HOUSTON – (By Cynthia Lescalleet for Realty News Report) – Caydon Development’s Drewery Place, a high-rise apartment tower in Midtown, is preparing to welcome its first residents on July 1. Company CEO Joe Russo visited Houston to review progress on the roughly $200 million building and to check on the second phase of the Melbourne-based developer’s mixed-use Houston Laneways project.
The multi-stage development sits on a 3.5-acre parcel next to Midtown Park along the light rail corridor between downtown and the Texas Medical Center. It is embedded in a neighborhood that is steadily gaining density, new amenities and urban activity.
Realty News Report spoke informally with Russo about how the Houston venture launched, how it has evolved, and where it’s headed.
RNR: Why did you choose Houston for your first U.S. development instead of a more obvious gateway city?
Russo: “I get asked that question a lot back home.”
Rather than focus on established U.S. markets like New York or Los Angeles, Russo targeted growing cities such as Houston, Dallas, Seattle, San Diego, Denver and Atlanta. When he visited Houston, the city resonated with him. “It felt familiar,” he said.
He noted several parallels with Melbourne: a diverse, dispersed population; a broad metropolitan footprint; pragmatic industries; strong food and sports scenes; and abundant parks. Those similarities made Houston an obvious choice for expansion.
RNR: What about Houston’s lack of zoning?
Russo: “I’d be lying to say that no zoning wasn’t encouraging, too.”
He explained that restrictive zoning can cap returns and limit the quality of development, constraining features like wellness facilities, wider corridors and higher ceilings. The absence of strict zoning in Houston allowed more flexibility to deliver higher-end product.
Before selecting Midtown, Russo considered multiple Houston submarkets from Uptown to Montrose and EaDo. Midtown’s combination of a new park, transit access and growing neighborhood amenities close to employment centers ultimately tipped the scale. Those are core elements Russo looks for in any project.
RNR: Has the project vision changed since you began?
Russo: “When I came in, I was probably going to do a typical five-over-two product.”
As he gained familiarity with the market, Russo decided to pursue a larger, more ambitious development. The mid-rise plan evolved into a 27-story tower now known as Drewery Place.
RNR: Any updates on Phase 2, Houston Laneways?
Russo: “We’ll get started in the first quarter of 2020.”
Project materials describe Houston Laneways as a roughly 2.5 million-square-foot mixed-use development spanning three city blocks bounded by Main, Fannin, Tuam and McGowen streets. Planned components include a 200-room boutique hotel, street-level retail, public art and activated outdoor spaces.
The name “Laneways” references Melbourne’s celebrated network of pedestrian alleys that have been transformed into lively districts filled with shops, cafés, street art, galleries, residences and hotels.
RNR: What is the estimated value of the Houston Laneways development?
Russo: “We’ve got towers A and B worked up. What we do on the second parcel of land depends on market conditions and timing. We’ll know more about it then. We’re not getting too ahead of ourselves.”
RNR: How is the project being financed? With the Australian dollar low, does that affect you?
Russo: “I don’t have investors. I put up my own capital and then have senior and mezzanine debt.”
On currency impact, he said the weak Australian dollar is increasing costs: “It’s affecting me a lot. We’re full steam ahead. It’s just costing me more than I wanted. I’ll manage it. It’s not going to stop development.”
June 12, 2019 Realty News Report Copyright 2019
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