35 South Capital Acquires Renovated Complex in Houston’s Memorial

Local investment firm 35 South Capital has acquired Village Place Apartments in an off-market deal as the company solidifies its place in Houston’s upscale Memorial submarket.

The Village Place Apartments, sprawled across 13 buildings on a 3.5-acre site, is at 9075 Gaylord Drive. It is an 84-unit Class A multifamily building previously linked to an LLC attached to luxury homebuilder Benoit Lemieux, co-founder of Surge Homes.

Surge Homes is the developer behind the Museum District condos called Museum Blvd, at 4819 Caroline Street, and Midtown’s Parc at Midtown townhomes, at 2401 Crawford Street.

The financial details weren’t disclosed, but the Harris County Appraisal District last estimated the 165,000-square-foot property’s value at over $12 million.

It was built in 1965 and renovated in 2021, according to HCAD.

“Despite the challenges in the current capital market, the response from our investor base has been tremendous,” said John Morton, CEO of 35 South.

Houston’s apartment market is experiencing a slowdown in sales, attributed to the impact of rising cost of debt. Institutional capital and private equity players have been adopting a more cautious approach in the Bayou City this year, according to Matthews Real Estate Investment Service. Private capital has taken center stage representing about 60 percent of multifamily buyer volume over the last year.

The Village Place Apartments is 35 South’s seventh property acquisition since it was formed in 2020 and its first multifamily purchase. The firm splashed into the market last year with its acquisition of a 150,000-square-foot, nine-story Class A office building at 10497 Town & Country Way.

That property was purchased from an affiliate of Pennsylvania-based investors Equus Capital Partners after a $4.5 million renovation. Its appraised value is $24 million, up 30 percent from the previous year, according to the Harris County Appraisal District.

While the ink is still drying on the Village Place deal, 35 South has set its sights on another Lone Star conquest. The company is poised to secure a neighborhood retail property in San Antonio’s Southtown District by the end of this, according to a news release.