Austin doesn’t have the population just yet to be a Tier 1 market, but it’s still on investors' radars—especially Californians. (Even LA's Kobe Bryant wishes he was like Texas.)
St. Croix Capital Realty Advisors CEO Ken Satterlee (pictured at a Bisnow event) says there’s a comfort level and association that Californians feel here because the city resembles—at least culturally—California cities. Earlier this month, St. Croix closed $60M in transactions for a California-based investor and anticipates wrapping up another $40M in deals for the same investor in the next 90 days.
The transactions are part of a 1031 exchange in which the buyer disposed of some Southern California properties and bought two flex buildings totaling 50k SF at Promontory Point (2621 Ridgepoint Dr in Austin, pictured) and the 115k SF University Business Center five-building flex project (3019 Alvin Devane Blvd in Austin) and a plot of land in Big Spring with plans to build a 35k SF office building. Ken tells us the buyer has other assets in Texas and is exiting his California properties, largely because of the choking business environment in California.
He anticipates even more investment transactions in the Austin area. Investors will want to complete a few more deals before the cycle changes, he says. Additionally, all signs point to the Fed raising interest rates this year, likely in the fall. So, Ken says, buyers will want to hurry to make deals and beat the clock. Even though the interest rate hikes will be almost imperceptible, there will likely be a lull in transactions for a few months after the increases. When he’s not making deals, Ken plays on two men’s baseball teams (about 50 games each year).
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