Houston industrial developer is getting into the ‘build-to-let’ business

A prolific Houston commercial real estate developer, best known for his industrial projects, is entering the fast-growing “build-to-let” business with plans to bring 1,000 single-family and duplex homes for rent in Texas.

Clay Residential, a newly formed subsidiary of Houston-based Clay Development & Construction, has begun construction on Willow in Sierra Vista, a neighborhood of 97 single-family rental homes in Colony Iowa. The first homes in the Brazoria County development will be available in April.

At the southwest corner of Crystal View and Ponderosa Pines Drive, the development is the first of four planned so far in 2022. The lots have been acquired from Sierra Vista-based developer Land Tejas. Houston, an 850-acre master plan. community along the Texas 288 corridor.

Clay Development Chairman Robert Clay has partnered with Clay Residential co-founders Josh Anderson, Chairman, and Ryan Smidt, Chief Investment Officer, as part of the new venture.

Clay and Smidt met more than 15 years ago when Smidt, a former managing director of global investment manager BlackRock, was investing in industrial properties in Houston. They had independently thought about entering the build-to-rent market and decided to join forces, bringing in Josh Anderson, who was head of investments for Value Builders, a Florida-based multifamily and duplex rental developer. Dallas area.

“We want to build a very Texan portfolio,” Smidt said. “Our initial focus is on the core markets of Texas, Dallas-Fort Worth, Houston, Austin and San Antonio.”

Houston’s first projects will be in Land Tejas communities with amenities such as Crystal Lagoons, playgrounds, dedicated sports fields and walking paths.

Willow in Sierra Vista will offer homes ranging from 1,548 to 1,980 square feet with three or four bedrooms, two bathrooms and attached garages. Rents will start at $2,220. Homes will have 10-foot ceilings, smart home technology, brick or stone exteriors, and fenced backyards.

The community will benefit from a complete on-site management and maintenance service.

Next, the developers will build in two sections of Marvida, a community in Cypress. One tranche is planned for 133 detached single-family rental homes and another will have 234 duplex units. Clay Residential is negotiating with Land Tejas to acquire lots of 266 duplexes in Sunterra, a new community in Katy.

Another project being planned in San Marcos is expected to bring 220 rental units by the end of 2022, Smidt said. The focus will be on Austin and Dallas-Fort Worth in 2023.

“Buying a home has become increasingly difficult for many families. With Texas’ steady population growth, the housing market has seen double-digit home price appreciation and bidding wars for many homes on the market,” Anderson said in a statement. “Single-family rentals offer an alternative with the benefits of a single-family home, suburban amenities and nearby schools without the hassles of maintenance and property down payments.”

Clay Residential is targeting a five-to-seven-year holding period and could most likely sell the communities as a portfolio, said Smidt, who has closed more than $4.5 billion in private equity real estate deals over the past 23 last years.

Since 1998, Clay Development has developed over 290 industrial and office buildings totaling 17 million square feet. The company builds about 2 million square feet of industrial space per year, and that’s not going to change, Clay said.

Robert Clay has a history of picking the right places for large-scale industrial developments, with past successes in pioneering projects in the Deer Park, La Porte and Baytown areas.

“It’s kind of a new real estate game for me, of course,” Clay said. “I’m just excited about it.”

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