In a state that prides itself on its large size, one Texas home building firm has set itself apart with tiny European-inspired condos.
With more than 30 years of experience each in the real estate industry, college friends and longtime business partners Louis Conrad and Ben Lemieux founded Surge Homes in 2014, just before the oil market went bust. It wasn’t the first time the two had found themselves building in a difficult market—the two friends each had experience as developers in cities worldwide, from Canada to Poland, as well as in the U.S. The need to stay ahead of the curve taught them how to anticipate city locations that will become the next hot spots for residential development.
“Since we worked in areas with very dense development, like Poland and Montreal, we developed an algorithm to show us where a city is in its ‘curve of densification,’” Conrad says. “Once you understand this curve, you can predict where a city center will be next and purchase your land ahead of time in order to have a competitive advantage.”
Seventeen years ago, the two set their sights on Houston’s Inner Loop and began to buy land with Lemieux’s late father, real estate developer Serge Lemieux (from whom the company gets its name), predicting that the area would become one of Houston’s most in-demand locations. At the time, the area consisted mostly of large single-family homes and rental properties, and it didn’t have much interest from home buyers. After purchasing sites at a bargain, the Lemieux family held onto the land for almost 15 years until Conrad says it was “ripe for development.”
With land acquired at a low price, Surge Homes was the first to start building affordable 400-square-foot for-sale condos in Houston’s urban core, where the average home sells for over $600,000. The firm’s first project, Parc at Midtown, an 80-home development of condos and townhomes, opened this month.
The company is preparing to break ground on its third Inner Loop micro-condo development, Museum BLVD, in August, which will bring approximately 40 units may of which under $200,000. Nearby, Surge recently unveiled its largest project, The Isabella at Midtown, a 165-unit development that is slated to open in March 2020 with condos starting at $170,000.
“We have been through many cycles in many cities, and so we were convinced that Houston would have a demand for smaller units—and consequently smaller mortgage payments,” says Lemieux. They were right: the area’s Midtown and Museum District neighborhoods are now packed with restaurants, shopping, entertainment, and parks—an area Conrad describes as “the No. 1 spot that millennials want to be.”
Though their land gamble paid off, the pair doesn’t leave design choices to chance. Surge Homes conducts market research to find out exactly what Houston condo buyers want.
“We interviewed 3,400 people in the area to find the city’s next innovative housing product,” Conrad says. “We proposed all kinds of housing types, new kinds of floor plans, different square footages, and different kinds of architecture and interior finishes from Europe and Canada, and we asked participants to rate each.”
For example, Surge Homes has presented participants with 90 different cabinet door choices, and in a market that where Shaker-style wood cabinetry dominates, Houston’s future home buyers responded favorably to the modern finishes on cabinets the company imports from Germany.
“You’ve been seeing [Shaker] cabinetry in Houston for 20 years,” says Conrad. “Now we have exclusive European imports for all of our cabinets.”
Spending time and money on research and holding onto land investments were risky moves, but they paid off when Surge disrupted Houston’s single-family home market with a for-sale housing option that was both luxurious and affordable. “When the oil bust came, we already had product ready to sell and we were one of the only ones in the market with that type of innovative product,” Lemieux says.
Conrad adds, “All innovators are going against the current, so for us to have people tell us we were wrong or would fail was normal, and it’s what every innovator hears. But today, we can’t build fast enough for the demand we have, and we are, for now, the only ones able to offer [affordable homes] here because we don’t have to buy land at a high cost.”