Tishman Speyer rakes in $200M on Texas office deal

Boston-based company buys Foundry complex in East Austin

Cushman & Wakefield's Mike McDonald and Jonathan Napper; The Foundry, Austin (Connect CRE, Tishman Speyer)
Cushman & Wakefield's Mike McDonald and Jonathan Napper; The Foundry, Austin (Connect CRE, Tishman Speyer)

Tishman Speyer has sold the first property it ever bought in Texas’ capital city, the company announced Wednesday.

Beacon Capital Partners picked up the 240,000-square-foot Foundry, a two-building office development in East Austin, for $200 million, according to a person familiar with the deal.

Mike McDonald and Jonathan Napper of Cushman & Wakefield represented Tishman Speyer in the transaction.

The purchase price works out to about $833 per square foot. AEW Capital Management bought a 330,000-square-foot East Austin office complex in June for $152 million — about $460 per square foot — according to Travis County records. Office properties in the Austin metro area traded for an average of $287 per square foot in the first five months of 2022, CommercialEdge reported.

Average full-service rent for Class A office East Austin office space for the second quarter of 2022 was $61 per square foot, according to a study by commercial real estate firm Aquila.

Austin’s Cielo Property Group developed the buildings — Foundry I at 310 Comal Street and Foundry II at 1600 East Fourth Street — between 2018 and 2021. TIshman Speyer purchased the complex for $150 million last year, closing on Foundry I in January 2021 and Foundry II when the building was completed in July 2021.

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Prior to that deal’s final closing, Tishman Speyer, Cielo Property Group and CBRE brought Foundry II to 99 percent occupied with 128,195 square feet of new leasing. The campus is now 96 percent leased, according to Tishman Speyer.

DPR Construction and Perkins + Will are Foundry tenants, and Cloudflare leased 128,000 square feet at Foundry II.

Tishman Speyer’s purchase marked its entry into the Austin market. The company has since taken a deeper dive into local real estate waters. It’s developing 321 West, slated to be the city’s tallest tower, and is looking at buying and redeveloping a property on retail and entertainment hot spot South Congress Avenue.

The initial Foundry purchase was part of the company’s move to focus on “technology-rich markets defined by strong population growth, innovative companies and exceptional academic institutions,” said Tishman Speyer’s Nooshin Felsenthal.

The Foundry’s high occupancy and sale price could indicate continued faith in the area’s office real estate market. On the other hand, the Austin sale, along with the company’s recent transaction in an even more tech-rich environment could indicate that Tishman Speyer, at least, is more interested in turning office properties than it is in buying and holding. After buying Silicon Valley’s Sunnyvale campus and leasing it to Meta in 2021, it sold the property in June 2022.

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