Austin's Top 10 Real Estate Stories For 2017
The year in real estate in Austin included plenty of firsts and a lot of cliffhangers to follow into 2018, from the opening of Oracle's Lakeshore campus to the master plan to redevelop the former Brackenridge Hospital tract.
Central Health Names Brackenridge Campus Master Developer
Central Health named Wexford to redevelop the 14-acre downtown Brackenridge campus. The six blocks, on a high-profile entry into Downtown Austin, likely will be reimagined as a life sciences campus that will complement the new Dell Seton Medical Center.
Demolition of the campus could begin as early as next spring. Construction on the campus is not expected to begin for another two to three years. Wexford has developed similar campuses in Philadelphia, Baltimore and Winston-Salem.
Major League Soccer Fever Grips Austin
The possibility of the Columbus Crew relocating to Austin spurred MLS soccer fever in Austin, with the Austin City Council scrambling to identify city-owned properties for a 20,000-seat stadium.
Anthony Precourt, owner of the Columbus Crew, has deemed a site on Butler Shores as "virtually perfect." The 15-acre site sits on the south shore of Lady Bird Lake, east of Zilker Park and west of Lamar Boulevard. The land abuts Zach Scott Theater.
State Officials Nix Idea Of Managed Lanes To Expand Interstate 35
The Texas Transportation Commission, at the behest of Gov. Greg Abbott and Lt. Gov. Dan Patrick, rejected a proposed $8.1B expansion of Interstate 35 through Austin that included managed lanes.
Local officials such as Sen. Kirk Watson called the use of managed lanes a necessary tool to fund large-scale transportation projects.
"Unless our leaders are willing to find the new money needed to invest in transportation infrastructure, all they are offering Texans is lip service," Watson said at the time. "Talk is cheap. Roads are not."
CodeNEXT Continues To Embroil City, Neighborhood Leaders
Austin's real estate community has remained on the sidelines in the continuing saga that is CodeNEXT: the rewrite of the land use code. The code, which most agree is complex and cumbersome, was last rewritten in 1984, an era that predates many of the burgeoning city's negotiating tools around land use entitlements such as Central Business District zoning and planned unit developments.
City leaders have struggled to get their arms around the 1,000+ pages of land use code in community discussions. For now, affordability and displacement have been the key issues raised by opponents to CodeNEXT. A third draft of CodeNEXT is due in February.
Domain And Domain Northside Rise As Second Downtown
Domain and Domain Northside now are widely acknowledged as being Austin's "second Downtown." Domain Northside, in particular, has succeeded as a retail and entertainment district, with more than 100 retailers.
Endeavor Real Estate has announced three more Class-A office towers, known as Domain 9, Domain 10 and Domain 12. The three towers are expected to deliver 1M SF of new office space.
"The Domain is a fascinating development," CoStar market economist Sam Tenenbaum said. "The third phase, Rock Rose, will probably have the biggest effect in turning it into an alternate Downtown."
That is because many local retailers now have a presence in The Domain or Domain Northside, Tenenbaum said, allowing residents to have their favorite local haunts at a rent more affordable than Downtown Austin.
Oracle Campus Lands On The East Side
Oracle broke ground on its 25-acre campus on East Riverside Drive at the end of 2016, to be delivered Q1 2018. This will be the first major headquarters on the near East Side, delivering 550K SF of office space. The $210M campus is being built by Ryan Cos.
What makes the Oracle construction more significant is the rumors of a larger district rising up around the Oracle, known as Project Catalyst. Four student housing projects, owned by Los Angeles-based Nimes Capital, were rumored to be the location. Oracle already has purchased the nearby upscale Azul apartments. And local residents say The Element has been picked up to be razed for Oracle housing. The only deal on the books, however, is a sale to the Presidium Group in August.
Apartment Rents Begin To Level Off in Austin
Apartment prices, which have been on the rise over the last year, appeared to be leveling off in recent months after year-over-year growth.
"Supply and demand is evening out," Abodo's Sam Radbil said. "Five years ago, a landlord could have asked $1,600, and the renter would take it. They had no choice. All the leverage was with the landlord. There's not so much of that anymore."
December data shows Austin is the 26th most expensive rental market in the country. A median one-bedroom apartment rents at $1,168. The market has had four months of consecutive, if slight, decreases, according to Adobo.
Schulz Block Plan Signals Beginning of South Central Development
Stream Realty is ready to build an office tower in the city's proposed South Central Waterfront District, part of a large, high-intensity, mixed-use vision for the south shores of Lady Bird Lake.
The South Central Waterfront District, an extension of the city's Town Lake Corridor Study, would incorporate 118 acres on the lake's south shore, including the Austin American Statesman site, which is up for sale.
The district is east of Auditorium Shores and north of Riverside Drive, but also incorporates some of the existing commercial development along Barton Springs.
City Council Stalls On Convention Center Expansion
Mayor Steve Adler's Downtown puzzle concept — using hotel occupancy taxes to tackle both homelessness and the convention center expansion — did not catch fire. This was despite months of effort from a task force that produced a broad master plan.
Instead, the council sent the topic off for further study. Downtown continues to add hotel rooms in anticipation of larger conventions: first, the Fairmont Austin, which will be the city's largest hotel and open in Q1 2018, and second, a Marriott on Cesar Chavez, which will be smaller than the sister JW Marriott property, but attached to the convention center.
Developers Still Bullish On Downtown Market
The trend in Downtown permits may be slower, but projects in the pipeline still suggest that Downtown will be flush with activity during 2018.
The Downtown Austin Alliance's Emerging Projects map indicates a number of projects that will be delivered to market next year: Shoal Creek Walk on Sixth and Bowie; 70 Rainey on Rainey Street; construction of a 28-story boutique hotel at 416 Congress; The Independent resident tower, at 58 stories, in Seaholm; and Austin Proper, next door to The Independent and across the street from 500 West 2nd.