Tech Goes Vertical
While other major metros are just now seeing tech move into downtown towers, Austin was the trendsetter (once again). Tech has been going vertical here for a few years, says ECR's Patrick Ley (here volunteering at the Ronald McDonald House of Austin with colleague, Jason Steinberg), and that's not just because there aren't many warehouses to revamp there. He says it's all about lifestyle—tech companies have a reputation for having a good time and offering amenities. A mixed-use environment is a great way to deliver that, which has many tech users flocking to Austin's CBD. The average tech employee is 27, and can't resist the ability to meander downstairs to happy hour and then walk home. (Why offer in-house amenities when you can let the city offer them for you?)
Many of the big names already office in Austin high-rises (Facebook's been in the one pictured here since 2010), and most of those are expanding. Google just leased two floors in its second local high-rise, and is rumored to be eyeing up to 100k SF Downtown. Dropbox is completely revamping a building Downtown to expand from 30 to 200 employees. And the names keep rolling in, Patrick says. It's rumored WeWork is searching for 50k SF, and MapMy Fitness has supposedly inked 35k SF in the Seaholm Power Plant redevelopment. And Mike says the vertical trend works here because its casual atmosphere means the creative class and professional services can coexist quite nicely. (Lawyers here might not wear flip flops, but they also don't wear ties.)
Parkway Properties, which owns half of the CBD's Class-A office product, already hosts eight floors of creative class in its 300 West 6th tower. We snapped directors of leasing Andy Smith and Mark Miller bookending managing director Mike Fransen in their own creative office in Austin's iconic Frost Bank Tower. It's less than half the size of the previous leasing/management office, with exposed ceilings and retro lighting that tech companies often favor to show them they can be funky even in a high-rise.
In the same vein, Parkway is revamping its retail, partnering with Live Oak with an emphasis on quirky local retailers to better serve the new wave of creative office users. (Forget Dunkin Donuts—Frost has a Houndstooth Coffee with a cult following.) The trio tells us going into institutional property has one significant draw: portfolio landlords like Parkway can offer growth opportunities they can't find in a warehouse. That's a perk for tech companies in their early days of explosive growth.