As we saw in a previous post, Army Corps regulations stipulate that a developer must prove there is a need for his/her project before destroying wetlands. Further, the Corps assumes that the developer has done due diligence in assessing market conditions.
“Has Romerica Investments done due diligence? Is this project needed?” In my opinion, the answer is no. It consists of condominiums 65-feet high in the flood plain, plus 25-50 story retail, commercial and hotel structures arranged around a marina. That marina is in the floodway of the San Jacinto River’s West Fork.
But growth in the Humble ISD has slowed from 6% to 1% because of concerns over flooding. The number-one need we have now is to restore safety by mitigating flood risk. This project will worsen flood risk and there is little demand for it – especially in this location. The Corps should deny this permit until the safety of the community can be assured.
The developer plans to build more than 3 million square feet of hotel, commercial, retail and residential space in the floodplain. Yet, since Harvey, we can’t fill all the homes we have – even those on higher ground. About a quarter of the retail space in Town Center and King’s Harbor is still vacant. There’s little demand for commercial space. And existing hotels can handle travelers just fine, thank you.
Previous Attempt to Build Retail Mall in Kingwood Failed
It’s also hard to see how Kingwood’s population would support another shopping mall and theater. We already have a major 1.2 million SF regional mall right across the river in Humble. We also have three theaters with 44 screens within 5 miles. Also, consider that online shopping and streaming services, such as Amazon and Netflix, are stealing market share from malls and movie theaters all over America.
A previous attempt to build a small mall in Kingwood resulted in abject failure. The mall was on the southwest corner of Kingwood Drive and US59. After sitting vacant for years, HCA bought the structure and converted it into a community hospital.
Market Review Does Not Consider Location-Specific Factors
The market review conducted by the applicant mentioned none of this. It focused on job growth in Texas and Houston. It totally ignored the local Kingwood market and site-specific considerations. Conducted before Harvey, the survey has NOT been updated to reflect flooding concerns.
That said, most existing homes and businesses in Kingwood are on much higher ground. Raising this project 12 feet above its current elevation to 57′ won’t raise it out of harms way. Far from it. We’ve had six floods higher than that since 1994 – an average of one every FOUR years. That’s an increase over the previous 65 years when we had just three – one every 22 years..
The build-it-and-they-will-come mentality in post-Harvey Houston invites disappointment down the road. It will create white elephants that leave permanent scars on the landscape after destroying the fragile wetlands that we so desperately need to absorb and store floodwaters.
Raising Elevation Will Raise Costs
However, raising the entire project 12 feet WILL raise costs. And therefore, it will price sales and rentals far above the rest of the market – in an area (i.e., floodplain) that people are wary of after Harvey.
In my opinion, the combination of higher costs, less demand, less traffic, remote location, and local opposition will doom this project from the start.
Incomplete Market Analysis
The developer’s market conditions report looks only at economic growth projections for the State of Texas and City of Houston.
- It does not include any evaluation of local Kingwood-specific factors, such as occupancy rates.
- It includes no staples of market analysis such as traffic counts or trading radius.
- It does not consider the feasibility of anchor attractions, such as the marina and retail mall. For instance, can the West Fork even accommodate the volume and size of boats in the marina? Will retailers support a mall at the end of a dead-end road, four miles from the nearest highway, devoid of any through traffic, that floods every time we get four inches of rain?
- It says comparable projects around the country were surveyed, but makes no mention of them. It contains no competitive analysis.
- It reads like a prospectus targeted at investors, but contains no mention of risk.
- The authorship of the analysis is redacted; we do not know who conducted the survey or what credentials they have.
- Finally, it contains no mention of flooding or Harvey.
These omissions feel like serious flaws in Romerica’s market analysis. The Corps should not approve a permit based on such work. There is no demonstrable need to destroy these wetlands.
Posted by Bob Rehak on 2/1/2019
521 Days since Hurricane Harvey