New $700 Million Dollar Houston Development to start in 30 days

March 23, 2005, 11:14PM

At Memorial City, a lifestyle in development
Project will surround mall with residences, offices
By DAVID KAPLAN and NANCY SARNOFF
Copyright 2005 Houston Chronicle

Metro-National plans to spend up to $700 million on new development along either side of its Memorial City Mall.

When it's completed, what will the firm have?

"A city," said Wayne Hays, Metro-National's president and chief operating officer.

Complementing the existing mall and health care complex will be midrise residential units, a luxury hotel, an office building, townhomes, an amphitheater, movie theater, restaurants, 350,000 square feet of retail space and pocket parks.

The project will feature multiple skywalks, connecting major buildings, stretching about a mile across the site.

Construction is expected to begin within 30 days and continue for seven years.

After spending $60 million within the last 90 days on multiple acquisitions in the vicinity, MetroNational now owns 200 contiguous acres of Memorial City in west Houston.

The proposed development will be on two tracts of land, one west of Memorial City Mall, called the "gateway tract," and the other on the east side, called the "lifestyle tract." In addition to the acquired tracts, the original land will undergo improvements.

The first project will be a six-story professional office building on the gateway tract. Then, in six months, construction will begin on the lifestyle tract for a high-end five-story to eight-story residential building with retail at street level. It will be modeled after the Aramore complex in the Buckhead area of Atlanta.

Because of the road work slated for Interstate 10, MetroNational will do its initial construction on the rear side of the two tracts. Some retail experts fear that MetroNational's new project, coupled with another large development proposed for a site nearby, could create an oversupply of retail space in the market.

Town & Country Mall, at the southeast corner of the Katy Freeway and Beltway 8, is being demolished to make way for an open-air development that will feature many of the same elements MetroNational is planning, including retail space. Houston-based Midway Cos., the developer, said it will begin site work on the 37-acre project this fall.

'Full potential'
And Memorial City Mall still has some vacancies to fill. There's also a likelihood that Lord & Taylor will close its Memorial City location, as its parent shutters stores around the country.

"What's already built out there has not reached its full potential yet," said Blake Tartt III, president of realty firm New Regional Planning. "I think they have to be very careful that they don't overbuild the market."

Others say there's lots of room for more shops and restaurants in this heavily dense area surrounded by affluent Memorial neighborhoods.

"There's plenty of room in the area for specialty retail, lifestyle retail and things like theaters and restaurants," said Edward Page of Page Partners, a real estate brokerage firm that will be leasing MetroNational's "non-mall" retail space.

Hays is bullish on Memorial City. He noted that before his company spent $200 million to renovate Memorial City Mall, the mall was getting less than $200 per square foot, and after the remodeling, it's gone north of $400.

Many local developers would shy away from creating office and hotel space because of the sluggish market.

"While others are waiting for things to turn, it gives us an opportunity to act," Hays said.

MetroNational decided to build a hotel, because there is a community need for it, partly because of the medical complex, Hays said. The company is in discussions with several major flagship hotels.

John Keeling, a hotel analyst with PKF Consulting, said upscale hotels are attracted to outdoor lifestyle centers because guests can walk outside and be surrounded by shops and restaurants.

Several restaurants are planned for the development: Denis' Seafood House and Ciro's Italian Grill, already under construction, and a Perry's Steakhouse & Grill.

'Private club feeling'
In 30 days, MetroNational will begin construction on an upscale steakhouse with "a private club feeling" on the lifestyle tract, Hays said.

MetroNational developed the concept. The company created and ran the Saltgrass Steakhouse chain until it was soldto Landry's Restaurants 2002.

A "unique grocery component," possibly multilevel with structured parking, will eventually be added, Hays said.

The 700-seat amphitheater will pose several architectural challenges, Hays said, including how to make the surrounding area most functional during the day.

Another challenge will be providing good acoustics with the amphitheater positioned near Interstate 10.

"It's smart of them to try to create a sense of place" with amenities like the amphitheater and pocket parks, said Richard Hodos, president of Madison HGCD, a New York-basedretail real estate and brokerage firm.

A sort of 'zoning'
Over the past several decades, planners have become more sensitive to what people want in a setting that combines living, shopping and entertaining, he said.

Cooper Carry, the architect for the project, is reputable and known to be sensitive to creating pleasing, human-scale pro-jects, Hodos said.

"Hopefully, by the time the project is over, the bean counters won't have chopped off too much of the original idea,"Hodos said. Drastic cost-cutting happens a lot with big projects.

MetroNational won't cut corners, Hays said, because the company is not about buying and flipping property. Rather, it aims to create "a premier lasting community," he said.

Tartt said it's important to note the amount of land Metro-National now controls in the area.

"There's no one else in Houston, Texas, that controls 200-plus acres of contiguous commercial land," he said.