Sam Zell’s Firm Lists Austin Office Buildings Amid Liquidation

As Sam Zell’s Equity Commonwealth winds down operations, its two remaining Austin properties are on the market.

The company is looking to sell Bridgepoint Square at 6200 Bridge Point Parkway and Capitol Tower at 206 East 9th Street, it said in its earnings call Wednesday. The company had considered other investments, but ultimately decided to liquidate its portfolio amid calls from investors, president and CEO David Helfand said in a call with analysts. The firm had stockpiled $2.2 billion.

While it determined selling is the best strategy, the company still faces a stiff market in which few buyers want older offices, and even fewer can get the financing to buy them.

“It is important to understand that current market conditions for selling office assets are uniquely challenging. Transaction volume for the first six months of the year was the lowest since 2010 and down 75 percent from pre-Covid levels,” Helfand said.

He added that EQC is “hopeful” it can get enough for the buildings to exceed their book value. But the fact that it is not a certainty highlights the difficulty facing office owners in Austin writ large.

EQC’s portfolio has already been significantly whittled down. Of its two other properties, in Denver and Washington, D.C., one is already on the market, and the other is expected to list in September.

While the two Austin buildings have been on the market since May, Helfand said the company is still trying to gauge buyer interest in the properties.

“It’s just taking longer,” he said. “Given the makeup of bidders and interested parties in the current environment as opposed to the past, it’s harder to predict the timing and execution.”

Bridgepoint Square is a five-building, 440,000-square-foot property near Pennybacker Bridge in west Austin. It sits on nearly 28 acres, with views of the Colorado River and Austin Country Club. However, it is just 53 percent leased and was built in the 1990s.

While Bridgepoint Square is competing in Austin’s suburban office market, Capitol Tower stands against the slew of glass towers recently built downtown. The property, just a few blocks from the state Capitol building, is 69 percent leased. The 175,100-square-foot building was constructed in 1984 but renovated in 2018. JLL has both listings.

Zell, who died last May, was one of real estate’s boldest contrarian investors, earning the nickname “the grave dancer” for his facility with distressed debt.