Simon Planning Luxury Hotel, High-Rise at Houston’s Galleria

By Gail Kalinoski

Rendering of a new luxury hotel and residential tower adjacent to The Galleria in Houston

Houston—A luxury hotel and high-end residential tower will be the newest additions to The Galleria in Houston by owner Simon Property Group, which has already spent at least $250 million transforming the city’s 46-year-old iconic shopping center in the past few years.

Spanning 2.4 million square feet, the complex, which also features two high-rise hotels and three office towers, is already the largest in the state of Texas and the fourth largest in the United States. The Indianapolis-based retail developer and owner said the new hotel and residences would be located in one 25- or 30-story building on the corner of Sage Road and West Alabama Street, with direct access to the shopping and dining at The Galleria and near the office buildings in the Uptown District. Plans call for 225 hotel rooms and 75 to 100 luxury condominium units built atop the hotel. Simon expects to break ground on the new tower in late 2017, according to the Houston Business Journal, which also noted the developer is deciding among three luxury hotel operators.

“With 30 million domestic and international visitors coming into The Galleria annually and retail sales among the highest in the nation, adding a luxury hotel and residential complex with global appeal is the perfect next step in the evolution of this iconic property,” David Contis, president of Simon Malls, said in a prepared statement.

The hotel/residential project would the final part of a multi-year renovation of The Galleria, which began with the creation of a new 200,000-square-foot Saks Fifth Avenue store that is expected to open this month. Once the new Saks is open, Simon will convert the existing Saks store into a new multi-level mall extension with 110,000 square feet of space to house about 35 new stores and restaurants, expected to open in 2017. Also as part of the $250 million renovation, Simon constructed a 14,000-square-foot, free-standing retail building known as “The Jewel Box” that was completed in late 2015 and is home to The Webster, a luxury fashion boutique, and is adding Yauatcha, a Michelin-starred Chinese dim sum tea house, later this year. Several new-to-the-market luxury retailers have also opened or plan to this year, including Celine and Christian Louboutin.

The renovations inside The Galleria also included a new color palette, upgraded flooring, lighting, seating and interior landscaping. The modernization program, expected to be completed by the end of this year, includes the installation of several new escalators and an updated dining pavilion.

The massive renovation was undertaken to compete with new upscale retailers in the area, but it comes at a time when the city is beginning to feel the effects of the energy industry slowdown caused by the sharp drop in crude oil prices. Contis told The Houston Chronicle that Simon was investing in Houston for the long term and was not worried about the current slowdown.

John Breeding, president & CEO of the Uptown Houston District, said the project would be “a welcomed addition to our prestigious area known for fashion, fine dining and luxury living.”

He noted that “demand for residential space remains strong” in the Uptown area.

“The overall densification of Uptown is a testament to the fact that our city continues to grow and people want to live and visit this area,” Breeding said in a prepared statement. “Simon’s commitment to this project speaks to their confidence in the Houston market and Uptown.”

Other developers and hospitality companies have been building near The Galleria in recent months, including Hyatt Hotels Corp., which along with Songy Highroads, opened The Hyatt Regency in October at 2626 Sage Road. The 14-story hotel has 325 rooms and is adjacent to the Hyatt Place Houston Galleria, a 12-story, 157-key hotel, which opened in February at 5252 W. Alabama St.

Several luxury residential towers are also under construction in the area, including the Arabella, a 33-story building from developer Randall Davis & Co. and DC Partners. The 34-story tower will have 109 units ranging in price from $800,000 to $4 million.