UPDATED Jan. 4, 1:13 PM:
A text flashed across the phone. It was Ari Rastegar.
“My G. Let’s get together this week or next.”
So it goes with Rastegar — a master of promotion, he is well aware of the power of suspense. He is also a constant communicator who rarely takes more than two minutes to answer a text. Rastegar offered few details on what to expect, just saying he wanted to take a drive.
Turns out he had a lot to show.
The developer formed his real estate private equity company, Rastegar Property, in 2015 with little background in real estate or private equity. He was an English major-turned-lawyer, someone more comfortable reading Shakespeare than a balance sheet.
His first deals, for unexciting apartment projects, rode the wave of Austin’s multifamily boom.
Now he is finally following through on his grander ambitions.
“Let’s call it what it is — we totally are going against the grain,” Rastegar said.
And though Rastegar isn’t the biggest developer in Austin, he does have perhaps the boldest vision of what the city could become.
In the next 90 days, Rastegar has hundreds of millions of dollars worth of projects coming online or taking major steps toward it, including his first two ground-up developments.
There is a boutique office building called Infinity Views, an industrial area named Infinity Park and a 318-acre master-planned community — Infinity Estates — in one of the country’s fastest-growing cities.
Ten years ago, he had to ask a childhood friend — Major Miller, now his chief of staff — for help paying rent.
He still has the message. “Can you do me a really big favor?” Rastegar texted Miller in 2014. “I need 1,500 bucks till a ton of cash comes to me at the end of the week.”
Today, his name is on construction sites across Austin.
The son of a Bahá’í Iranian immigrant, Rastegar believes in some combination of several religions, and feels that in some way, some God-like entity has made this moment happen.
But every child of a higher power is still subject to gravity.
His projects are moving ahead just as Austin’s once-limitless real estate market is finding a bottom.
Nearly 22 percent of office space was empty at the end of the third quarter, according to figures from CBRE, and in East Austin, the office vacancy rate reached 35 percent, the second-highest of any submarket.
The industrial vacancy rate was much lower — it was 8.5 percent in the third quarter, JLL research found — but that was almost double the national rate.
Homes in Austin have seen a price correction, too. At the residential development, Rastegar put the first 300 or so lots under contract to a volume homebuilder, which he said would cover the acquisition loan costs of the project and open up financing to finish the development. That deal fell through, but he is now finalizing contracts with other homebuilders.
Rastegar no longer has to prove he can sell his vision, but he does have to prove that he can build it.
Next, he has to fill it.
The unbuildable block
On a November morning, Rastegar sat in the back of his Mercedes-Benz at Infinity Views, the office development at 809 East 8th Street in East Austin. He was wearing black Alo sweats, his uniform when he’s not in a suit, with his hair cut in a smooth fade.
It’s a runt of a development site, less than a quarter of an acre wedged between Interstate 35 and a condo building. A lanky resident of the condo building would be able to touch the office project from his balcony.
“East 8th was unbuildable,” Rastegar said. “There was nothing to do there.”
He bought it anyway, paying $3 million in 2019 on a hunch that East Austin, a gentrifying enclave for the city’s arts crowd, would mimic Brooklyn in the 2000s. In both places, younger, moneyed people were moving in but still commuting to traditional downtowns for work.
At the time, there were about 1.5 million square feet of offices in East Austin, with a vacancy rate of just under 7 percent, according to a CBRE report from 2019. Tenants were signing leases, particularly tech firms with younger workforces.
Rastegar thought an office that faced out from East Austin toward downtown would send a clear signal that East Austin was for work, not just play.
“He’ll never ask you to get in the boat and start paddling unless he’s already paddling.”
In August 2020, Rastegar announced the site would become an office building, one that would combine elements of “home design, hospitality, health care and fitness,” he said. The first challenge facing the project was that the land was unentitled. Rastegar would have to get a raft of permits and city approvals before moving forward.
The developer was able to secure a loan from a frequent partner, Thrive, a private lender based in Austin, even before Rastegar presented much certainty about the project’s future.
“It’s one of the cool Austin things,” Rastegar said. “We kind of keep it in the family.”
Rastegar only pitches Thrive on deals he has already poured himself into, according to Justin Brogna, the lender’s chief operating officer. “He’ll never ask you to get in the boat and start paddling unless he’s already paddling,” he said.
The next challenge was the site itself. The access roads on either side of it slope harshly down toward the highway, leaving enough flat land to build only about 12,000 square feet of office. Without some kind of way to increase the lot’s buildable area, the project wouldn’t work.
Francisco Resendiz solved that. Rastegar hired Resendiz, an architect, straight out of graduate school.
In contrast to Rastegar, who could wax poetic about a trash dump, Resendiz is understated about the breakthrough that made Infinity Views possible. In his time at Rastegar, as he has grown from a design intern to a development executive, he has come to look at projects like a puzzle, shifting numbers around until he can strike a balance that makes them pencil out.
Case in point: The site for Infinity Views wasn’t big enough to fit a parking lot and a building, so he dug the parking area into the ground — a rarity in Austin, with its limestone bedrock — and cantilevered two floors of office out over the hilly terrain.
The cantilever gave Rastegar twice the amount of rentable space — about 24,000 square feet.
For both Rastegar and Resendiz, the office building is one of the first ground-up projects they will see become reality.
“They’re not done yet, though,” Resendiz said. “I’m ready for some ribbon-cutting ceremonies.”
Now, looking up at the skeleton of Infinity Views, Rastegar said he was excited about the present but already worried about the future.
He monologued about raising money, the surreality of this moment in his career and the conflict between his desires to do big things and grow sustainably.
Then he threw on a hard hat and yellow vest. A welder sent sparks flying as the developer climbed up two flights of stairs to look out over the skyline.
Thrills and anxiety aren’t as different as they may seem, and spec developers weather high doses of both as their projects near completion. Rastegar couldn’t wait to finish construction.
He also didn’t know who would pay for that view just yet. East Austin’s rentable office space has increased since the project kicked off, more than doubling since 2019. To fill Infinity Views, Rastegar hopes to emulate the smaller Class A projects that are still finding tenants. He’s looking to lease to one of the many firms downsizing from large downtown spreads to smaller, boutique spaces.
But at the end of the day, in this oversupplied market, a tenant is a tenant.
“Anyone creditworthy,” he said with a chuckle.
When Tesla comes to town
Southeast of the city, where Austin’s urban core melts out into farmland, four warehouses shoot up out of the endless green. This is the next stop on the Rastegar ride-along: Infinity Park, Rastegar’s 600,000-square-foot industrial park near the Tesla Gigafactory.
He partnered with New York City’s Related Companies on the deal, bringing one of the companies that built Hudson Yards into the Austin industrial market.
By his own admission, Rastegar has succeeded with a heavy dose of good luck, but the circumstances surrounding his industrial project are practically a miracle.
He bought the land in March 2020 from his former boss, embattled real estate investor Nate Paul, who was weathering dozens of bankruptcies and lawsuits. Just four months after Rastegar took over the property, Tesla announced that it would be building its plant 5 miles to the north.
The value of Rastegar’s logistics hub, now a short drive from the Elon Musk factory that employs a reported 20,000 people, skyrocketed overnight.
“If it was just multifamily, I would be over-leveraged. But if I’m fucking bulldozing it and building 400 Class A units, the IRR goes through the roof, because they were all development deals.”
The storage company PODS is moving into Infinity Park, with a second tenant arriving soon. Rastegar declined to name future tenants due to ongoing negotiations, but in the next 45 days, he expects the project to be 90 percent leased. The market backs up his hunch — JLL said that a record supply of speculative industrial square footage coming online by the end of 2023 was “needed supply.”
Rastegar raced around the site, staring up at the warehouse’s soaring ceilings, rattling off stats like he was calling a baseball game on the radio, if the play-by-play included things like how quickly the tilt-walls went up and how fast a truck can get from warehouse to highway. The project’s liftoff isn’t just a step up for Rastegar. The Infinity trio are a ladder out of the quicksand facing real estate players across the Sun Belt.
Resendiz held back. He fixed on the small details — the patterned materials on the tilt-walls, a bright orange entryway to one of the buildings — and pointed them out with pride.
“Having a vision, committing to it and actually seeing it built,” he later reflected. “This is my first time seeing my office building or industrial project actually come to life.”
Welcome to AriLand
Rastegar’s most ambitious project sits a 40-minute drive south of the city, in a sprawling, empty field just on the edge of Kyle, Texas.
Kyle is one of the fastest-growing places in the country and has the feel of a Lego city, with one master-planned community interlocked with the next as people pour into town. Grist Mill Road is the epicenter.
At the edge of one finished development, the road stops, and so does Rastegar’s Mercedes.
On the 318 acres in front of him, Rastegar plans to build Infinity Estates: 1,000 single-family homes, 1,400 apartments, 19 acres of commercial development, 60 acres of parks and an elementary school. This project will take longer to complete than the office or industrial park. It is also more meaningful to Rastegar. When he deeded 11 acres to the city for the school, he sobbed.
Today, the site looks like the kind of place Tony Soprano would dump a body, all loose dirt and half-finished trenches.
In the next 90 days — so long as it stops raining, Resendiz joked — the developer will extend Grist Mill Road through the middle of the land and hook up the utility lines beneath it, activating power for the rest of the project.
With no housing here yet, the value of the land is clear. Rastegar came to understand that through experience.
He bought many of his first apartment projects with floating-rate debt in the mid-2010s, and in some cases has had to lower rents or pump in more equity to keep things going.
“On some of the deals, rates have popped up, and I’m drinking my own blood,” he admitted.
Some of Rastegar’s apartment portfolio was recently targeted by a distress buyer, which sought to acquire his holdings for little more than the cost of the debt.
Rastegar ended up keeping the buildings and plans to redevelop his small multifamily properties into Class A projects. He’ll need seven rezoning requests to pass local governments.
“Everyone thought I was buying Class B and Class C multifamily, but what we were buying covered land plays,” he said.
“I’m laughing because they’re right — if it was just multifamily, I would be over-leveraged. But if I’m fucking bulldozing it and building 400 Class A units, the IRR goes through the roof, because they were all development deals.”
In other words, Rastegar wasn’t buying the apartments so much as the land beneath them. There are hints he sensed this several years ago when he considered selling the portfolio: An unreleased marketing video advertised the properties not as value-add, but as development plays.
At Infinity Estates, he still needs to build houses, though. Construction costs are high, and average home prices in Austin have fallen by 18 percent since their height in May 2022.
If Rastegar’s multifamily, office and industrial projects were constrained, whether by money or space, Infinity Estates was his empty canvas. He could build anything he wanted — apartments, offices, restaurants, shops and a school — out in the rolling farmland on the edge of Kyle.
His preoccupation with Infinity Estates comes from something he used to call “futuristic suburbanism,” a term he now feels is kind of overwrought. Put plainly, it’s a modern version of the white-picket-fence ideal, where homes have side-loading garages and are part of walkable neighborhoods with pocket parks. For a generation starved for community and belonging, Rastegar is building a place where you know your neighbors but don’t have to share a wall with them.
Rastegar wanted to design and develop all the homes himself. But financial realities changed his mind. He initially told The Real Deal that he put 339 lots under contract with Green Brick, a Plano-based homebuilder. After publication, Green Brick disputed this, telling TRD that the deal was terminated in October. So Rastegar will still need the cash to clear the $16 million credit line on the land; his team has since said they are finalizing contracts with two other homebuilders.
Rastegar was in a thoughtful state of mind, something he handled by talking more. (He grew up with a speech impediment and jokes that once he learned to speak, he never shut up.)
He reminisced about going from unit owner to unit owner in the neighboring condo building, the dozens of awkward conversations and daily persuasions it took to get here. It was a grind.
“I learned that from Kobe,” he said of the hard work, nearly breaking down at the mention of the late basketball superstar.
None of Rastegar’s projects is a behemoth, he pointed out, and there are a lot of unknowns still: if he can get a rezoning for the multifamily redevelopments, if construction costs will come down, if rents will go up.
He has a lot on his plate, and he’s adding more elements, all across Austin. They’re beginning to add up to something real.
“What happens if you buy 1,000 crumbs?” he said. “It’s a loaf of bread.”
Correction: The original version of this article implied that Green Brick had closed on the lots at Rastegar’s development in Kyle. That deal was terminated in October 2023, before it could close. After publication, Rastegar told The Real Deal that he is finalizing contracts with other homebuilders for the lots.