Texas Realty Blog

Downtown high-rises will soar even higher

Ok, one more Downtown Austin update and I'll move to other topics. Many of the highrises are being updated to include living spaces. Apartments, condos, etc. are going to be on the rise. Investors should take notice because most are expected to have double-digit appreciation almost immediately.

(Austin Statesman) - A downtown residential project is ready to start construction - with eight more floors than the original plans envisioned.

• MetLife and partner Hanover Co. are building the 36-story apartment tower at 101 Colorado St., next door to MetLife's 22-story office tower at 100 Congress Ave. A revised design is 36 stories, with 258 units, including three live-work units facing Cesar Chavez Street. The first residents could move in by fall 2008.

Mayor Will Wynn has said his vision for a lively downtown includes 25,000 residents by 2015 - a fivefold increase - and there is no shortage of developers ready to meet the demand.

• Projects under construction or planned for downtown would add more than 3,000 living units, with more slated to be built south of downtown.
• Work has started on six projects, and several more are expected to break ground in early 2007.
• Work should start Feb. 1 on Spring, a 36-story 220-unit condominium tower at Third and Bowie streets, said Robert Barnstone, one of the project's developers.
• Just south of downtown, Crescent Resources LLC plans to start work in early 2007 on Aquaterra, a 19-story, 173-unit condominium tower at 210 Barton Springs Road. The project will cost almost $50 million and should be finished in late 2008.

Condo Conversion Project Launches in Central Austin

I'd thought condo conversions had subsided because of the time it takes to make the developments, but it appears we have one in the works in Central Austin. AUSTIN (Austin Business Journal):

– Local developer Marshall Durrett, president of Grandview Street Partners Ltd., plans to turn an aging multifamily development in Central Austin into a 16-unit, $10 million condominium building at the intersection of 32nd and Grandview Streets between Seton Medical Center, downtown, the University of Texas and the Tarrytown neighborhood.

Grandview Street Condominiums will be a single building with ten, two-story condos on the ground level topped by six penthouse units. The condos will be finished-out to luxury specifications with prices ranging from the mid-$500,000s to mid-$800,000s for floor plans between 2,000 square feet and 3,000 square feet. The 1930s duplexes and fourplexes currently on the nearly one-acre site will be demolished. Construction is slated to begin in January.

Condo and office conversions can be a good way to get the maximum profit out of an aging property. Residential living spaces in the price ranges of $250-500k would sell very quickly in Central Austin. Investors looking into these opportunities should make sure they do enough research to understand the time they need to dedicate to the project and value of the property after the conversion.

Austin's Draw: high cap rates, occupancy

Austin is getting a lot of attention from the East and West Coast investors. Cap rates have been steadily on the rise this past year and continue to improve. This story is from the Texas A&M Retail Center:

As the metro's retail market edges toward a four-year high for all indicators, investors and tenants are pushing hard for a piece of the action. Vacancy is hanging at 7 percent, the best reading of the state's four metropolises. A recent report by Marcus & Millichap Real Estate Investment Brokerage Co. puts cap rates for multitenant properties in the mid- to high 7 percent range. Single-tenant assets are perking along at a 7 percent cap rate, on average, while properties filled by top-tier tenants are producing in the mid-6 percent range.

In the first quarter, a six-property portfolio, totaling 660,000 square feet, brought $75 million, the brokerage house's researchers reported. A recent study showed single-family housing sales rose 4 percent just in the past month. The push for product to keep pace with the rooftops has developers raising 2.7 million square feet, a slight increase from last year's construction level.

According to a Weitzman Group analysis, the 28.5 million square feet of existing retail space is 93 percent filled. Morris says the true indicator as to the market's strength will be how quickly 11 Albertson's grocery stores will be filled. The store closings were Aug. 3-18, leaving the metro with five Albertson's when the dust settles on the Boise, ID-based grocer's retreat.

240 Unit Condo Development on the Way in Dallas

DALLAS (dallasnews.com) – Crow Holdings and condominium developer Wood Partners of Atlanta will build a retail and loft-style residential complex in the Design District at Oak Lawn Ave. and Hi-Line Dr. The complex will house 240 lofts with up to 40,000 square feet of ground floor retail, showroom and gallery space. Crow will upgrade utilities, landscaping and lighting to make the area more pedestrian friendly.

The City of Dallas' Design District Tax Increment Financing District will provide $4.4 million in funding. The Design District is adjacent to the planned Trinity River park and near the booming Victory project. Construction is scheduled to begin in early 2007.

Dallas has been a hot topic among Austin developers who are interested in moving outside of the city. Dallas and Austin share similarities in the fact that we're appreciation markets and our downtowns are becoming more residential. Although Dallas is a larger city, redevelopment is abound.

More condos on way to East Austin

Pending approval of a building permit, construction is slated to begin in the fall on Skyline, a $46 million condo project. The 118 upscale lofts will be built by Interurban Development LLC. The six-story Skyline between East Eighth and Ninth Streets will overlook I-35. Prices start in the low $200,000s.

Construction is already underway on another East Austin project, Robertson Hill Apartments, 290 upscale units on San Marcos St. between Ninth and 11th Streets. A spokesman for builder Martin Fein says the first units should be available in the spring. Rents are expected to range from $1,175 for a one bedroom to $2,600 for a two-bedroom unit.

Other projects include the Bel-Air Lofts on South Congress Avenue, where all but one of the 48 units in the first phase have sold. Construction is scheduled to begin next month on the second phase - 35 units with prices ranging from about $200,000 to the mid-$300,000s.

'Triangle' in Austin Grabs unique tenants

The Texas A&M Research Center reported on the Triangle, which is north of the University of Texas Campus.

(North Central Austin) - Cencor Urban, the Austin-based mixed-use development arm of Cencor Realty Services of Dallas, broke ground August 2 on the most ambitious retail phase of The Triangle, which will bring an extra 90,000 square feet of space to the project off 45th Street.

Tenants that have signed on include: Galaxy Café, Flipnotics, Dragon Gate by Phoenix, Flying Saucer, Tino's Greek Café. Almost half of the project's total retail space is leased or in negotiation. The new shops are slated to open by fall 2007. Bordered by Guadalupe Street, Lamar Boulevard and 45th Street, The Triangle will include a total of 120,000 square feet of retail and restaurant space and 750 apartments once complete. Cencor's partner on the project, Simmons Vedder & Co., is developing the apartment component.

Although The Triangle was at first a shock because they replaced a nice park-like setting on this corner, it is a cool development because it brought luxury apartments and retail to a popular area of town. As mixed-use developments gain popularity in Central Austin, it will be interesting to see how long these types of properties appreciate. All guesses point to steady appreciation for at least the next 5 years.

Austin: Seaholm District Redevelopment Plan Online

The Seaholm Redevelopment is something that many have not heard of. It's sort of old news, but I wanted to report on it because it's moving forward through the city planning department. This East Austin development was given the ok to develop earlier this year and should start construction in 2007. The Austin Statesman reported, "The 150,000-square-foot, art deco-style power is set to be the centerpiece of a mixed-use development that will include cultural, office, retail and residential components. Potential tenants include the Texas Music Hall of Fame, and public television station KLRU and its flagship "Austin City Limits" show."

I wanted to make sure investors, owners, and interested parties knew that the current draft of plans for Seaholm are available on the City of Austin website. The concept is to bring together a mixed-use retail, residential, and arts/cultural development. The architectural drawings are very nice and it looks like the area will be popular. On the real estate front, the houses near the power plant skyrocketed in value. 50x50 residential lots are selling around $145k. This is because the area will be extremely popular, especially with the excellent view of Town Lake.

In West Austin, any real estate along Town Lake or with a view of the lake is expensive and sells/rents quickly. All signs point to any investment in this area being very well spent.

Big retailers break ground at Mueller

It's time! The first commercial retail construction is underway at Mueller. The Austin Statesman reported last Friday:

Phase one construction is underway on the new mixed-use urban village at the former Robert Mueller Municipal Airport site, two miles from the University of Texas and three miles from the Capitol. Store openings are scheduled for April 2007 for the first three big-box anchor retail tenants — Best Buy, Bed Bath & Beyond and Marshalls — located along the I-35 frontage road between 51st Street and Airport Blvd.

The first two phases will have 370,000 square feet of national, regional and local retailers and restaurants on 36 acres. Included in the master plan for Mueller will be additional retail in a town center setting, with restaurants and smaller boutique retailers. The development’s final buildout is expected to take almost ten years and will include 650,000 square feet of retail space.

Catellus Development Corp. is the company responsible for transforming the 711-acre site into an urban village of shops, homes, services, schools and offices. The company is in the process of selecting home builders for the first phase of the planned 4,600 residential units.

Read more at Big retailers break ground at Mueller.

Study shows retail needed in Leander

This is from the Texas A&M Research Center...

Claritas, a national market research firm, examined consumer product information for a specific region in and around Leander to highlight areas untapped by retailers. The region starts from RM 1431 goes north on U.S. Highway 183 to State Highway 29, west to Burnet, south to Marble Falls and then east back to Leander. The study, paid for by the city, provided statistical proof for what officials and business types have been saying - Leander needs retail.

The data will aid in bringing more retail by showing potential businesses what products are desired the most. For instance, consumers in the area spent more than $2.1 million last year on optical goods, but retail sales in the area yielded only $158,378 for those products. Of the 29 product groups analyzed, none showed consumers were satisfying their needs in the area. Eighty-one percent of paints and sundries were bought in another area, 73.8 percent of audio equipment, and 73.5 percent of footwear.

For those of you investing in Greater Austin, Leander, Georgetown, Cedar Park, and Round Rock are HOT. Although there is more housing inventory, commercial developments are a good investment.

Streetcar and Rail Plans Underway in Austin

I attended a luncheon last week where Councilman Brewster McCracken and CapMetro employees presented an update on their long-term transit plan. I must admit that it looks great. I'm excited that the city is thinking about how Austin will grow over the next 20 years and are taking action.

Many local residents are unaware that:

1) The MetroRail is on the way. This is a commuter rail line that will use existing railroad tracks to  get residents around the city. The rail is already funded and the city has purchased sites. They are in the design concept stage for some lines while finalizing locations for others.

2) The impact of the rail on surrounding areas should be significant. I saw the All Systems Go plan a few years ago, so purchased properties in close (but not too close) proximity to these mass transit stations. Capmetro said that they plan to have "everything you need" next to their mass transit stations as part of making our lives easier in Austin. They want to have coffee shops, day cares, dry cleaners, grocery stores...everything you need to get through your day, near these stations so you do not have to use a car. One of the leaders of the AllSystemsGo plan said their goal is to have families down to using just one car with Capmetro systems used for most transportation needs.

The MetroRail looked pretty cool. The concept that they showed us was a bullet shape. It was a cross between a train and a monorail. They wanted the inside to look inviting. All of the rails are expected to have tray tables and wireless Internet.

The Chronicle recently reported about the streetcar concepts. I'm not too excited about them, but apparently, this is what residents want. I'm not against streetcars, but they're not very new. The city is still finalizing routes but most are pretty similar.

Investors, buyers, and sellers should pay attention to where the upcoming mass transit stations will be. This can be a great selling point and will definitely affect the value of the home, especially since the city is purchasing many acres around the station for future development. The only station that was not listed was the potential one at Slaughter and IH35. From what I remember, the city was still investigating that site.

I'll keep you updated as I get more details.