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Real Estate Bisnow
The largest commercial real estate publication in the United States.
   
January 12, 2012 
 
 
I-35: DRIVING YOU NUTS

Georgetown is ready for the future, with a growing, skilled work force, forward-thinking infrastructure and a beautiful community. Find out more here.

 
With 110,000 cars a day and 75% of the NAFTA truck traffic driving through Austin on I-35, the heavy traffic is both a blessing and a curse, says Plum Creek director of operations Peter French. He joins a star-studded panel to discuss real estate development, government incentives, and congestion at Bisnow’s Future of the I-35 Corridor event at the Omni Austin Hotel Downtown on Tuesday. You can still save a spot.
 
Austin traffic

Peter tells us the corridor creates tremendous opportunities as a connector for San Antonio as our cities grow tighter. The challenge and opportunity resulting from the traffic is a primary driver (no pun intended) for the creation of mixed-use projects where people can live, work, learn, and play in one place, Peter says. Creating developments where people have the option of commuting is more sustainable than places where you are required to commute by car. He knows: he lives in San Antonio and makes the drive to Austin a few times a week, so he's familiar with what happens when a tractor-trailer jackknifes. (Here's a simulation: Go to your favorite chair, stare straight ahead, then take a nap.) There aren’t many alternative routes until SH 30 finds its way down to Seguin.

Peter French and family
And that’s where the Lone Star commuter rail line comes into play, says Peter, here with wife, Caroline, daughters Amelia and Laura and son, Loomis. ("Eenie Meenie Miney Mo" is wrong; it's actually "catch your brother by his toe." Tigers are probably endangered anyway.) It can connect all these centers and make the Austin-San Antonio area competitive with other super regions, as well as help business people get between the cities and the airport. Additionally, he says, there are more than 100,000 students living within one mile of I-35 and that rail line, which will connect the students to jobs along the corridor and to their campuses. Hear more from Peter at Bisnow’s Future of the I-35 Corridor event (you can still register here in case you forgot).

Bisnow
A LOOK BACK @ 2011
 
INDUSTRIAL STRENGTH
 
Mark Milstead
With new Q4 leases and expansions generating about 466k SF of positive net absorption, the year-end gain landed above 1.1M SF, numbers not seen since '07, says NAI REOC Austin VP of industrial services Mark Milstead. The citywide vacancy rate gradually tightened to 17.8% at year’s end, compared to 19% last quarter and 20.3% a year ago. Thank a slowly improving national outlook, stable local economy, and spec projects kept in check. Looking ahead, spec construction remains limited, although several proposed projects wait for demand to trigger development, Mark says. Meantime, horizontal movement may characterize the majority of leasing activity because of stiff competition amongst landlords.
Tech Ridge 4.2

Among the 24.3M SF of warehouse facilities in the market, the Northeast submarket led the way with US Farathane Corp's lease of almost 243k SF at Tech Ridge 4.2 at 820 W Howard (above). The Michigan plastic auto parts supplier is expected to create more than 220 jobs over the next three years. This single new lease accounted for 69% of the total absorption generated within the warehouse market this quarter. Mark says aside from the US Farathane lease, expansions by existing companies outperformed new leases. Notable expansions: Hisco for 55k SF at Colorado Crossing in the Southeast; Worldwide Technologies for 71k SF at Vista Business Park; CV Linens for almost 45k SF at 2300 Grand Ave; and TekSavers for

24k SF at Lincoln Vista in the North submarket.
HISTORIC PRIVATE-PUBLIC PARTNERSHIP
 
PID map
Two large, mixed-use projects slated for the SH 130 corridor received about $40M in municipal bond financing for infrastructure, marking the first time that the City of Austin has used the new financing tool. The two projects, developed by Taurus of Texas Holdings, are Whisper Valley (1 on the map) and Indian Hills (marked 2). Project features: 2,300 acres; 3.8M SF of commercial space; 8,600 affordable housing units; and a total value likely topping $2B at build-out. Bury+Partners (project engineer) chief development officer Jim Knight says a public improvement district, known as a PID, will be a very popular way of getting projects off the ground in the years to come. Last year, the Texas Legislature cleared the way for cities to sell bonds to fund infrastructure improvements in areas approved as PIDs.
 
Jim Knight
Jim (after a Bisnow Austin event last year) says construction on infrastructure will start early this year and take roughly two years to complete. Taurus is selecting various developers for the components of each project. The first homes are anticipated to start construction in late '13 and early '14. For the 2,063-acre Whisper Valley PID, the bonds will fund: a two-mile extension of Braker Lane; five miles of off-site water lines; and a wastewater treatment plant and lines. For the 239-acre Indian Hills PID, the bonds will fund a half-mile extension of Decker Lake Road, off-site water lines, and sanitary sewer lines. Metcalfe, Wolff, Stuart & Williams partners Steve Metcalfe and Talley Williams have been working on the legalities since '06, while the financing consultant is DPFG’s Jon Snyder.
 
SALES SEE RED
 
Mike Kennedy and Carl Condon
Crimson Real Estate Fund and co-investor USAA Real Estate Opportunity Fund bought the 204k SF Aspen Lake One building in March and six months later added the adjacent 174k SF Tower of the Hills. Austin-based Commercial Texas advised Crimson on the second purchase, and prez Mike Kennedy (left, with colleague Carl Condon) tells us the Crimson deals reflect what institutional investors from across the country are finding attractive about the Austin market: properties with good odds of making a turnaround. That means underlying factors like a solid structure, stellar location, proximity to reasonably-priced housing, and the general desirability of the immediate area, Mike says.
 
EMPTY TO FULL
 
7000 W William Cannon

From vacant to fully occupied: ArthroCare Corp consolidated its California operations to 136k SF for 10 years at 7000 W William Cannon in the Southwest submarket (we told you all about that last week), making it the largest office lease of the year. Commercial Texas repped the tenant in both the consolidation and expansion (as well as the original '05 relocation), while Stream Realty Partners repped landlord CarrAmerica Lantana.

 
CAN 2012 = 2011'S RECORD YEAR?
 
Troy Holme
While 2011 was the best year CBRE office/landlord whiz Troy Holme has seen since '07, he’s going out on a limb to predict a healthy '12 with similar numbers. Last year saw some 5M SF of deals, mostly with larger institutional landlords; he’s still seeing positive signs (and it’s not just the Sprite talking). The downside for 2012: it’s an election year, so things will likely slow down as it gets closer to the November elections. Regardless of the outcome, Troy’s vote is for soccer. He plays in an indoor men’s league and his two children, ages 8 and 10, play as well.
 
Our Austin reporter, Tonie Auer, is heading to the UT-Baylor women's basketball game on Sunday to cheer on her No. 1 Lady Bears. Are you going? Email tonie@bisnow.com.
 
 
 
 
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Knockout Night AUS
 
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