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After opening of latest Grand Parkway section near Dayton, ‘explosive growth’ happening east of Lake

September 15, 2022

For some communities on the far east side of the Houston area, the days of sleepy countryside life may be numbered.

As real estate development pushes farther and farther to Houston’s exurbs, one submarket that is seeing explosive growth is the area stretching from the eastern side of Lake Houston to the small towns of Dayton to the north and Mont Belvieu to the south.

That push has only picked up steam since the completion of the eastern section of the Grand Parkway in May, according to Tera Aguero, economic development coordinator at the Dayton Community Development Corp.

“We had interest before, when the parkway was in the works,” she said. “But now that it's completed and everything, we do see a lot more residential, retail (and) industrial coming to the area because it's such easy access to The Woodlands, Houston and everywhere around with that being available to us.”

According to residential real estate research firm Zonda, developers are planning 14 future residential subdivisions that, combined with existing communities being built out, are estimated to bring more than 10,400 new homes to the area — the largest being Riceland, a 1,400-acre master-planned community being developed in Mont Belvieu.

Those communities will be in addition to 13 that have opened since 2019 and more that have not yet been officially announced. Aguero estimates around 27,000 new homes will eventually be added to just the area around Dayton.

The small town in Liberty County, which had a little more than 8,500 residents as of the 2020 U.S. Census, expects its population to more than double in the next several years, Aguero said.

One developer taking an interest in the Lake Houston East submarket is League City-based Windy Hill Development, headed by husband-and-wife team Randy and Rachael Hall. They recently secured financing to start the development of a 583-home community on 138 acres just east of Lake Houston on the southern side of Indian Shores Road, between Huffman and Crosby.

In a recent interview with the Houston Business Journal, Randy Hall brought up another critical piece needed for new development to come to an area.

“The city of Houston now is working with developers to provide water,” he said “They're upgrading some sewage treatment plants on the east side of Lake Houston. So, the city knows the growth is coming, and they're preparing for it.”

Much of the land in the area is still undeveloped, and some belongs to families who are not interested in selling, said Tommy LeBlanc, principal at Avison Young. But as more and more tracts are being turned into subdivisions, many holdouts are changing their minds.

“I think that valuations of land in this particular market have hit a milestone where some family-owners have decided to sell,” LeBlanc said. “They're receiving offers at valuations that they've never received before.”

As of June, LeBlanc was aware of about 1,300 acres under contract with residential developers in the Dayton area, he said.

As the number of rooftops grows in an area, retail development is usually not far behind. Aguero said commercial development is already picking up pace in Dayton, though LeBlanc isn’t seeing much of it yet.

“It may be happening, but we're not seeing it,” he said. “I just think that there needs to be a few more rooftops built before you see significant retail (development).”

Of course, rapid growth also means challenges for municipalities such as Dayton, a quiet bedroom community almost halfway between downtown Houston and Beaumont. Dayton's selling point has been its small-town feel, away from the hustle and bustle of the big city, Aguero said.

“We have to make sure that we have the infrastructure ready to accommodate all of the new growth with businesses, residential and everything like that,” she said. “And it's definitely a learning curve. But we're really excited for what the future holds for Dayton. We have several new projects in the works.”

By Florian Martin, Houston Business Journal