Starwood Cashes out of Austin Office Asset and More Texas News

Texas’ office market is still adjusting to post-pandemic realities, as illustrated by the plays a few heavy hitters made this week.

Starwood is unloading a massive Austin office portfolio it acquired when the market was up, and Brookfield Properties handed back Houston’s largest office complex to its lenders.

Miami Beach, Florida-based Starwood sold a 50-percent leased office building, the Park on Barton Creek, at 3711 South MoPac Expressway in Austin. Los Angeles-based BH Partners was the buyer. The asking price for the 205,000-square-foot building wasn’t disclosed. It’s the first to sell of the four-property, 709,000-square-foot portfolio that Starwood listed in the Texas capital last summer.

Starwood picked up the Park on Barton Creek along with Cielo Center at 1250 Capital of Texas Highway, the Crossings at Lakeline at 11001 Lakeline Boulevard and two other properties, for $333 million in 2017. Since then, developers have flooded Austin with office deliveries, and the vacancy rate has risen to a record 25 percent.

Meanwhile, Brookfield handed back the keys to the 4.6 million-square-foot Houston Center after buying it for $875 million ($190 per square foot) in 2017.

Pension fund AustralianSuper and Dallas-based Stream Realty Partners took control of the downtown campus — at 1221 McKinney Street, 909 Fannin Street, 1301 McKinney Street and 1331 Lamar Street — after loaning Brookfield $219 million when it bought the property.

The complex lost two major tenants — LyondellBasell exited 358,000 square feet in 2023, and Norton Rose Fulbright left 350,000 square feet last year. Stream is working to backfill those spaces.

Here’s what else happened in Texas real estate this week.

Two developers are on tap to receive subsidies from the city of Fort Worth for office-to-residential conversions. Chicago-based 3L Real Estate and local developer O-SDA Industries secured a combined $7.35 million in reimbursements from the city’s Tax Increment Finance Zone No. 8, clearing the way for two separate adaptive reuse projects that will add 430 units to the urban core.

Also in Fort Worth, one of the developers behind a $1 billion expansion of the Stockyards has dropped out of the project amid a lawsuit. Craig Cavileer, who helped develop the Mule Alley shopping district and the Hotel Drover, is being sued by his former firm, California-based Majestic Realty Company. Majestic sued Cavileer in December, alleging he failed to repay loans and breached his contract, seeking nearly $76 million plus interest.

Elon Musk’s SpaceX is grabbing more power in Texas. Today’s election will decide whether Starbase, the area around SpaceX near Boca Chica in Cameron County, will be incorporated as a company town. Incorporation is likely, since there are only 270 eligible voters deciding, and 90 percent of them are SpaceX employees and their family members.

Meanwhile, Texas lawmakers want to give SpaceX the power to close public beaches in South Texas.

Elsewhere in real estate politics, Central Texas’ Hays County is trying to stop controversial “traveling” housing finance corporations, which are intended to fund affordable housing, from bleeding $230 million from its coffers. The Houston Housing Authority has stopped accepting applications tied to the similar public facility corporations, saying they don’t actually provide affordable housing as intended.

Homebuilder Lennar received approval for a public improvement district, which has the power to issue bonds backed by property taxes, as part of its plan for a 770-home subdivision on the Southwest Side of San Antonio. The bonds would fund infrastructure like roads and storm drainage.

Austin’s luxury market is showing signs of a hot spring season. A condo unit at the Four Seasons Residences sold last week after it was listed for $6.75 million.

A couple of ultra-luxury listings turned heads this week. The JL Bar Ranch, near Fredericksburg in Central Texas, was listed for sale at an undisclosed price. The 4,000-acre resort has a private airport and offers trophy game hunting and ranch experiences to well-heeled guests. And Dallas’ Rachofsky House, home to the art collection of Howard and Cindy Rachofsky, is for sale with an undisclosed price. The Preston Hollow home was the setting for the Rachofskys’ exclusive Two x Two gala, which raised $120 million over 25 years for the Dallas Museum of Art and AIDS research. The Rachofskys held their final gala last year and are donating their art collection to the DMA.

Dallas-based Cawley Partners is behind one of the largest land deals in North Texas in recent memory. The firm bought the 5,200-acre South Creek Ranch near Ferris, about 20 miles south of downtown Dallas. Cawley plans to develop industrial real estate, including data centers, first before moving on to residential projects.

A couple of notable developments are getting off the ground: Trammell Crow Company is starting construction on 395 multifamily units at Mockingbird Station, near Southern Methodist University in Dallas. And Austin-based Parkspring is making its debut in Waco with 372 apartment units near an entertainment-focused retail center called Cottonwood Creek.

—Rachel Stone