Saturday, July 26, 2008

Hidden Opportunities for New Housing—It Happened in Houston


By Tyler P. Berding


            Earlier this year, we wrote:


Like old apartment complexes, there are many older common interest developments that were built in the sixties and seventies when land was abundant and densities were low. These projects are often spread over many acres and rarely exceed two stories in height with very low density per acre. That limitation might have been appropriate when their locations were semi-rural, but today many of the cities we have been discussing in the San Ramon Valley, and in similar suburban areas elsewhere, have vibrant commercial districts which support a great deal of automobile and pedestrian traffic. These sites could easily handle taller, higher density buildings and would be ideal candidates for re-development.


This was part of a longer article entitled, “Back to the housing future: will the old suburbs become the new urban core?”[1] We discussed how older developments adjacent to expanding urban cores could be re-developed into higher density, high rise housing. Now we have a real-life example of this strategy. In Houston, Texas, a team of real estate specialists recently consolidated 108 condominium units into a single, saleable parcel. The community association is built on almost 5 acres of land—or roughly 20 units to an acre--decidedly low-density for attached housing.  The developers looking to purchase the parcel are estimating that with high-rise construction, they can get closer to 100 units per acre on that site.


According to an article in the Houston Business Journal, old condo complexes in well-located areas are in demand in Houston. The writer states: But land, as it has been pointed out through the ages, is the one thing they aren’t making more of, and there are plenty of developers looking at Inner-Loop land who are willing to pay for it. Two-story condo complexes built more than 20 years ago inside Houston’s Loop 610 are definitely on the endangered list in 2008.”[2]

One of the realtors is quoted as saying: “Developers will come to us seeking a particular tract of land. The hard part is getting all the owners to agree on the sale, and that takes a lot of work. When you take into account the number of owners you have to talk to and agree on price points, it could take up to a year.”[3]


The deal took over a year to put together and negotiations had to be undertaken with all 108 owners. But this particular development was attractive for redevelopment because the complex is “functionally obsolete” --it will cost more to repair than the project is worth in its present configuration.


This is an example of how the real estate market can impose an end strategy on a condominium complex that has reached the end of its useful life. Texas law may be more conducive to this strategy, however.  California provides no statutory way to re-combine condo interests into a single, saleable parcel, other than to secure the approval of 100% of the unit owners or perhaps to amend the governing documents to give the board of directors the necessary authority to negotiate a sale.


Regardless of how it’s done, or where, aging community associations could provide an alternate option for re-development in fast growing urban areas.

[1] Berding, Back to the New Housing Future: Will the Old Suburbs become the new Urban Core?” ECHO Journal,

[2] Bradford, Nicole, Houston Business Journal, July 24, 2008.

[3] Ibid

About Me

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I received my Ph.D. in Government from Claremont Graduate University and my law degree from the University of California, Davis. Berding|Weil has represented community associations for over 35 years. For more information, please call 925-838-2090, or email: