Launched as Douglas Elliman, Texas, and headquartered in Houston, the joint venture represents an estimated $500 million in current condo development in the Bayou City, including The River Oaks, a recently completed luxury high-rise.
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To enter the Texas housing market, a century-old residential brokerage based in Manhattan with national reach and resources has teamed up with a like-minded niche realty firm in Houston specializing in new developments of high-rise condos and high-end homes.
The joint venture, announced this week and now operating as Douglas Elliman, Texas, pairs Douglas Elliman Real Estate and Sudhoff Cos.
It’s a strategic move for both entities; the former expands into the Texas housing market by establishing a base in the state’s biggest city, and the latter revs up to parlay its business model of design-to-development support and sales services into other major metros within the Lone Star State.
Both entities gain exposure. As does the city itself, insiders said in remarks following the announcement.
As explained by Scott Durkin, president and COO of Douglas Elliman, factors in the joint venture decision ranged from Houston being “a feeder market to other areas we serve,” to the partners sharing a compatible, integrated business approach to real estate development.
“We follow our customers and what they need,” Durkin said. The company, an independent residential real estate brokerage ranked second nationally in total sales volume, has 120 offices and more than 7,000 sales associates, according to the announcement.
The new venture is headquartered in Houston.
Going Up and Out
As in other cities getting more densely developed, such as Los Angeles, Durkin said, Houston has become more receptive to “vertical living,” as in higher-rise housing.
In addition to going up, however, Houston buyers are also going out, he said, as in beyond state lines, to purchase second — or even third — homes in pricey places like Aspen, Colo., southern California and Florida’s Gulf Coast.
“Houston has a seat at the table in all these markets,” he said.
Having built his namesake company since 2009, Jacob Sudhoff serves as CEO of the new venture. Business partner Catherine Lee is also remaining on board as part of the leadership team. With time, the operations will expand into in Dallas, Austin and other markets, he said.
Details of the new venture indicate Sudhoff operations are now under the “umbrella” of Douglas Elliman, which gains an 85% market share in Houston’s new development market for condos, which appears to have gained momentum.
Sudhoff pegs the segment at $500 million, with another $1.4 billion of projects in the chute for completion in the next 18 months. That’s about 1,000 new units on the boards, he said, and typically (not exclusively) located near high-end neighborhoods and employment centers.
Having worked with 60 developers and having grown a company that cultivated, marketed and pre-sold new condo properties, Sudhoff has tracked several changes in the types of projects and in perceptions of condominium living in a city once skittish about the option: “’Condo’ was a bad word until we started paying attention to what people wanted and not just building ‘nicer apartments,”’ he said. “Now, they’re ‘homes in the sky.’”
By that he means units have enough square footage, posh fittings, amenities and cache to compete with other new housing options. In some locations, empty nesters are snapping up units as they jettison family homes for lock-and-leave living — without losing the space or neighborhood they’ve called home.
The average age of condo buyers in Houston is 62 to 64, Sudhoff noted, and 83% of them pay cash.
Unit pricing, meanwhile, has expanded beyond the luxury end, now as high as $3 million, into more mid-range and even modest budgets down to $299,000, he said.
In 2018, Sudhoff’s sales volume was reportedly $493 million, highest in the city for new construction.
The combined venture, meanwhile, accounted in 2018 for $28.6 billion in closed sales volume nationwide, according to figures in the company release.
Durkin said a resale division in Houston could be in place in the first quarter of 2020. Including ranches? Yep. The company’s equestrian division handles those, he said, and they do know the difference in saddles.
Elliman is a subsidiary of Vector Group Ltd. and has an alliance with London-based Knight Frank Residential, encompassing luxury markets in 60 countries.