Growth Wave Hits Galveston

Austin American-Statesman, July 22, 2006,
by Shonda Novak

Institutions such as Gaido's, serving fresh seafood since 1911. Timeworn hotels. Oceanfront beachwear stores and tackle shops. Stately historic mansions. Sense of calm that comes as the Gulf of Mexico announces itself and the rest of Texas disappears behind the causeway into town. Galveston retains much of its old character and charm, just as it has for decades. But there are jarring signs that a transformation is under way in this coastal city of 60,000 southeast of Houston. Developers are charting a new course for Galveston, one that is bringing high-rises, new businesses, more residents and new challenges for city leaders. Residential development, propelled by an aging population looking for retirement, second-home and resort properties near saltwater, is also booming. Last year, the city issued building permits for new residential and commercial construction valued at $2.5 billion. During the first five months of this year, the value more than doubled.The signs of what's to come aren't hard to miss. Of the more than a dozen mid- and high-rise projects being built or planned, the highest-profile are the twin 27-story condo towers, Palisade Palms, under construction on the far east end of the island.One Palisade Palms purchaser, an Austin software engineer, is buying a $700,000 condominium on the 24th floor of one tower. He and his family moved to Central Texas from San Jose, Calif., two years ago and plan to use the condo as a summer getaway. Like many buyers, he views his Palisades condo as an investment. He settled on Galveston after ruling out overheated markets in Florida and Hawaii. "Galveston right now is the best deal I can find." He expects the condo's value to climb by $300,000 in the next five years. "If you want to buy anywhere up or down the East or West coasts, the market is extremely expensive, much more expensive than the Gulf Coast," Gaines says, a research economist with the Real Estate Center at Texas A&M University. "We're hearing that people from the East and West coasts are discovering the Third Coast because it's the only coast that has affordable prices."