A design and technology firm focused on augmented and virtual reality is bucking trends in a market where office construction has nearly ground to a halt.
Austin-based Kaalo is planning an office campus development in West Austin, the Austin Business Journal reported. It’s a rare ground-up office project when many developers are backing away from the asset class.
The company filed plans to build Kaalo Studio, a 37,500-square-foot office building at 7901 Ranch-to-Market Road 2222, with an estimated construction cost of $34.4 million. The reported cost is $918 per square foot.
The two-story building will include a below-grade parking garage, a fitness center and several live-work units designed for short-term employee use, the filing said.
The site plan has already been approved and is valid through next March.
The development, spanning 5 acres, will also feature an amphitheater, a commercial kitchen and 4 acres of greenspace, according to the project’s website. Partners on the project include Cushing Terrell as architect, MWM Design Group as civil engineer and Swinerton as general contractor. DencityWorks is also listed as contributing architectural design.
Austin’s once-booming office pipeline is nearing a complete cooldown.
Only 264,000 square feet of office space has been delivered citywide so far this year, and nearly all of the 2 million square feet under construction is slated to wrap by year-end, according to CBRE. Once Lincoln Property Company’s Waterline tower downtown is completed, Kaalo Studio could be one of the city’s few office buildings in development.
As elevated vacancy rates and interest rates weigh on office investment, several Austin developers have either delayed or dropped office components from planned mixed-use projects, opting to prioritize retail or residential instead.
— Judah Duke