderson. There is also a fitness center, morning lounge, dining
room/party area, media room, picnic area, children’s playroom and
playground area, tennis courts, two swimming pools, two spas and a luau
fire pit.
The curvilinear design of Palisade
Palms sets it apart from other condominium developments. “The
curvilinear construction is very unique, giving the development its own
architectural persona,” Anderson says. “Basically, it’s more of a
radius condition than linear, implying curvature.” The arched design
affords all owners a view of the water. “There are only seven units per
floor and a real tight core area, which includes elevators and
hallways,” adds Anderson. “Each unit has a balcony that doesn’t look
onto the other balconies — because of the curvature. And two of the
units per floor have bay views and the other five have gulf views.”
Currently, Falcon Group has sold
190 units, or approximately 66 percent. In terms of dollar volume, the
numbers are at 58 percent. “The way things evolved, at the beginning we
sold a lot of the lower-priced units. Now, those units are no longer
available and we’ve created such a momentum that people are not as
price-sensitive as they used to be,” says Anderson. “From a national
perspective, as compared to Destin, Panama City, Pensacola, Gulf Shores,
Perdito Key and the like, Galveston is half-price. Right now the blend of
all our units is running $350 per square foot.”
“Up until last December, the
lion’s share of our purchases were being accumulated from a five-county
region around Galveston,” says Anderson. “Then word of the project got
out on the street and spread to a national level. In the last couple of
months, we have been drawing buyers from all corners of the United States
— except the northwest — who are willing to pay for the more expensive
units because it’s still less than what they’d be paying in
Florida.”
There is still the question as to
whether buyers are viewing Palisade Palms as a second home or as an
investment, and even Anderson believes that it’s almost impossible to
separate the two ideas. Some purchasers will rent out their units, and
others, especially those within driving distance, will elect not to rent
since they will frequently use the unit on weekends and in the summer. But
as Anderson points out, even investment-minded retirees who buy units will
more than likely spend a month or two at the condo, warranting the label
of second-home.
Many investment-oriented buyers are
turning to real estate instead of Wall Street. “They are looking to
place their hard-earned money in a real estate asset that is tangible and
that they can use and enjoy, as opposed to placing it on Wall Street where
there seems to be a high level of uncertainty as to whether that asset
will appreciate,” says Anderson. “The average guy doesn’t understand
Wall Street, and with the negative publicity that it has been receiving
over the last 5 years, he doesn’t trust it either. He understands real
estate better.”
The demand for the product has led
to the late addition of 36 residences, adding five more floors to the
original design, which comprised a 27-story and a 22-story tower.
“Adding five floors just made sense,” Anderson says. “The market
demand for the product was certainly there and the higher the density, the
more efficient the operating costs are. Most professionals in the Texas
residential real estate market would say that we were ‘burning them
up.’”
Realizing the high level of
interest in its project, Falcon Group decided to purchase an additional 16
acres adjacent to the original site, bringing its total land acquisition
to 32 acres. The developer has not yet decided how to fill the space, and
will rely on the success of the first few phases of Palisade Palms to
determine the direction it will take. “Plans are up in the air right
now,” says Anderson. “We plan to roll out subsequent phases but until
we sell out of Phase I, we’re not going to focus on Phase II. Our
velocity is such that we feel that we should be sold out soon on Phase
I.”
The development of Palisade Palms
is helping to fuel the renaissance that is currently taking place in
Galveston. “By virtue of developing a residential project, with a
relatively large number of people frequenting the property — people who
wouldn’t normally be in that submarket — there will definitely be a
positive impact to the existing retail community,” Anderson notes.
According to Anderson, 90 percent
of the development on Galveston is going up on the west end of the island.
Palisade Palms and a couple other developments constitute all the
developments on the east end. “The first phase will bring money into the
Strand area, which is on the east end of the island,” Anderson says.
Galveston’s Strand National Historic Landmark District or downtown area
offers more than 100 shops, restaurants and art galleries situated within
36 square blocks. “As we start rolling out Phases II, III and IV, there
will be enough density on the east end on the beach area and retailers
will start to position themselves to either buy land or lease to take
advantage of that density,” says Anderson.
|
