Houston industrial developer jumps into the ‘build for rent’ sector

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

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

On the southwest corner of Crystal View and Ponderosa Pines Drive, the development is the first of four projects planned so far in 2022. The plots were acquired from Land Tejas, a Houston-based developer of Sierra Vista, a masterplanned 850-acre community along the Texas Corridor 288.

Robert Clay, president of Clay Development, has teamed up with Clay Residential founders Josh Anderson, president, and Ryan Smedt, chief investment officer, on the new project.

Clay and Smedt met more than 15 years ago when Smidt, the former managing director of global investment manager BlackRock, was investing in industrial real estate in Houston. They were independently considering entering the building rental market and decided to join forces, bringing in Josh Anderson, who was head of investments at Value Builders, a developer of multifamily rentals and duplexes based in the Dallas area.

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

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

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

The community will have full service, management and maintenance on site.

After that, the developers will build two sections of Marvida, a community in Cypress. One section is set to house 133 separate single-family rental homes and another section will contain 234 units in duplexes. Clay Residential is negotiating with Land Tejas to purchase 266 duplexes in Sunterra, a new community in Katy.

Smedt said another project in the planning stages in San Marcos is expected to bring in 220 rental units in late 2022. The focus will shift to Austin and Dallas-Fort Worth in 2023.

Buying a home has become an increasing challenge for many families. “With the steady population growth in Texas, the housing market has seen a double-digit rise in home prices and bidding wars for many homes on the market,” Anderson said in an announcement. “Single-family rentals provide an alternative with the benefits of a townhouse and the amenities of suburban and neighboring schools without the disadvantages of maintenance and down payments for ownership.”

Smedt, who has closed more than $4.5 billion in private real estate transactions over the past 23 years, said Clay Residential is targeting a five- to seven-year suspension period and could potentially sell communities as a portfolio.

Since 1998, Clay Development has developed more than 290 industrial and office buildings, with a total area of ​​17 million square feet. Clay said the company builds about 2 million square feet of industrial space annually, and that’s not going to change.

Robert Clay has a history of selecting sites suitable for large-scale industrial developments, with previous successes in pilot projects in the Deer Park, La Porte and Baytown areas.

“It’s definitely a new real estate game for me,” Clay said. “I’m just so excited.”

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