Galveston, Texas (CNN) The market for office buildings is booming, but there’s still one major hurdle for developers: The city is in the midst of a housing shortage.
And it’s not just the need to build homes.
Developers need affordable housing.
“There’s a shortage of affordable housing in the city, especially in the south of the city,” said Mike O’Keefe, president of Galvestons office real estate firm Real Estate Brokers.
The housing stock is limited.
There are just under 12,000 units in the area.
Developers, particularly those in Galvestos booming tech sector, have a difficult time finding a home.
“It’s not even the housing itself that’s a problem,” O’Reilly said.
“It’s just the people who are moving into the area and the amount of housing they need.”
In Galvestas south bay area, there’s an office park called The Green.
But the development has had some problems, according to real estate broker Mike O’.
The developer wanted to build a four-story office building.
When the site was first developed in the late 1970s, it had some affordable housing available.
O’Kelly’s developers, meanwhile, didn’t have the space.
But they didn’t want to leave the neighborhood, so they started looking at an adjacent vacant lot.
“So we thought, we’re gonna build a five-story building and it’s gonna be a five percent of what we’ve got on the lot,” OReilly said, adding that the developers were happy to accommodate the developer’s needs.
O’Keefe says developers also have to consider the neighborhood and its culture.
It’s a place where people like to live.
“I think that’s the biggest issue with developers.
Developers think, I’m gonna build here, I can get all the people I need here, and I’ll build it right here,” O’.
That doesn’t always happen, however.
“When you’re a new developer, you’re not thinking about where the building is going to be, you just think about where are the people that you’re building for and that’s how you’ll build your project,” O.
Kelly said, noting that developers have to think about what kind of housing to build in their area.
“You’re looking at a property, you don’t think about, ‘Who’s going to live here?’
That’s kind of the biggest thing for developers.”
For the real estate agent, there are two types of housing in Galvegas south bay: those that have been in the market for years, and those that are new.
“The new units have an average price tag of $2 million,” OLeary said.
The old units, on the other hand, have average prices of about $300,000, and are a mix of low- and high-end housing.
“They’re not built for the people.
They’re built for people who need a place to live,” O.’
Kelly said of the old and new units.
As more and more affordable housing becomes available, developers are looking to find buyers for those new homes, but O’Keefe says developers can only afford to invest in the older units.””
We’re not seeing that with these new units.”
As more and more affordable housing becomes available, developers are looking to find buyers for those new homes, but O’Keefe says developers can only afford to invest in the older units.
“The way you get the most bang for your buck is to put that money into the market, which is why developers are taking advantage of the market right now,” OKeefe said.
OReilly believes that developers will be able to sell their old units and make money on the new units, but that may not be the case.
“A lot of developers are thinking about how do we get more people into the affordable housing, and if you look at the average price of the building that they’re currently building, it’s way down,” OKelly said.
“And then if you take those units and put them in a rental, they’re going to sell for about $500 a month.”
O’Kelly said that if developers can build a new affordable housing project, the city can use that money to improve the existing housing stock.
Reilly says developers are willing to build for the current market, but if the housing stock becomes a problem, developers can look to the federal government to help solve the issue.
“I’m a little worried about the government being able to do anything,” O Kelly said.