Sunk cost: Kilroy now into paused North Austin office tower for $70M

Kilroy Realty continues to run up the tab for its stalled office tower next to Q2 Stadium in North Austin.

Los Angeles-based Kilroy halted construction of Stadium Tower, at 10615 Burnet Road, in October 2022 due to a struggling office sector and broader economic concerns, leaving a giant hole in the ground. 

By the end of 2023, the paused project had cost the developer $70 million, up from $66 million through last June, the Austin Business Journal reported, citing Kilroy’s annual earnings report. 

When the development came to a halt in 2022, Kilroy had spent nearly $55 million on the project. Since then, it’s cost the developer about $715,000 per month to keep the site as-is.

The company will resume construction when “the economy gives us more confidence or we pre-lease a substantial portion of the project,” Kilroy chairman John Kilroy told investors on an Oct. 26 earnings call. Still, a relative restart date has not been determined.

Kilroy bought the 2.9-acre site for $40 million in March 2022 from Austin-based Capella Partners. Stadium Tower, which is still listed as a future development on Kilroy’s website, is expected to span 493,000 square feet, with terraces on every floor and ground-level retail space. It’s possible that plans have changed since the project has been on pause, though.

Kilroy also owns the 36-story, 730,000-square-foot Indeed Tower at 200 West Sixth Street, which it paid $580 million for in 2021. At year end, the downtown tower was 78 percent leased, with Indeed occupying 42 percent of it, the outlet reported. However, the job search company has put 10 floors of the building on the sublease market.

—Quinn Donoghue 

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Kilroy Realty buying Indeed Tower in Austin for $580M