GlobeSt.com EXCLUSIVE: Condo Converter Takes On Houston Trophy

HOUSTON-BCN Development has finalized plans to convert 3333 Allen Parkway into residential condominiums after beating out 10 other buyers to claim the 32-story, 253-unit apartment complex.

Located just one mile from Downtown, the high-rise complex was built in 2003 by a partnership between local developer, Simmons Vedder Co., and O’Connor Capital Partners of New York City. Industry experts say 3333 Allen Parkway sold to the Denver-based BCN for significantly higher than the city record of $225,000 price per unit, set by locally based Hanover Co. with the sale of the 356-unit 1200 Post Oak to Sentinel Real Estate Corp. for a reported $80 million. The Harris County Appraisal District has 3333 Allen Parkway assessed at $43 million.

BCN Development, under the leadership of Craig Nassi, has never tackled a condo conversion project, but has developed three condominium buildings in its hometown, Craig LaFollette, a senior vice president with CB Richard Ellis Inc., tells GlobeSt.com.

The project marks BCN Development’s entrance into the Houston market. “Craig [Nassi] recognizes that Houston is in the infancy of its condo market and the first people to get it are the ones that are successful and make the money,” says LaFollette, whose team included Todd Marix and J. Todd Stewart along with Jay Massirman in CBRE’s Miami office. “Plus, he fell in love with the building and the location. And finally, there’s no competition from existing high rises in the submarket.”

According to LaFollette, 3333 Allen Parkway will require little if any renovations. “It’s already a luxury property with granite countertops, hardwood floors and stainless steel appliances,” he points out. “3333 Allen Parkway is in a triple A location and is atriple A building.” BCN financed the acquisition with first-mortgage debt from Chicago-based Corus Bank and mezzanine funding from New York City-based CWCapital. Simmons Vedder development partner Rick Craig and Mark Ehrlich with O’Connor Capital in New York City also helped get the deal to the closing table.

The high-rise’s units average 1,674 sf, ranging from 973 sf to 5,161 sf. The tower has 88 one-bedroom units; 139 two-bedroom apartments; 20 three-bedroom layouts; and six penthouses. It is 85% occupied with asking rental rates of $2.08 per sf. However, concessions drop the rate to $1.90 per sf, LaFollette says. BCN Development expects many renters at 3333 Allen Parkway will purchase condos, LaFollette says.

“There’s opportunity and demand in the market. Orion is further evidence that Houston is becoming more accustomed to high-rise living,” LaFollette says, referring to a $425-million condo tower being developed by a partnership between Asbury Place Development and Tarragon Corp. Orion condos sell from $500 per sf, but pricing for 3333 Allen Parkway’s condos has not been determined yet, he says.