PayPal Leases 90K SF in Austin’s Domain

UPDATED 10/9/24 at 5:13pm

Some of the biggest names in tech are making moves in the Austin office market.

Google is looking to drop space, PayPal added, and Amazon is finally moving in, according to a third-quarter report from JLL. The moves come as Austin’s office market recovers from a brutal two years of slowed leasing and excessive availability.

Google

While word is mum on how much space Google aims to drop of the 800,000 square feet it leased at Block 185, located at 601 West 2nd Street. However, it has placed some space at the iconic, sail-shaped tower back on the market, according to the report. Some 90,000 square feet at the building became available for sublease last quarter. Google leased the entire building before it was finished in 2021, but has yet to move in.

Austin’s office market has been watching for signs of life at the tower, developed by Trammell Crow and MSD Capital, ever since. In the meantime, Google has shed space in other cities.

One market insider said he didn’t see the block being officially marketed anywhere, though that doesn’t guarantee it is not available. Google did not respond to a request for comment.

Asked for clarification, a JLL spokesperson stood by the report. “We can confirm the information in the report is accurate, there was space at Block 185 in the CBD marketed for sublease in Q3. JLL is not involved with that property so we cannot comment further,” the spokesperson said.

A representative for CBRE, which owns Trammell Crow, was similarly brief. “I don’t know the context, but the space at Block 185 was not included in our report,” she said of the listing.

PayPal

90,000 here, 90,000 there.

The financial technology company added 91,000 square feet at Domain 2, at 10025 Alterra Parkway. PayPal already occupies 60,000 square feet at the tower, owned by Stonelake Capital Partners. It accounts for almost half of the 330,000-square-foot tower’s space.

In 2022, PayPal consolidated its 500 Austin employees into the top two floors of the 24-story building. That deal has a 10-year term.

Amazon

Jeff Bezos’ everything store couldn’t secure two-day delivery for its new digs in the Domain, but the office has finally arrived.

Amazon finished its buildout at Domain 9, at 11624 Burnet Road, the 332,900-square-foot space it leased in 2021. Last month, CEO Andy Jassy announced the company would begin requiring its employees to come into the office five days per week.

In Austin, tech companies have long been some of the market’s biggest fish, gobbling up the millions of square feet developers have delivered in the past decade. After the pandemic, though, many switched to hybrid work, leaving a massive hole downtown.

Leasing demand broke 1.5 million square feet last quarter for the first time since the middle of 2022, although the single largest lease of the quarter was actually a downsize. IBM announced in September that it would take over 320,000 square feet at Domain 12 that was vacated by Meta. While that is a huge lease, IBM had previously agreed to take 500,000 square feet at a 14-story building Hines is developing elsewhere in the Domain. That deal was terminated as part of the Domain 12 lease.

Some 350,000 square feet of office space will come online before the year’s end, and half of it is preleased.

UPDATE: After publication, a JLL spokesperson confirmed the Google space is still available for sublease.