Soaring land prices in popular areas of Houston, where the market for condo living was once a small wedge, are spurring the development of new luxury condominiums. "This has not been a condo market in the past. We've gone past our tipping point on being a condo market and now we are," said Jacob Sudhoff, CEO of Sudhoff Companies, a firm that develops high-end luxury condominiums in the Gulf Coast city. Houston condo developers say the city goes through a building cycle for high-end condominiums every 10 years. The previous luxury condo market could only absorb a couple hundred at a time. "Today we are now absorbing what we have built in the last 20 years over the next three years," Sudhoff said. "The market is very aggressive and bullish on condominium living." The last round of high-end condominium building in Houston was almost a decade ago. In 2006, Randall Davis Co. built the Cosmopolitan, a 22-story, 80-unit high-rise near the Galleria, an upscale shopping area. More: Miami Developers Eye ‘Lower End’ Luxury The average sales price in that building when it opened was around $700,000. Today those same units, many of which are less than 2,000 square feet, are above the $1 million mark. There are only two new luxury condominiums hi-rises under construction in Houston, said Randall Davis, founder and principal of Randall Davis Co., a long-time condo developer in the Bayou City. Davis' company is currently building one of those high-rises -- a 29 story building with 75 luxury condos called the Astoria that will open in the fall of next year. The average apartment at the Astoria costs around $1.3 million, and only one unit remains unsold. "You can wait for the new projects to come out of the ground, or you're going to buy something eight to 14 years olds," Davis said on the spike in demand for luxury condo living. Buyers for Houston's luxury condominiums are typically affluent local empty nesters and the international crowd who are interested in condos near expensive retail areas, Houston real estate experts say.
A rendering of the exterior of Riva at The Park, a new mid-rise development from the Sudhoff Companies. TiltPixel The fifth largest unit at the Cosmopolitan, built nine years ago, is listed at $2.8 million -- a listing price 44% above its county appraisal value from 2014, according to the Harris County Appraisal District (HCAD) records. The steep increase in price stems from rising land prices and the demand for luxury condos sized over 3,000 square feet. Land prices in the Galleria shopping area jumped nearly 10% since 2014, according to the HCAD records. Most out-of-town developers are used to building 1,500-foot condos in other markets, but Houstonian empty nesters, downsizing from large suburban mansions, prefer condos sized over 3,000 square feet, developers say.
BROWSE: Mansion Global's Houston Listings Sudhoff says his company has hundreds of luxury condos in the pipeline priced over $1 million in the River Oaks and Galleria area -- many are spacious units to appeal to the wealthy, downsizing Houstonians. Sudhoff Co.’s developments include the Wilshire, a hi-rise under renovation with 94 units with priced between $800,000 and $2.9 million; the River Oaks, another renovation project with 84 units that sell on average at $2.2 million; and the Riva at the Park, a new mid-rise with 29 units pre-selling between $800,000 and $1.6 million. "The market is much deeper than people thought," said Sudhoff, who is confident that the Houston luxury condo market will continue to grow. Follow Farran Powell on Twitter