City of Austin Spends $42 Million Buying More Real Estate

The city of Austin is adding another massive real estate deal to its shopping spree, locking in a $41.1 million purchase of a massive tract in East Austin.

The City Council approved the 143-acre buy at 6500 Tracor Lane this week, greenlighting its ninth major property acquisition since December, the Austin Business Journal reported. The site, owned by Karlin Real Estate, comes with more than 2 million square feet of development, most of it surface parking. Roughly 435,000 square feet is office, warehouse and storage space spread across 11 buildings.

The land is split into three parcels flanking Highway 183, with the bulk of the tract to the east. City officials plan to use it for Austin Water and other municipal operations. The deal continues a run of big-ticket buys by the city, which has been scooping up office and industrial properties at a rapid clip.

In the past nine months, Austin has closed on eight other sites, including the $108 million former Southeast Austin campus of Tokyo Electron and a 207,000-square-foot office building at 3300 North I-35 for $26.2 million. In total, the city has tacked on more than a million square feet of office space along with industrial and special-use properties.

The Tracor Lane purchase highlights how aggressively Austin is stockpiling real estate while private developers navigate a choppy capital markets environment. Rising borrowing costs have slowed investment sales across the country, but municipalities with cash on hand are in a stronger position to move on large tracts.

Karlin, the seller, picked up the property from BAE Systems in 2020, part of a wave of institutional money that bet big on Austin’s growth. Now the city itself is stepping in as one of the market’s most active buyers.

For landowners looking to join the trend, the city’s Financial Services Department has said it welcomes pitches from owners of sites with potential municipal uses. That could keep Austin a steady, if unusual, player in the region’s transaction pipeline.

— Eric Weilbacher