Office projects dominated Austin development pipeline in 2021

A visitor to Austin these days might conclude the city’s official bird is the construction crane.

It’s hard to miss them scattered across Texas’ capital, and the towers rising left and right in downtown. And the developments are being occupied just as quickly.

Austin’s construction boom matches the fast-paced growth of the region, which has been the fastest-growing metro for 10 years as companies and talent relocate to Texas. That’s why Austin’s economy has been among the quickest in the U.S. to recover from the pandemic, which has put immense pressure on its housing market and helped fuel demand for office space. Most of the marquee projects under construction last year were office projects, according to an analysis by The Real Deal.

Roughly 6 million square feet of office development was under construction by publication time, and about 2 million square feet was already pre-leased, said CBRE’s Troy Holme. The increased demand in Austin’s office market is not only limiting supply; it’s also reawakening project plans put on hold at the onset of the pandemic. At the same time, brokers still need to find space for big-name companies.

“We’re starting to definitely see activity from Big Tech on planning stages and trying to figure out what their next moves are,” Holme said. “We are starting to work on some deals that will fill some of these newer developments.”

Still, it will be a few years before an office tower is delivered downtown that’s not already significantly pre-leased.

“You have this time period in between now and the next building delivering where you’re going to have sort of a tightening of the market because there’s a lack of big blocks,” he said. “As a matter of fact, Indeed Tower is probably the only building in downtown that can sufficiently accommodate someone above 50,000 feet with some growth. They’re going to be the beneficiary of some of the bigger deals that could come here over the next 18 months. That just shows you how strong downtown is.”

Arguably, the largest development in progress last year was Tesla’s 4-million to 5-million-square-foot gigafactory, which didn’t meet the parameters of TRD’s analysis. Tesla’s $1.1 billion manufacturing facility — which also doubles as the company’s headquarters — is located in the Austin extraterritorial jurisdiction and not within city limits. Construction finished in late 2021, and vehicle production began earlier this year.

Below are 10 developments that The Real Deal has identified as the largest projects underway in Austin last year by square footage. These projects are within city limits and were identified through building permits issued last year and ongoing developments that have become prominent in the city’s skyline.

(Apple)

Apple

The iPhone maker is developing a $1 billion, 3-million-square-foot campus in Northwest Austin.

Construction began in 2019 and is planned in five phases. At full buildout, Apple’s campus will include 12 office and amenity buildings, parking structures, a central utility plant and a separate daycare building. A six-story, 75,500-square-foot hotel and a three-story conference center are also planned.

The first phase of construction was nearing completion in January, according to Austin Business Journal.

Kansas City-based JE Dunn Construction Co. is general contractor.

Apple’s development is an extension of its longtime Travis County campus, about a mile south on Parmer. The 133-acre campus is on land that once belonged to the owners of the Robinson Ranch.

(DPR)

Block 185

The next major development has already become a signature building in the Austin skyline.

Block 185, as it’s formally known, is a 35-story, 590-foot tower that looks like a sailboat along the northern shore of Lady Bird Lake in downtown Austin. The highrise includes about 800,000 square feet of office space. Construction has been ongoing for a few years, though the building is expected to be complete this year.

Google has fully leased Block 185. Trammell Crow Company is the building’s developer and owner.

(Sixth and Guadalupe)

Sixth and Guadalupe

Lincoln Property Company’s mixed-use tower at Sixth and Guadalupe streets will be Austin’s tallest tower for the foreseeable future.

The 66-story skyscraper will reach just over 800 feet high, and it will be the city’s first high-rise of 1 million square feet once it’s completed.

Meta, the parent company of Facebook, leased the entire commercial half of the tower — about 590,000 square feet — at the end of 2021. Floors 34 to 66 will comprise 349 residential units.

Construction is expected to end next year.

San Antonio-based Kairoi Residential and San Francisco-based Divco West Real Estate are also partnered on the project. Gensler is the tower’s architect and Kansas City-based JE Dunn Construction Group is general contractor.

(Jay Paul Co.)

Springdale Green

A California company that has built a reputation as a preeminent developer in the Bay Area is making its Austin debut.

Development began last year on Jay Paul Company’s Springdale Green project, which will be anchored by two six-story office buildings totaling roughly 775,000 square feet. The entire project, including outdoor amenities, is more than 870,000 square feet on 30 acres in East Austin.

Jay Paul is developing the office buildings at 93 feet tall with help of a density bonus. It’s rising off Springdale Road and Airport Boulevard.

The final price tag for the project is unclear, though multiple state filings indicate it could exceed $225 million.

Gensler is serving as architect on the project, and California-based Level 10 Construction is the general contractor. Local landscape architect DWG is also involved.

(Kilroy)

Indeed

Construction came to a close last year on the tower with the most office space in downtown Austin.

Indeed Tower is a 36-story, 730,000-square-foot high-rise at the intersection of Sixth and Colorado streets. Its tenants include Indeed., the job-search website and building namesake, plus Heritage Title, Teachers Retirement System of Texas and law firm Vinson & Elkins.
Kilroy bought the tower last year in a deal that outranks all other sales in the Texas capital in 2021. The firm purchased Indeed Tower from Trammell Crow Company for $580 million, which also represented Kilroy’s entry into the Austin market.

JPMorgan Chase and Wells Fargo provided construction financing while Principal Real Estate Investors was the equity partner. CBRE has handled leasing.

Applied Materials expansion

California-based semiconductor supplier Applied Materials began work last year on a project that will expand its long-time Austin campus by 724,000 square feet.

The manufacturing giant expects to spend roughly $150 million over five years through buildout of the facility, plus equipment and information technology infrastructure, according to city documents.

The firm first established itself in the Texas capital in 1992, and its campus will total nearly 3 million square feet with the expansion off U.S. Route 290.

Still, the manufacturer is eyeing a $2 billion project in the Austin suburb of Hutto, where it wants to build a research and development facility. It would be near Samsung’s future chipmaking hub in the adjacent town of Taylor.

Industry experts have said Central Texas is on the way to becoming one of the world’s most important semiconductor hubs, a title that would carry extra weight amid a global chip shortage.

Parmer Village

Retail, residences, restaurants and a hotel are underway near Parmer Lane and Harris Ridge in Northeast Austin.

Ly & Nguyen is developing Parmer Village, a 19-acre mixed-use project near the Dell and Samsung campuses in Austin. The master plan includes a 124-room Element Hotel by Marriot, more than 280 apartments and 11 retail buildings.

FTC Architects, general contractor HB Construction and hotel development consultant Merritt Development Group are working on the project. Cathay Bank provided financing, according to local news outlets.

(Texas Medical Center)

Texas Children’s Hospital

One of several hospital projects in the area is the Texas Children’s Hospital near Lakeline Mall.

The 9835 N. Lake Creek Parkway project represents a $485 million investment for children and women that is set to open in the first quarter of 2024. The hospital is planned to be 365,000 square feet with 52 beds.

(Brandywine)

Uptown ATX – Block A

Philadelphia-based Brandywine Realty Trust is constructing a 350,000-square-foot office building. It’s part of its 66-acre, $3 billion master-planned community east of The Domain called Uptown ATX.

The larger plan is 7 million square feet of office, residential, retail and hospitality spaces, plus a new MetroRail station. Local news outlets have pegged it as one of the biggest redevelopment projects in Austin’s history.

(Dell Children’s)

Dell Children’s Medical Center North

Another children’s hospital is under construction in North Austin.

Construction on a 187,000-square-foot pediatric hospital began in May 2021. The hospital is under development on 34 acres at Avery Ranch Boulevard and 183A in Williamson County.

The children’s hospital will include 36 beds, trauma services, two operating rooms and procedure rooms.

What we’re seeing in 2022

The pipeline remains strong.

Development planning is picking back up again for delayed projects, said CBRE’s Holme.

“Some people are just resuming from where they were a year or two ago, and there’s new projects too.”

After almost five years of planning, Lincoln Property Company and its equity partner DivcoWest announced in April that they have signed a deal with an anchor tenant that will allow them to build a 48-story, 833,000-square-foot highrise off Fourth and Guadalupe streets. The project is expected to cost $500 million.

Though construction hasn’t officially started, a building permit was issued in October 2021, according to city records. Construction on the tower, dubbed The Republic, will begin later this quarter.

(NeoScape)

Lincoln’s co-developer on the project is Phoenix Property Company, co-founded by Blake Pogue and Jason Runnels. Harvey-Cleary Builders is the general contractor, HKS is the architect of record and the sustainability consultant and TBG Partners is the landscape architect.

Kilroy Realty, a major player on the West Coast, is taking over development of a tower in North Austin near the Q2 Stadium, home to the Austin FC soccer team.

The Los Angeles-based real estate firm agreed to buy a 2.9-acre development site — Capella Capital Partners already planned to turn it into an office building called Arena Tower — in a $40 million off-market deal. Kilroy is now advancing the project.

(Arena Tower Austin)

The building will be 19 floors spanning 493,000 square feet. Floor plates will be about 48,000 square feet, according to commercial brokerage firm Aquila’s marketing materials.

Texas’ tallest tower will rise in Austin, which will also be the Texas capital’s first “supertall” tower.

A 2.3-million-square-foot, mixed-use building called 98 Red River is underway at the corner of East Cesar Chavez and Red River streets. Plans for the more than 70-story building will include a 240-unit hotel, 700,000 square feet of office space, 332 residences and 43,000 square feet of retail.