Rouse Plans New Town Deep In The Heart of Texas

By Len Lazarick



The Rouse Co., which made a name for itself developing the new town of Columbia and shopping malls, announced last month that it had acquired 8,060 acres of rolling, treed land 25 miles northwest of Houston for $82.9 million to build another planned community.

Rouse has yet to name the Harris County development that is about 60% the size of Columbia, but the company plans to build about 17,000 single-family homes there and use 900 acres for multi-family housing and commercial uses, though those are just preliminary estimates, said J. Alton Scavo, executive vice president for community development.

"There's no zoning in Houston, so we can make it anything we want," Scavo said. "It's also a pro-growth area."

With Columbia nearing full development, and fewer than 1,000 unbuilt acres available in Town Center and in Gateway parks along I-95, the acquisition significantly expands Rouse's community development portfolio. Those holdings include Summerlin, Nev., a 22,000-acre parcel along the rim of the Las Vegas Valley that has been ranked as the best-selling master planned community in the United States in 10 of the last 11 years.

The Texas purchase "is a perfect extension of the company's community development expertise," said Rouse Chairman and CEO Anthony Deering. The company is also developing the 570-acre Emerson in southern Howard County and the 1,100-acre Fairwood in Prince George's County, projects the size of a Columbia village.

But both those smaller projects were long blocked by opposition of some neighbors to rezoning, pointing out the difficulty of developing Columbia-size projects on the crowded East Coast. Not only is there a limited number of large parcels near major metropolitan areas in the East, but getting government approval for a mixed use development in the face of not-in-my-backyard resistance is more difficult.

The Southwest and West is "where growth in the country is still going on and the regulatory environment is more favorable," said David Tripp, director of investor relations. "It's clearly where there's more land available."

Houston is now the nation's fourth largest city, and its metropolitan area added one million new residents in the 1990s, averaging 60,000 new jobs a year since 1994. The Rouse Co. had already done "a fair amount of market research" on the area in the late 1990s, Tripp said, when it unsuccessfully bid to complete the development of the 27,000-acre Woodlands master-planned community north of Houston. "We liked the Houston Market, and we knew the area was going to continue to grow. We still see the opportunity to do a high-quality, master planned community and be successful," Tripp said.

The land also will be served by Houston's fourth beltway, known as the Grand Parkway, giving it good highway access, Scavo said.

Another advantage of the parcel is that the company expects to be selling lots to homebuilders in as little as two years, officials said. This compares to the development process at Fairwood on Route 50, which took 10 years before the first lots could be sold.

But still, the community development process "takes a long time," Tripp said. The Rouse Co.'s stealthy purchase of the first parcels of Howard County farmland that would become Columbia took place 41 years ago. In the early 1950s, Howard Hughes acquired the desert parcel that would not start being developed as Summerlin until 1988.

According to the Houston Chronicle, the new Rouse community is a combination of the 2,000-acre Josey Ranch and the adjoining 6,000-acre Longenbaugh Ranch. The property is studded with oil and gas wells, but "that's Houston," said Scavo, and the small well pipes should be less difficult to work around than Columbia's outparcels.

Rouse Co. officials would only describe the seller as "a Houston real estate developer," but the company's Securities and Exchange Commission filing said the land was purchased from West Houston Land Development Co. and Rose Hill Meadows Ltd. Company officials noted that not only was the land priced reasonably at $10,285 an acre, but financial terms were very favorable with $20 million down and the other payments not starting for two years.

Scavo, who has been involved with Columbia's development for more than 30 years, said Rouse is constantly looking for large-scale properties for its community development division. "I see this kind of acreage every month," he said, but "very few of them make the cutÉ. Every once in a while you see one like this one É where all the pieces seem to fit."

The Rouse Co. currently owns four regional shopping centers in Texas, located in Fort Worth, Plano, San Antonio and Austin, and is developing a fifth, The Shops at La Cantera in San Antonio.

The planned community will give Rouse a significant base of operations in Texas, perhaps opening other real estate opportunities there, Scavo said, just as Summerlin did in the far West.