Building Boom: Interview with Michael G. Scheurich, CEO of Arch-Con Construction
Michael Scheurich, CEO of Arch-Con
HOUSTON – (Realty News Report) – Although Houston currently has more office space than tenants, the region’s real estate market remains comparatively healthy, driven by robust industrial, retail and hospitality sectors. Will these trends continue into 2019? Is new construction the only force shaping the market, or is adaptive reuse gaining momentum? To understand where the industry is headed, Realty News Report spoke with Michael G. Scheurich, CEO of Arch-Con Construction—one of the most active builders in the city. Arch-Con maintains a diversified portfolio across Houston and Dallas, with nearly 9.4 million square feet under contract and expected 2018 revenues near $370 million. In Houston, Arch-Con recently began construction on Tower 5040, a 147-unit luxury apartment building adjacent to the University of Houston. Renovation has also started on the historic Palace Bowling Lanes, which will become Southside Commons, a two-story mixed-use building featuring retail, entertainment, office and medical space. Meanwhile, the first phase of the Buffalo Heights District mixed-use multifamily development has topped out.
Realty News Report: Looking ahead to 2019, will construction activity increase in southeast Texas next year?
Michael G. Scheurich: Yes. We expect a new wave of multifamily, hospitality and industrial projects. Healthcare construction will show significant growth after being relatively flat for the last three years. Medical office buildings and emergency care centers will lead that upswing.
Realty News Report: Are there any surprising development trends planned for Houston?
Michael G. Scheurich: Nothing surprising—redevelopment of existing properties remains a strong trend, as do mixed-use projects combining retail, office and healthcare elements. National tenant-driven developments continue in outlying submarkets as well.
Realty News Report: Arch-Con has completed several adaptive reuse projects and renovated historic buildings. Do you expect that to continue, or has Houston exhausted its pool of good redevelopment candidates?
Michael G. Scheurich: Available inventory is limited. The remaining candidates for adaptive reuse will require more creative approaches to become viable. One exciting example we’re working on is the AC Marriott in downtown Houston, originally built in 1914 as the Gulf Oil headquarters by local entrepreneur Jesse Jones. The ballroom, which served as a silent movie theater in the early 1900s, will be transformed into a ballroom and restaurant featuring a grand barrel ceiling—an example of how imaginative design can preserve history while creating attractive modern spaces.
Realty News Report: Your firm recently redeveloped the Stowers Furniture Building (1913) into the Aloft hotel. Can you describe that project?
Michael G. Scheurich: The Aloft Houston Downtown is listed on the National Register of Historic Places, so restoration required careful techniques and processes to protect historic features. Historic renovations often present numerous challenges; ensuring compliance with local and national historic guidelines was a complex but rewarding undertaking. Adding a rooftop pool—the project’s most distinctive feature—was particularly demanding because it had to meet state and federal requirements. I’m proud of our team: last month the project earned an APEX Award from AGC Houston.
Realty News Report: Arch-Con is redeveloping the old Palace Lanes bowling alley on Bellaire Boulevard into Southside Commons. What are the plans?
Michael G. Scheurich: We are restoring this iconic 1955 building, which historically housed a first-floor bowling alley and second-floor offices. The renovation removes the original front façade and second level to create a refreshed appearance, and the second level will be raised by four feet to suit contemporary office standards. The first floor will honor the Palace Bowling Lanes legacy with retail, dining and entertainment—including bowling—while adapting the space for modern uses.
Realty News Report: What is the status of the farmers market redevelopment in the Heights, originally opened in 1942 on Airline Drive?
Michael G. Scheurich: Plans are currently in permitting and undergoing final pricing. The redevelopment will transform the existing market into a modern marketplace totaling roughly 150,000 square feet, combining open-air and enclosed retail spaces and restaurants to create a revitalized destination.
Realty News Report: High-rise and mid-rise residential construction has increased in recent years. How do you see that segment evolving?
Michael G. Scheurich: Urban infill multifamily projects will continue to be prominent as more people choose long-term renting over homeownership. New deliveries are slowing in the near term, while construction costs and inflation have remained relatively steady. Occupancy rates and rents have risen compared with last year, and Houston’s economy is recovering—factors that will stimulate further development proposals. Two urban infill projects in our pipeline include:
Sunrise Montrose is a Class A multifamily community comprising 224 units and approximately 203,257 square feet of net rentable area on a 1.84-acre site. The eight-story building will feature three levels of parking at grade and five residential levels above. Unit types will include efficiencies, one-bedrooms, two-bedrooms and mezzanine-level townhomes. Amenities will center around two courtyards and include a fourth-level outdoor pool, an adjacent cyber café and residents’ lounge, a leasing conference room, private resident offices, a street-level fitness center and a rooftop terrace. Located just a few blocks from Arch-Con’s headquarters, it’s an exciting project for our team.
Tower 5040
Tower 5040 is a privately financed, eight-story apartment building adjacent to the University of Houston. The 147-unit development will offer 404 bedrooms designed for student living. The first three levels will be a cast-in-place parking garage, with five wood-framed residential floors above. Planned amenities include a pool, dog park, interior courtyard and other features that enhance the living environment for students.
Realty News Report: How will Houston change over the next decade?
Michael G. Scheurich: Houston will continue to densify inside the Loop, with numerous multifamily and mixed-use projects emerging in Midtown, Montrose and along Washington Avenue. Co-working and flexible office models will expand through both new construction and adaptive reuse. At the same time, the metropolitan area will continue to push westward, extending suburbs further out. That outward growth will be supported by infrastructure improvements like the Westpark Tollway extension, but the city will face challenges managing sprawl as development reaches beyond communities such as Fulshear.
