AustinTowers Downtown Condo Blog

Exclusive: 30 Month Milago Sales Analysis

editor@austintowers.net — 2010-09-06T19:21:42-05:00

Over the last 30 months, 344 downtown Austin condos sales have been recorded on the MLS. Of these sales, an amazing 52 have been in the Milago -- more sales than any other downtown Austin condo project (360 is #2). Of course, MLS statistics exclude sales that aren't listed on MLS -- including almost all sales by the developer. As a result, the MLS statistics provide a clear picture of resale units but not initial sales.

When looking at resale volumes and quantities, the 52 Milago sales provide an interesting picture of the downtown Austin condo market over the 30 months. During this period, Milago sales volumes have decelerated from 2.1 sales per month to 1.9 sales per month and prices have dropped from $322 / SF to $266 / SF. The price drop occurred almost entirely in 2009. Fortunately for owners, prices have been relatively stable going into 2010.

Milago Sales Analysis: Sales Velocity

Year

# Sold

Units / Month

Avg SF

2008

2.1

1041

Read the full analysis here:

Downtown Apartment Market Softening

editor@austintowers.net — 2010-08-27T12:53:08-05:00

Over the next year, the central Austin rental apartment vacancy rate is expected to jump significantly from 3.6 percent to 9.4 percent.

This negative trend is in stark contrast to what is happening in the rest of the City, where employment growth and migration are reversing the current apartment supply glut. According to market data from Marcus & Millichap Real Estate Investment Brokerage, citywide apartment vacancy rates are expected to drop 9% this year. In hot areas of the city -- such as the south central area near South Congress Ave, vacancy is expected to drop significantly as more units are absorbed.

Across the city, rents dropped 3% last year as more than 10,000 new units hit the market. This year, rents are expected to increase slightly (2.4%) as only 2,860 new units are expected to hit the market.

In downtown Austin where rents are highest, tight spending is limiting absorption of new units. Central Austin apartment rents average $1,014 -- significantly higher than the citywide average of $864.

According to the firm, "the city is forecast to add 19,100 jobs this year, prompting a rush of new residents and a rise in demand for residential rentals. At the same time, the apartment development pipeline has drastically thinned out, with 2,860 new units expected this year, down from 10,340 in 2009."

With a strong supply of downtown apartments, potential renters will be able to negotiate better rents and more attractive incentives, especially for higher-end units.

Exclusive: Summer Downtown Condo Sales Stay Strong

editor@austintowers.net — 2010-08-23T22:48:05-05:00

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for June and July, 2010. With the new results loaded, we are pleased to announce that year-over-year sales volumes have increased for the 13th month in a row. In addition, more expensive units are starting to sell, prices are rising, and average days on market is dropping. The downtown Austin condo market continues to gain strength as it enters it's second year of growth and recovery.

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Jun-09	8	$431,738	$292	1,400	2000	87%	117
Jun-10	18	$387,241	$324	1,160	1999	95%	100
Change	125%	-10%	11%	-17%	-1.00	9%	-15%

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Jul-09	12	$265,450	$265	1,021	1987	97%	88
Jul-10	14	$338,192	$298	1,121	1999	96%	74
Change	17%	27%	12%	10%	12.00	-1%	-16%

During June and July -- key summer selling months -- 32 units worth a total of $11.7 million were transacted on the MLS: 12 more than during the same period in 2009. In addition

Swim! Pictures of Downtown Condo Pools

editor@austintowers.net — 2010-08-15T23:30:37-05:00

Ten years ago, if you wanted to live downtown in Austin in a place with a nice pool, your options were slim. Now, most of the new projects feature resort-like pools which are key selling points for the buildings. In the future, nice pools will likely be standard on new Austin condo buildings. As the new generation of resort-like projects comes to fruition, it's possible that units in buildings without pools with sell at a discount when compared to units in buildings with this key amenity.

While resort-like pools are to be expected on high-end projects like the Four Seasons Residences, the Austonian, and the W, the pool scene is equally as important at more reasonable projects like 360 and Spring.

Here are the pictures of the new downtown Austin condo pools:

Spring

See more cool pools!

New Profile Posted: 904 West

editor@austintowers.net — 2010-08-06T22:37:21-05:00

We've updated the AustinTowers downtown Austin new condo guide to include 904 West, a new $8 million low rise project on 9th and West near Whole Foods and the Nokonah.

The 33 unit project is a green conversion of solidly built commercial structure. The new condo project is being constructed in phases with the first 7 units complete. Prices start at $191,000 and rise to $326,000. We've already added the project to our listings page and a full profile is here.

While the project features an attractive modern design and a quiet location, the most interesting features are the flexible floor plans (some include live/work spaces) and the green features. In general, condo projects utilize significantly less energy than equivalent single family homes. This project should utilize less energy than almost any condo project. Some of the energy efficient features include:

- Dedicated solar panels for each unit
- 100% LED lighting
- Tankless water heaters
- Spray foam insulation
- Rainwater collection
- Double-paned, low-energy glass and windows

Already, the project has been recognized for these attributes with the Austin Business Journal Going Green Award [Winner: Green Building - Residential] and the Envision Central Texas Community Stewardship Awards [2010 2nd Place Finalist].

While the building is only two stories tall it does have an elevator and a swimming pool. So far, one quarter of the available units have been sold.

Here are some additional details from the Statesman:

"The city and Austin Energy are working toward a goal of having 65 percent of new single-family construction be capable of zero net energy consumption by 2015, meaning the homes potentially could generate as much electricity as they consume, with solar panels and advanced energy-efficiency features.

The 904 West project is attracting interest from professionals, empty-nesters and second-home owners who want to live downtown but in a neighborhood setting, Clouse said.

Although zoning rules would have allowed a much taller project, "we didn't want to be a 40-story beacon in the middle of this neighborhood," Clouse said. The surrounding neighborhood mostly has two-story houses used as apartments and offices.

"Instead of being involved with sprawl development, we focused on sustainable development," said Clouse, who also owns Fortis Realty Services, which was involved in designing the first phase of the Bel Air condominium project on South Congress Avenue.

The solar systems cost a total of $515,592, Cordova said. The city returned $365,107, about 71 percent of the cost, to the developers as rebates, he said.

The solar installations will generate an estimated 113,839 kilowatt-hours per year, Cordova said — enough to provide electricity to about 10 average-size Austin homes for a year.

Put another way: the savings are equivalent to planting 2,583 trees in Austin's parks, or the removal of 132,278 vehicle-miles or 17 cars from Austin roadways, Cordova said.

Zilker Park Residences Withdrawn From Market

editor@austintowers.net — 2010-08-04T22:58:32-05:00

As developer prepare for a third iteration of Zilker Park Residences, the project has been withdrawn from the market.

In 2007, developers announced plans for 74 units to be developed on the eastern edge of Zilker Park on Barton Springs Road. With units starting at $300K and topping out near $1.3 million, the 3 building project was to sit on the border of the park with direct access to the hike and bike trails. Although the project featured a unique and highly desirable location, it was marketed at the bottom of the downtown condo market.

As a result, the plan was changed substantially in 2008 when the developers reduced the size of the project from 74 to 40 larger units, added a 65 room boutique hotel, and an announced the expansion of the site through the purchase of an adjacent restaurant (formerly Wanfu Tool).

The 2008 Plan for Zilker Park Residences

With the revised plan, Zilker Park Residences was supposed to include 40 units ranging in size from a 1,515 square foot one bedroom to the largest 3,241 square foot unit. With the larger units came prices ranging from $659,000, one of the highest starting prices of any project in Austin, to $1.4 million.

Now, developers have begun notifying prospects that the project has been withdrawn from the market. According to the developers, they are redesigning the project to better meet market needs. In particular, they now plan to build a 90 room boutique hotel, spa & fitness center along with 15 large residential condo units. Currently, they plan to begin construction and marketing for the redesigned project sometime next year.

New Project Listings: 904 West

editor@austintowers.net — 2010-07-25T22:25:02-05:00

We've added listings for 904 West, a new low-rise condo project on 9th Street and West Avenue. The new development is close to the Nokonah and Whole Foods in a corner of downtown that has seen very little condo development.

904 West is an interesting "green" condo project. It's the only multi-residential property in downtown Austin offering photovoltaic systems for each unit. The project also features tankless water heaters and LED lighting.

Currently, there are 4 units listed on MLS ranging from $193K for a 577 square foot 1/1 to $327K for an 891 square foot 1/1. We're working on a full profile and will have additional details on AustinTowers soon.

La Vista on Lavaca is Dead. Again.

editor@austintowers.net — 2010-07-17T23:55:16-05:00

After a decade of starts and stops, the ill-fated La Vista on Lavaca condo project appears to be fully dead.

Now the planned nine-story residential mixed-use tower consisting of 19 condominiums on the top four floors, a three-floor Executive Business Center, and first floor restaurant, has been abandoned mid-construction by its new owners.

Continue reading here:

Downtown Austin Condo Sales Soar in May

editor@austintowers.net — 2010-07-13T22:48:40-05:00

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index through May, 2010 and, for the twelfth month in a row, MLS sales volumes have increased in comparison to previous year numbers. On a per square foot basis, however, year-to-date prices are down about 9% over the comparable 2009 numbers based on a 12-month rolling average.

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
May-09	11	$347,045	$308	1,150	1990	96%	63
May-10	24	$258,967	$285	934	1976	96%	118
Change	118%	-25%	-8%	-19%	-13.91	0%	87%

The big news for May is that condo sales volumes soared, breaking the longstanding Austin Towers |urbanspace record of 22 units in a month (set in April, 2008). View the Full Analysis:

With Downtown Marriott Dead, Land Owners Seek New Hotel Developer

editor@austintowers.net — 2010-07-06T22:05:59-05:00

Last month, the Austin City Council enacted a zoning change and turned over a public alley in the most effort to lure a major convention hotel to Block 18 --- the Congress Avenue block that used to house Las Manitas and which was at one point going to be taken over by a very large Marriott hotel.

The Congress Avenue Marriott -- a 1,000 room hotel complex on 2nd and Congress avenue -- was one of the most controversial, and one of the least popular downtown projects. The project is best known for displacing Las Manitas and other local businesses. Before being cancelled, the last two versions of the project were criticized for bland institutional architecture and a lack of ground-floor retail on a key block connecting the convention center area to the second street district. The original plan for the project included 1,000 rooms across 3 separate Marriott-branded hotels in one convoluted multi-facted building. The second version of the project included two hotels in one building. Version 3.0 included just one Marriott hotel with 1,000 rooms. The budget at one point reached $250 million before the project was shelved.

Now, the City is trying new tactics to

Shhhh! New Congress Tower Planned

editor@austintowers.net — 2010-06-29T22:20:39-05:00

According to city records, the owners of three vacant historic buildings on Congress Avenue between 9th and 10th street are planning to build a 16-story, 88,000 square foot office tower on the site. If successful, the project would commence construction in 2011 and open by Summer 2012.

According to a statement by Tucker Lynch, a representative of the site owners, in the Austin Business journal, “The owners told us to keep it as quiet as possible,” Lynch said. “We are just doing our feasibility. If it is not feasible, we won’t build.”

According to the Austin Business Journal, "Plans call for eight floors of office space, atop six floors of parking and one basement parking level, plus street retail. According to architecture drawings by Dallas-based HKS, the building will have a glass facade and a terraced set back at the 11th floor. The proposed building bumps right up to the height limit imposed in the Capitol View Corridor. The owner is applying for central urban redevelopment designation, or CURE, which exempts development from some building codes and permits greater heights for the sake of economic benefit. The site is currently zone for “Central Business District,” which allows for 88,000 square feet of development at the site and Lynch said his client is not seeking a density bonus."

The project is one of numerous towers currently in the works. Other projects include:

- A 15-story boutique hotel at 416 Congress Avenue
- Two 40-story Towers by Constructive Ventures on an Austin Energy Site near 2nd and San Antonio
- A 250 unit 28-story condo tower and an adjacent 16-story office tower on the 1.2 acre site bounded by Fifth, Sixth, San Antonio and Nueces streets by Novare, the developer of 360.
- A 15-story office tower with ground floor retail is being proposed for the north east corner of West Cesar Chavez Street and Lamar Boulevard by Capital City Partners

1155 Barton Springs Condo Project Files for Bankruptcy

editor@austintowers.net — 2010-06-21T22:27:05-05:00

In April of 2008, developers announced a 4-story, 27 unit development on Barton Springs just east of Lamar adjacent to the train tracks, McDonalds, and Peter Pan Mini Golf. With pricing starting at $1,000,000, our original reaction was that "the project is a very odd combination of location and pricing that suggests a lack of experience in residential development." At the high end, the units were priced at $900 / SF making this the most expensive development in Austin.

This week, the project, 1155 Barton Springs, filed for bankruptcy. According to the Austin Business Journal, "PPT Development is seeking Chapter 11 protection, filed at the end of May, claiming its assets and debts each range from $1 million to $10 million, according to records that did not include a complete list of creditors. The company’s largest creditor is San Antonio-based Overland Partners, the lead architect on the project, which is owed about $1 million, according to court records. Despite the setback, PPT Development LP principal Steffen Waltz said the $40 million development called 1155 Barton Springs is merely in hibernation, not dead."

While strong projects are finding success South of the river, they are succeeding by combining prime locations with prices far below those of the large downtown high-rises. 1155 Barton Springs attempted to combine ultra-luxury with a low-rise "B" grade location -- a tough sell in any market. While the views are great, top dollar projects need to be perfect, which is not the case with 1155 Barton Springs.

According to the Austin Business Journal, "the 1155 Barton Springs project has been in the works under various names, including The Milan, since at least 2005. In April 2007, developers announced plans to break ground by that year’s end, with tenants moving in by mid-2009. There would be two portions of the project, they said, with one building on the north side of the property on the corner of Barton Springs and Dawson roads and three buildings toward the southern side. The 24 residential units, ranging from 1,600 to 6,200 square feet, would list for $1 million to $6 million each, according to the announcement."

Austonian, Four Seasons Prepare to Open

editor@austintowers.net — 2010-06-13T14:02:59-05:00

In downtown Austin, there are two classes of new condo projects. There are upscale projects like 360, Austin City Lofts, Milago, and the Nokonah. About a dozen of these projects have been completed over the decade and almost all are sold out at this point. Only Spring still has new units left to sell. These projects have sold well featuring mostly 1-2 bedroom units priced under $600K.

The second category includes the three super high-end projects now under development: the Austonian, the Four Seasons, and the W Hotel and Residences. These projects typically start around $600K and feature many units priced over $1 million. This is a new market for Austin, and the timing of construction has been difficult for the developers. All three projects are believed to be 40% - 60% sold at this point in time.

This month, two of these projects -- the Austonian and the Four Seasons -- will open and welcome their first residents. The W is scheduled to open in December. Between the three buildings, 501 new high-end units will hit the market this year:

- The Austonian begins welcoming residents next week. The 56-story, $250 million, 188-unit luxury condo tower is the tallest residential building west of the Mississippi.

- The Michael Graves-designed Four Seasons Residences opens later this month. The 32-story project features 148 units and a 32nd floor sundeck, fitness center, party room, catering kitchen, and resident library. The project also includes valet parking, a 24-hour concierge, in-room dining, housekeeping, and daily linen service through the hotel.

- The W will open in December. The $295 million 36-story project will include 252 hotel rooms, 165 condos, 35,000 square feet of office, retail and restaurant space and a new theater to host Austin City Limits on Second Street.

For these projects, the next few months will be essential. With many units yet to sell, developers are hoping that potential-residents will appear now that the projects are ready for occupancy. With the economy and real estate markets improving, sales activity has been picking up at all three projects. While developers have not announced any public discounts, this should be a good time to negotiate, especially for buyers who are willing to consider any of the three projects.

The Future of Downtown Austin: A Visual Tour of the Downtown Austin Plan

editor@austintowers.net — 2010-06-01T22:58:05-05:00

This evening, the City of Austin hosted a town hall meeting to review the Downtown Austin Plan -- the draft master plan for downtown Austin.

The purpose of the plan is to create a vision -- and policy framework -- for a vibrant downtown that becomes the region's core for work, play, shopping, and living. The 90-page plan and 93-slide summary presentation (they are fascinating -- get them here) include hundreds of ideas to improve downtown Austin. The ideas range from zoning and historical protections to transit solutions to requirements for store glass transparency.

To provide a quick overview of the very rich content, we have assembled a visual walk through of some of the most interesting content:

(1) The core and waterfront district is red -- this is the area analyzed in the Downtown Austin Plan.

(2) Even without active regulation, emerging land use patterns have effectively segmented downtown activity. In this diagram, pink represents the core employment zone; blue is commercial, entertainment and convention; and orange is residential. The dotted areas are pedestrian priority zones and the diagonal hatches represent sites with development opportunities.

(3) This heat map shows likelihood of redevelopment. Pink means that the site is pending redevelopment, green means near-term development is possible, yellow means long-term redevelopment is possible. Red means that development is unlikely. There are 62 properties > 1/4 block that can be redeveloped. These sites total 48 acres.

The Visual Tour Continues Here:

New Hotel Planned for Congress Ave!

editor@austintowers.net — 2010-05-21T22:43:12-05:00

For those who are counting, this is the fifth new downtown Austin tower announced in the last two weeks. Today's newly announced project is a 15-story boutique hotel with 60-70 rooms. It will be constructed on Congress Avenue between fourth and fifth streets across from the Frost Bank Tower.

The new hotel will be located at 416 Congress and will integrate the existing 1893 Congress Avenue facade

The boutique hotel will integrate the 1893 Romanesque facade into a new 15-story tower to be designed by prominent Austin architect Dick Clark. The building will be 52,000 square feet and will not require any building variances for construction. The small size results from the small lot -- the average floor plate will be just 3,500 square feet or 50 by 70 feet.

Austin has a number of successful boutique hotels such as the Hotel San Jose on South Congress. 416 Congress will be the first downtown boutique hotel and an important development for Congress Avenue. Earlier this year, plans were cancelled for an unpopular Mariott mega hotel on Second and Congress.

The 416 Congress hotel is expected to open in 2012

Two More Austin Condo Skyscrapers Announced!!!

editor@austintowers.net — 2010-05-13T20:26:47-05:00

This has been a crazy week. First, the developers of 360 announced plans to develop two new downtown towers. Then, rumors surfaced that the Aquaterra project may be revived as a rental tower. Today, Constructive Ventures announced plans to build 425 new condos in two 400-500 foot towers on an Austin Energy site just West of 360 downtown. Together, these announcements may herald the beginning of a new downtown condo building boom.

The new project by the developers of Spring would include 425 condo units and 15,000 square feet of retail in two point towers on a 1.7 acre site adjacent to 360 and the decommissioned Green Water Treatment Plant downtown. The project would cost $220 million and construction would begin in 2013.

Here is a summary from the Statesman:

The City Council is set to vote today to authorize the city manager to sign a development agreement with a partnership of Constructive Ventures and Trammell Crow Co. to buy the tract for $14.5 million.

The community benefits from the project would include contributions for public art and $2.7 million for the city's affordable housing fund, the largest proposed payment from a developer for a project to date, said Rodney Gonzales, deputy director of the city's Economic Growth and Redevelopment Services Office.

"This is a really good chance for the city to convert an underutilized piece of downtown property into one that generates property and sales taxes for the city and brings forth a substantial contribution for the affordable housing trust fund," Gonzales said.

In 2008, the city chose a partnership of Trammell Crow, Constructive Ventures and USAA Real Estate Co. over four other teams to redevelop the Austin Energy site and the nearby 6-acre water treatment plant at West Cesar Chavez and San Antonio streets with a hotel, apartments, office and retail space.

Those projects are part of the city's grand plan to transform downtown's southwestern edge, including the former Seaholm Power Plant, into a lively, densely developed district. A new central library is also planned along Cesar Chavez.

The city is still negotiating a development agreement and purchase price on the Green site, Gonzales said.

The agreement says the soonest that Constructive Ventures could purchase the Austin Energy property is March 2013. The city must first relocate the control center, from which the entire Austin Energy electric grid is managed year-round.

Larry Warshaw, a principal with Constructive Ventures, said the condominium buildings would be so-called point towers — slender buildings on a wider base like the Spring condominium high-rise, of which he was a co-developer — and would soar between 400 and 500 feet.

"Financing will be the most likely factor dictating a start date," he said

Hilton Condo Owners Sue Over Quality Problems

editor@austintowers.net — 2010-05-11T20:55:23-05:00

Seven condo owners in the City-owned Hilton Hotel and 99 unit 5 Fifty Five condo project are suing the city-backed non-profit developer for noise problems and water leakage damage.

The impacted units are located under a catering kitchen that is reportedly loud and susceptible to water leaks into the units below.

According to the Statesman:

The condo owners are suing Austin Convention Enterprises. Tony Ciccone, the lawyer representing three of them, said the problems caught his clients by surprise because they were not allowed to tour sections of the building before their purchases and did not know that hotel plans included putting a banquet kitchen above residences.

Five of the condo owners suing the city say that chronic leaks from the kitchen, plus the noise from a service elevator and heavy carts thunking across the kitchen's tile floors at night, have made their units uninhabitable.

According to court filings, Linda Cartwright bought a unit in August 2006 and soon discovered water leaking in through her smoke alarm. A year later, Cartwright "returned from vacation to find her ceiling open and water openly running onto the floor of her unit," causing severe damage, the lawsuit says.

Gary and Rhonda Golden allege in their lawsuit that leaks and noise have ruined their two units, on the eighth and ninth floors.

The city has acknowledged some of the problems.

"Based on prior investigations ... it is obvious that the kitchen is causing the leaks" into condo units, according to a Jan. 8 letter from Assistant City Manager Rudy Garza to the condominium owners association.

The Hilton was developed by the City through a $110 million1998 bond issue. The convention center hotel was a key part of the City's strategy to strengthen the convention and tourism industries with a large anchor hotel. Such a hotel is required to lure larger events to the city. According to the City, the hotel has been a financial success, paying off its debt obligations at an accelerated rate.

The city owns 74.41 percent of the space inside the building while Condo owners collectively own 22.68 percent of the space. The remaining 2.91 percent is commercial space owned by Neches Street Partners. So far, the majority of complaints are related to the small number of units directly under the kitchen. It is not clear whether the units on upper floors suffer from similar construction issues. The complex ownership structure has made it difficult to address the issues by moving the kitchen.

The Hilton is not the first project to be sued by its condo owners. Last year, Sabine owners sued the developer for a variety of problems including noise and safety issues. The litigation was resolved when the developer agreed to make significant repairs and enhancements to resolve the issues.

360 Developer Planning Two New Austin Buildings!

editor@austintowers.net — 2010-05-10T22:41:05-05:00

Novare, the developer of 360, has announced preliminary plans for two new towers to rise one block west of the downtown post office. The new plans call for construction of a 250 unit 28-story condo tower and an adjacent 16-story office tower on the 1.2 acre site bounded by Fifth, Sixth, San Antonio and Nueces streets.

The new project, to be called Ovation, replaces earlier plans for a larger 400-unit condo development on the same site. Novare's 360 was one of the largest and most successful downtown projects, selling out 430 units with strong pre-sales and minimal discounting.

One of the things that made 360 so successful was its combination of competitive pricing -- most units were $200K to $500K -- and design: it was desirable tall glass building on a great downtown site. In previous statements, Novare has implied that it plans to follow a similar mode for future downtown condo developments such as Ovation -- aiming to build desirable projects with entry-level pricing.

Since the completion of 360, Novare has flirted with development plans for the site as well as for an adjacent site that currently houses the downtown post office. Novare is currently working on plans to redevelop the post office in another location, allowing the company to purchase the prime and underutilized land and to develop that site as well.

According to the Statesman, the new "residential tower, called Ovation, is for 250 units with ground-level commercial space" and "the office tower would include a restaurant, bank and a parking garage with 567 spaces." In addition to the condo building, the plans call for "a 153,634-square-foot office building, a 5,000-square-foot "high-turnover" restaurant, 14,000 square feet of specialty retail and a 4,000-square-foot drive-through bank."

Novare has been clear that development plans were revised to better adjust to a changing local market and a changing financing market. It is the latter that has delayed the project and which continues to be an obstacle for its completion. However, as markets return to normal, the company is increasingly confident that it will be able to line up the support required to proceed.

Seaholm Development Update

editor@austintowers.net — 2010-05-03T21:44:13-05:00

More than 2 years ago, the city approved a master plan for the redevelopment of the Seaholm Power Plant site on Cesar Chavez near Lamar. The $117.2 million project, a partnership between the city and Southwest Strategies, is supposed to result in a 22-story hotel, 60 condo units, and 180,000 square feet of retail and commercial space.

More than a decade in the works, the original plan was for the new project to begin construction in 2009 and to open in 2011 with the 150,000-square-foot decommissioned power plant as the centerpiece of the 7.8-acre property. Needless to say, the project is delayed.

While the project remains active, a variety of obstacles have prevented development from moving forward. In particular, the City is in prolonged negotiations with Union Pacific over development of portions of the lot which the railroad controls. Apparently, the company is concerned about dense development in the area immediately surrounding active railway lines. With a dramatic increase in pedestrian and bicycle traffic across the tracks, the company is appropriately concerned about safety.

The second issue hindering construction is the slow development of a city-funded 315-space parking garage on an awkward corner of the site. The City, which already allocated $3.8 million for the project, must find a way to fit a large number of spaces into a small irregular site without building high. Since the site is within the Capital View Corridor, the height of the garage is limited to 40 feet.

Once these obstacles are overcome, the lot can be split and the private development of the site may proceed. For the private developers, however, there is another major obstacle: they have not raised the necessary funding to begin the project. In this tough environment -- and with two major proposed office buildings sucking up potential tenants -- financing will be no easy task.

Despite the obstacles, Seaholm remains one of the most desirable and important downtown development projects. While the economy and the difficult commercial financing environment pose serious challenges for any project, Seaholm has a high probability of completion once the obstacles have been resolved and the financing environment improves.

With offices, extensive retail, and more than 3 acres of open space, Seaholm will further shift the heart of downtown to the west once it is completed. While downtown life used to center around 6th street between Congress and red river, the warehouse district, 2nd street district, and Whole Foods have shifted the balance. With Seaholm, the downtown action will increasingly be centered between Congress, Lamar, 5th, and Town Lake.

The most dramatic part of the project is the redevelopment of the Seaholm facility itself. When complete, the historic art deco structure will include nearly 100,000 square feet of retail and restaurants.

Austonian, W, Four Seasons, & Spring Sales Estimates

editor@austintowers.net — 2010-04-26T23:05:23-05:00

Harold Hunt, a research economist with the Real Estate Center at Texas A&M University, published an interesting profile of the downtown Austin condo market in Tierra Grande.

First, the report calculated that "about 1,500 condominiums have been delivered to the downtown market since 2001 . . .To date, nearly 98 percent of those units are sold and closed" Of the 18 projects completed over the last seven years, all but 18 of 1,544 units have been sold.

Interestingly enough, the report included sales estimates by project for four unfinished projects: The Austonian, the Four Seasons, the W Hotel & Residences, and Spring. These estimates, credited to Capital Market Research and dated March 10, 2010, show the challenges in selling hundreds of million dollar units in the current environment. While anecdotal research shows that sales have increased in recent weeks, many additional units remain unsold.

Sales Estimates for Projects Under Construction

Project	Year	Units	Contracts	Avail.	% Sold	Absorption / month	Avg Price	Avg Size	$ / SF
Austonian	2010	178	55	123	31%	1.89	$1,516,000	2203	$688
Four Seasons Residences	2010	148	74	74	50%	2.64	$1,269,447	1969	$645
W Hotel & Residences	2011	159	82	77	52%	2.49	$1,067,352	1716	$622
Spring	2009	248	120	128	48%	3.87	$521,063	969	$538

In summary, the article concluded that "More than 400 of the most expensive luxury condos in Texas are coming online in downtown Austin. Some say the timing is disastrous; others believe economic recovery may work in favor of these developments. Upscale buyers hold the key to success for this small niche market."

The Four Seasons Residences to Focus on Service

editor@austintowers.net — 2010-04-20T21:37:31-05:00

Lorley Musiol, the new Director of Residences at the Four Seasons in Austin, captures an important intangible about downtown condo life when she states that "this is only a building. It's going to take personality and a staff I'm hand-picking to make that building come to life."

One of the things that is hardest to quantify about a new building is the quality of the service. Training staff to connect with residents, to be personable yet professional, and to meet every residents' random and unpredictable needs and desires without disappointing is hard. This is what the Four Seasons is good at -- and something that other projects will have a tough time duplicating.

For example, the Four Seasons Residences will keep a photo database of frequent visitors so they can greet them by name. That is impressive. And of course they will also keep a database on residents to track their preferences.

Lorley Musiol and the Austin Four Seasons were featured in an interesting article in Austin360 which details at length the project's focus on service:

The word "no" does not exist in Lorley Musiol's vocabulary.

As a hotel concierge for 23 years, 16 of them at Four Seasons hotels including Austin's, she has dealt with the most persnickety of guests. Never, she says, has a request gone unfulfilled. She has thrown a birthday party for an 18-year-old Saudi prince at 2 a.m. at the Los Angeles' Beverly Wilshire Hotel on short notice. She has spelled "Marry me" in rocks outside Las Vegas so a skydiving couple could see it. She has enrolled as a student at the University of Las Vegas in order to check out architecture books that Michael Jackson wanted.

"I always find a way," she says over coffee on the terrace outside the hotel's Trio restaurant. "There is no intimidation."

If Musiol, 56, sounds like she has a Superwoman complex, it's because her job has required it. And she'll soon need to ramp up the can-do attitude, if that's possible, because sometime around Memorial Day weekend, Four Seasons Residences will open and she will be its Director of Residences. She'll manage the building and staff and make sure that every resident's wish is granted.

15-Story Downtown Office Tower Proposed

editor@austintowers.net — 2010-04-18T22:34:38-05:00

A 15-story office tower with ground floor retail is being proposed for the north east corner of West Cesar Chavez Street and Lamar Boulevard.

The new project, to be located between the Gables apartment and Seaholm, would be the first new office project constructed in the downtown core since the Frost Bank tower was completed in 2001. The developer behind the new project, Capital City Partners LLC, recently completed Capstar Plaza, a 115,000-square-foot, eight-story, office building at the southeast corner of MoPac Expressway and Fifth Street.

The new building, currently named Park Plaza, will only be built if the developer can line-up enough tenants to justify development. If completed, the project would include 189,000 square feet of Class A office space and 10,000 square feet of ground floor retail. The project would be located just West of Seaholm and across the street from Ladybird lake. The 1.8 acre plot is owned by Gables residential which recently completed a large low-rise rental project on an adjacent site.

Condo Liquidity Analysis: Will You Be Able to Sell?

editor@austintowers.net — 2010-04-11T19:11:35-05:00

If you are thinking of buying a downtown condo unit that you will eventually sell, you need to think about liquidity. Unfortunately, rapid growth in the number of downtown units has also meant fierce competition among sellers in some projects. With so many sellers and ongoing competition from new units in projects like Spring, it can be difficult to sell.

When thinking about liquidity, you need to start with the building. Since most buyers pick a building and then a unit, being in the wrong building can make it very difficult to sell. Since most units are similar, the market is extremely efficient and the only way to sell in an unpopular building is to drop your price -- often significantly.

Last year, buyers purchased units in 22 different downtown buildings through transactions listed on the MLS. Of the 112 2009 downtown sales, there were only eight projects that sold 5 or more units. While we have pointed out many times that MLS statistics ignore developer sales and thus provide and incomplete market picture, they are in fact very accurate for sales by owner as very few units are sold without agents.

To analyze liquidity, we compared the number of units currently on the market in each building with the number of units sold in each building during 2009. We looked for buildings where the total inventory would sell within 9 months. Of the 8 projects profiled, only two buildings met this criteria, The Nokonah with an amazing average of 6 months and Milago with an average of 8. Not far behind, with an average of a year, were Austin City Lofts and the Penthouse condos.

The Nokonah, which leads the list, was the first high-end downtown project. It has an older and less likely to move owner population than projects like 360. While Milago is newer and more affordable, it is notable in the volume of units that sell. In 2009 alone, 24 of it's 240 units -- 10% -- changes hands over the MLS. Austin City Lofts has always been a popular and well-respected building with relatively brisk sales.

On the other end of the liquidity spectrum are three slow-moving projects: Five Fifty Five with an expected time to sell of 45.6 months, Cambridge Condos with a 28 month average, and 360 with an average of 27.8 months. It's hard to understand why 360 -- one of the most desirable and successful projects -- fares so poorly on the liquidity front. Likely, the issue has to do with the projects success as buyers who successfully purchased units on a well-subscribed wait list are now ready to sell. Many buyers may be holding out for more money than buyers are willing to pay. In addition, year 2 of the project may be a peak time for turn-over.

Equally concerning is the number of projects that did not make the list because sales volumes were too low to evaluate. The Brown Building and Plaza Lofts each had 3 sales during the year. Brazos Lofts, the Shore, and Brazos Place each had just one sale during the year. The Sabine did not have any successful unit resales.

Here are the full statistics on downtown Austin Condo liquidity for the eight projects with enough transaction volume to evaluate:

	2009 Sold	2010 On Market	Months to Sell
Nokonah	10	5	6.0
Milago	24	16	8.0
Penthouse Condo	7	7	12.0
Austin City Lofts	6	6	12.0
Greenwood Towers	7	9	15.4
360 Condos	19	44	27.8
Cambridge Condo	6	14	28.0
Five Fifty Five	5	19	45.6

Exclusive: January & February Downtown Condo Sales

editor@austintowers.net — 2010-03-30T21:44:39-05:00

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for January and February, 2010. With the new results loaded, we are pleased to announce that year-over-year sales volumes have increased for the eighth month in a row. That, however, is where the good news ends.

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Jan-09	4	$358,225	$321	1,129	1996	93%	85
Jan-10	6	$274,547	$291	953	2005	96%	127
Change	50%	-23%	-9%	-16%	9.00	3%	49%

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Feb-09	6	$400,833	$322	1,258	1998	90%	116
Feb-10	8	$291,938	$292	1,002	1979	94%	50
Change	33%	-27%	-10%	-20%	-19.00	5%	-57%

During January and February, 14 downtown Austin condo units were transacted on the MLS: 4 more than during the same period in 2009 with the gain spread across both of the months. While volumes are up, prices are headed downward as buyers gravitate towards smaller, older, and cheaper units than they did in the past.

Read the full analysis:

Coming up: Urbanspace Downtown Q&A

editor@austintowers.net — 2010-03-30T21:44:36-05:00

As we first announced last month, urbanspace has announced a monthly downtown Q & A that will be held at the urbanspace office the first Saturday of every month. It is free to anyone interested in learning a little bit about downtown Austin and the development taking place.

The Downtown Q&A was founded by Emily Crawford and developed in conjunction with Bryan Cady. As former first-time buyers and former Downtown Austin newbies themselves, they wanted to provide an interactive forum to help new buyers understand the options in the current Downtown Austin marketplace. Likely questions: Should I lease or buy downtown? What is the Downtown Austin lifestyle all about? What are the best deals out there? Why live downtown?

You can join them this month on April 3rd from 11-noon.

Top Art Galleries: New York, San Francisco, 360 Tower

editor@austintowers.net — 2010-03-20T20:21:00-05:00

This week, Details magazine published its list of the ten coolest art galleries in America. As would be expected, the list was dominated by galleries in New York (4) and California (3). Less expected was the inclusion of Austin's own Lora Reynolds Gallery which is located in the base of the 360 tower. The remaining two galleries were located in Chicago and Minneapolis.

Details claims that the 10 galleries on the list represent "the top places in the country to see contemporary art." In their profile of the Lora Reynolds' Gallery, the author writes that "after seven years toiling in the London and New York art worlds, Reynolds forged a niche in the competitive Austin scene by luring a roster of international talents like British artist Ewan Gibbs to Texas. As she told the Austin American Statesman when the gallery opened in 2005: "Why not bring art here that otherwise wouldn't be shown?" And what she shows doesn't just make you look—it makes you look twice."

Lora Reynolds established the gallery in March 2005 after working with galleries in London and New York. The gallery's mission is to bring national and international contemporary artists in all media to Austin. The gallery organizes 6 – 8 shows annually of emerging, mid-career, and established artists.

While Austin has a strong cultural scene for a mid-size city, it is not known for contemporary art. In addition to the well-respected Arthouse, it is great to see national recognition for Lora Reynolds Gallery. See the full article here.

Lora Reynolds Gallery

Forbes: Austin Economy Good

editor@austintowers.net — 2010-03-18T22:57:28-05:00

According to Forbes.com, the Austin-Round Rock area tied for first on a list of large metropolitan areas where the recession is easing.

The report listed Austin and Washington D.C. as the two top cities in terms of economic recovery. The report considered a number of factors including local economic output, job growth and real estate industry trends. While the national unemployment rate hovers at 9.7%, the comparable rate in Austin is 7.6% (up from 7% a month ago). Washington D.C. has a 6.2% unemployment rate.

According to Forbes, one thing that Austin and Washington D.C. have in common is a high rate of government job generation. The number of Central Texas jobs increased just shy of 1 percent between 2007 and 2009, more than any other city included in the research. Dallas came in second on the ranking behind Austin. The number of jobs there are expected to increase more than 7 percent in the next three years. San Antonio and Houston also made the top 10 list.

For anyone with a stake in downtown Austin real estate, future downtown home values will be driven by supply, access to lending, migration, and economic growth with job growth being a key factor. Supply for the next few years is highly predictable --- it's growing on the high end and flat in the low and middle price brackets. Access to mortgages remains constrained for conforming loans and highly constrained for jumbo loans. Migration is expected to remain strong. That leaves economic growth remains the biggest unknown.

While the economy is improving, cuts at large local employers or a dip in technology spending could dramatically change the local housing outlook. But so far, as Forbes notes, Austin is doing better than just about every other city in the country.

Exclusive: 2009 Condo MLS Sales Review

editor@austintowers.net — 2010-03-08T14:16:12-06:00

With the help of urbanspace Realtors, we have put together a comprehensive analysis of recorded downtown Austin condo transactions in 2009. The analysis looks at MLS data capturing 2009 condo sales in area DT during the year 2009. Like all listing data, it excludes private transactions that were not listed on the MLS. This is a big exception considering that hundreds of units have been sold through non-mls sales.

The data does, however, provide a very clear view of the downtown resale market. It shows the price per square foot that buyers are willing to pay for real units, provides information on building-by-building sales prices, and shows how long it takes for units to actually sell. Here is the annual summary of 2009:

Market Summary - MLS recorded 112 downtown Austin condo transactions during 2009 (down 14% over 2008) with an average sales price of $329,374 (down 5%) which represents an average price per square foot of $298 (down 3%). Units sold for 95% of listing price in an average of 88 (3 days faster than 2008). For the second year in a row, the project with the most sales on MLS was Milago with 24 transactions (v 25 last year). Here are the details for 2009 with the comparison to 2008 in parenthesis:
- DT Condo Transactions: 112 (130 in 2008)
- Avg. Sales Price: $329,374 ($345,856)
- Avg. Listing Price: $353,311 ($362,750)
- Sold Price as % of Listing Price: 93% (95%)
- Avg. Sold $/SF: $298 ($308)
- Avg. Listing $/SF: $319 ($322)
- Avg. Days on Market: 88 (91)
- Avg. Unit Size: 1,126 (1,106) Square Feet

Old v New - The MLS data clearly shows that the downtown Austin condo market is really 3 separate markets. The first market contains older units constructed prior to 1986 with an average age of 41 years. The second market is buildings constructed after 1998 when the current downtown boom started. The third market, which we have the least data on, is buildings currently under construction or recently completed. In particular, the high-end Austonian, W, and Four Seasons serve a much higher-end market than any of the current projects. Over the last year, sales of older units has plummeted as new buildings have entered the market. Sales of newer units are up dramatically. Prices for all units are down. Here are the details:
- Average Year Built, All Condo Sales: 1991 (1983 was the average in 2008)
- Units Built Before 1986: 40 (73)
- Units Built 1987 - 1998: 0 (0)
- Units Built After 1998: 82 (57)
- Pre 1986 Avg Sales Price & $/SF: $219,083 ($277,737) & $237 ($278)
- After 1998 Avg Sales Price & $/SF: $390,646 ($430,416) & $324 ($363)

High & Low: In a market and year where affordability is an important issue, it is amazing to see that there were 24 transactions under $200K which is a large increase from 18 units in 2008. It shows that it is possible to find affordable units downtown.
- Least Expensive Sale: $110,000 in Greenwood Towers ($107,000 in Greenwood Towers in 2008)
- Most Expensive Sale: $1,368,000 in the Nokonah ($1,100,100 in the Nokonah)
- Lowest $/SF: $162 for a unit in Greenwood Towers ($168 for a unit in Towers on Town Lake)
- Highest $/SF: $452 for a unit in the Nokonah ($571 for a unit in Five Fifty Five Condos)
- # Units Under $200K: 24 (18)
- # Units Over $750K: 5 (6)

Transactions by Month: Sales results were less cyclical than usual with strength in the second half of the year. Compared with 2008, the beginning of 2009 saw a dramatic reduction in the number of units and the back half of the year saw a strong increase over 2008. While there was strength in the back half of the year, it doesn't seem to have translated into higher prices. At Milago for example, prices were 3% lower on average in the second half than the first half.
Month - # Units
January - 4 (5)
February - 6 (6)
March - 4 (14)
April - 4 (22)
May - 11 (13)
June - 8 (13)
July - 12 (10)
August - 14 (13)
September - 15 (13)
October - 13 (9)
November - 13 (8)
December - 8 (4)

Over the next year or two, as a significant quantity of transactions continue to be conducted outside of the MLS, it will be difficult to gauge exactly what is happening with downtown Austin condo sales, especially on the high end. With a greater proportion of transactions shifting from private developer sales and auctions to resale and the MLS, we need to see increased MLS activity over the next year just for the market to remain stable. While lending remains constrained and the stresses of the economy remain strong, a dramatic near-term downtown condo upswing is unlikely. For sellers in particular, the next few months will continue to be very difficult.

With the addition of December data (it was a strong month), we've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index through the end of 2009.

Another Downtown Building Boom?

editor@austintowers.net — 2010-03-05T20:56:26-06:00

There should be no doubt: It's a tough time to be a downtown condo developer in Austin, Texas. While building costs have slipped from their peak, demand is soft and it remains a buyer's market. For high-end projects in particular, supply remains plentiful and competition among sellers is fierce.

Yet, developers are once again thinking about the next wave of projects. Over the next year, the current non-luxury condo inventory is almost certain to be depleted. With a 2-4 year construction timeline, developers are thinking now about the next wave of demand.

Here is a summary of some of the projects currently on the drawing board:

- Aquaterra (condo): Originally envisioned as a 163 unit 20-floor condo tower at 210 Barton Springs Rd., this was one of the first projects cancelled. Now, the architects have been asked to update the project to be more competitive in the current environment as the developers look for a path to proceed. No funding has been lined up.

- 7Rio (Condo): Originally envisioned as a $50M 34-floor 160 unit condo project, 7Rio is also back on the drawing board and being actively rethought for development. Originally planned for completion in 2009, the building would be on the site of Ranch 616 which will be incorporated into the building. The project has been supported by the neighborhood Association and the developer has already successfully completed two other projects in Austin.

- 800 W 6th St (Office): Austin-based Cypress Real Estate Advisors plans a 120,000-square-foot, six-story, Class A office building on the site.

- Block 51 (Office + Condo): According to the Austin Business Journal, the stalled Ovation development, originally reported to be a 37-story condo tower on Block 51 by Atlanta-based Novare Group Inc. and Austin-based Andrews Urban LLC, is being revamped. It now involves a partnership with International Bank of Commerce and more office space than originally planned. The plan revisions are in the beginning stages, and specifics will be available in mid-2010, he said.

- Schlosser Tower (Office & Condo): Schlosser development plans to construct a new 27-story downtown condo and office tower. The developer is proposing to build a tower of up to 350 feet on the vacant lot between Whole Foods and Austin City Lofts. As proposed, the new building would include street level retail and parking on the lower floors, 16 stories of office space, and 90 condo units on the top seven floors. In addition, a companion building on the 2.7 acre site would include three levels of commercial office space with parking and street-level retail.

- 21c (Apartments): The developers are proposing -- but have not found funding for -- a 31-story 350 unit apartment tower near the corner of Red River and Cesar Chavez. Rents would start at $1.50 per square foot which would mean $1,000 / month for a 700 square foot unit or $1,500 for a 1,000 square foot unit. The goal would be to make the building 70% 1 bedroom / 1 bath units. As many as 10% of the units for be designated as affordable units with controlled rents. A second tower -- which is more precarious in the current environment -- would be a 12-story 200 room hotel, spa, and restaurant. The developers are hoping to put parking underground and include ground retail in the project. Although no specifics have been announced, the third tower could include condos if at some point it does get built.

While almost none of these projects have funding, the investment in new development is a strong sign that when the market stabilizes and commercial financing becomes more common, another building boom is likely. With projected population growth and one of the strongest economies in the country, Austin will likely be an attractive target for development as the markets improve.

7RIo Tower as originally Proposed

Sabine Auction Results!

editor@austintowers.net — 2010-02-28T21:22:10-06:00

Today, more than 200 registered bidders showed up to compete for 31 units in the much anticipated Sabine auction. In the end, 29 of 31 units sold for an average 30.5% discount with a final price per square foot of $228. With strong demand, the developer added four units into the auction: three just days before the sale and the fourth unit during the auction.

Prices were about 19% lower on a price per square foot basis than the recent Brazos Place auction -- the Sabine's closest comparable. The additional discount is appropriate given the problems that have plagued the project. In a recent valuation analysis, Austin Towers estimated that a fair sales price would be a 30% discount and units traded hands for slightly less than that.

Here are the key metrics on the sale:

Sale Prices by Unit Type

Unit Type	Original Price	Sale Price*	$/SF	Discount
1/1	$252,631	$189,120	$264	25.1%
1/1 + Study	$289,900	$196,733	$210	32.1%
2/2	$464,083	$310,007	$214	33.2%
All Units	$341,697	$237,388	$228	30.5%

* Includes 4% Buyer Premium

Sale Prices by Unit

Unit #	SF	Bed/Bath	Original Price	Starting Bid	Sale Price*	$/SF
303	693	1/1	$234,900	$85,000	$172,640	$249
305	1462	2/2	$409,900	$145,000	$276,640	$189
308	925	1/1 + Study	$267,900	$95,000	$193,440	$209
401	1461	2/2	$485,900	$165,000	$319,280	$219
404	728	1/1	$249,900	n/a	$194,480	$267
409	918	1/1 + Study	$259,900	$95,000	$193,440	$211
501	1461	2/2	$485,900	$175,000	$327,600	$224
502	755	1/1	$239,900	$95,000	$193,440	$256
504	728	1/1	$249,900	$85,000	$192,400	$264
508	951	1/1 + Study	$279,900	$95,000	$188,240	$198
510	682	1/1	$204,900	$85,000	$166,400	$244
605	1467	2/2	$434,900	$155,000	$287,040	$196
610	682	1/1	$229,900	$85,000	$167,440	$246
701	1461	2/2	$469,900	n/a	$350,480	$240
703	695	1/1	$240,900	$95,000	$197,600	$284
704	728	1/1	$259,900	$85,000	$195,520	$269
705	1467	2/2	$449,900	n/a	$315,120	$215
707	1426	2/2	$409,900	$135,000	$279,760	$196
801	1461	2/2	$530,000	$185,000	$357,760	$245
802	755	1/1	$273,400	$105,000	$205,920	$273
804	728	1/1	$311,900	n/a	$196,560	$270
805	1460	2/2	$469,900	$165,000	$309,920	$212
808	951	1/1 + Study	$311,900	$95,000	$198,640	$209
904	728	1/1	$263,900	$85,000	$197,600	$271
907	1426	2/2	$434,900	$135,000	$263,120	$185
909	918	1/1 + Study	$294,900	$95,000	$195,520	$213
910	682	1/1	$244,900	$85,000	$180,960	$265
1001	1419	2/2	$550,000	$195,000	$365,040	$257
1004	728	1/1	$279,900	$95,000	$197,600	$271
1007	1426	2/2	$437,900	$145,000	$268,320	$188
1008	951	1/1 + Study	$324,900	$105,000	$211,120	$222
AVG	1,043		$341,697	$117,222	$237,388	$228

* Includes 4% Buyer Premium

Interestingly enough, the developers still own about a dozen units which they plan to sell directly to buyers and through MLS listings. In can be assumed that these units will sell for approximately the same price as the auctioned units which raises the obvious question: why didn't they sell the remaining units in the auction? While it's hard to know what they are waiting for, the developers likely wanted to avoid flooding the auction with too many units and driving prices even further down.

For the developers, the auction is likely a relief. It does go to show that these sorts of auctions do work and that there are many potential downtown Austin condo buyers on the side lines looking for a good deal. The prices of the remaining units -- and the speed with which these units sell -- wlll determine whether the auction prices were in fact a good deal.

UrbanSpace to Hold Monthly Q&A for Downtown Buyers

editor@austintowers.net — 2010-02-28T21:22:07-06:00

In an effort to reach out to new downtown Austin condo buyers, urbanspace has announced a monthly downtown Q & A that will be held at the urbanspace office the first Saturday of every month. It is free to anyone interested in learning a little bit about downtown Austin and the development taking place.

The Downtown Q&A was founded by Emily Crawford and developed in conjunction with Bryan Cady. As former first-time buyers and former Downtown Austin newbies themselves, they wanted to provide an interactive forum to help new buyers understand the options in the current Downtown Austin marketplace. Likely questions: Should I lease or buy downtown? What is the Downtown Austin lifestyle all about? What are the best deals out there? Why live downtown?

You can join them March 6th from 11-noon.

Sabine Auction Pricing Analysis: Looking at MLS Sales

editor@austintowers.net — 2010-02-21T20:48:24-06:00

With one week until the Sabine auction, it is clear that many potential buyers are considering participating in the sale. With starting bids as low as $85,000, bargain hunters will inevitably emerge looking for a great deal. The big question, however, is what is the right price for a Sabine unit.

For a few reasons, valuation of the Sabine units is particularly difficult. First, the building has had real problems with noise complaints, elevator issues, and a tenant lawsuit. The developers claim that the issues have been fixed but the history will still impact the value. A building is a brand, it is part of your identity, and the Sabine brand is damaged.

Second, not a single Sabine unit was transacted on the MLS in 2009. Not one. The most recent comparables are 5 transactions from mid-2008. These show an average price per square foot of $256 for one bedroom units (2 sales) and $352 for two bedroom units (3 sales) -- an unusually large difference between unit types. Since these prices were during the market peak and since they predate the buildings problems, they are just about useless.

Third, the Sabine is a condo conversion project and not a new development. This greatly restricts the comparable units that can be considered in a real analysis. Essentially, it leaves Brazos Place as the primary point of comparison. Since Brazos place also went to auction, it may be a good indicator of where the auction prices will land. But the Brazos Place auction was held during tougher times and the building did not have the problems that have plagued the Sabine. One other possible comparable is the Brown building, but we have seen very few recent MLS transactions.

So, while those are the problems, we had to start somewhere and here is the analysis: we used three valuation methods:

(1) We looked at condo conversion sales on MLS in Brazos Place and the Brown Building over the last 4 months. During this period, the average price was $271 / square feet for transacted units.

(2) We looked at the Brazos Place auction which resulted in an average price of $281 / SF (although not really relevant, the average discount was 29%).

(3) Peak MLS sale price by floor plan from early 2008. Useful information but in no way indicative of the value today.

See the full analysis:

Austin is Very Very Very Lucky

editor@austintowers.net — 2010-02-15T21:39:50-06:00

2009 was a tough year for job creation in the United States. Since job creation drives home prices, the 2009 job losses are likely to leave a lasting impact.

How lasting? Economists estimate that it may take the United Stated 125 months (10+ years) to fully recover the jobs lost during the great recession of 2009. In Texas, which had the strongest job growth of any state over the last decade, it is predicted to take 37 months or just over 3 years for the job losses to be recovered.

So, what about Austin? In 2009, Austin lost 2,600 jobs. In a normal recovery, the city would be expected to make up these losses in about two months -- that's 10 years and 3 months faster than the rest of the country. Local economist Angelos Angelou is predicting 26,300 new jobs and a healthy real estate environment through 2011 while warning that Austin’s economic development performance, especially around clean technology, is lagging.

While the future looks bright, we are not out of the woods yet. Technology does not perfectly follow the normal business cycle and Austin remains disproportionately dependent on the technology industry. In new areas like clean technology and biotech, the City is losing ground. Until we see job losses in the tech industry end, we're unlikely to see strong local job growth.

That said, the economic mood in town is definitely improving. One example of this is the local single family home market. In December, Austin home buyers returned in force, increasing sales 5 percent from the same time in 2008. The median price of the 1,373 homes sold in December rose to about $194,000, an increase of 6 percent year over year.

The bottom line is that we are very very very lucky. There is almost no other place in the U.S. that has emerged from 2009 as unscathed as Austin, Texas.

Sabine Auction Update

editor@austintowers.net — 2010-02-07T21:10:53-06:00

As we reported last month, 27 of the 44 long-vacant units remaining in the Sabine are finally headed to auction on February 28th. The auction is a last hope for the project which is currently facing foreclosure.

According to the Austin Business Journal, "Beverly Hills-based auctioneer Kennedy Wilson will sell-off 27 of the available 44 units Feb. 28, taking bids as low as $85,000 and $195,000. The apartments were previously listed near $204,900 and $550,000. Condo buyers would receive a one-year Tower Health Club and Spa membership and up to $1,500 in closing costs paid by the seller."

Kennedy Wilson has handled many condo auctions in the last year, including the successful Brazos Place auction in Austin. The auction will be held in February 28th at 1 p.m. at the downtown Hilton. According to the auction firm, potential buyers must register by Feb. 25. The company has set up a Web site specifically for auction information here.

It's always hard to predict what will happen in an Auction like this. In the Brazos Place auction, held during tougher times, all 19 remaining units were sold in less than 90 minutes to a packed room of bidders. In that case, the units sold at a 29% discount to the original listing price. This is, however, is a useless barometer as the units were not selling well at the original prices. More useful is the average price / square foot which at $281/SF is a 9% discount to the 2008 downtown condo average of $308. Unfortunately for the original Brazos Place residents, the units sold for 24% less on a $/SF basis than the $370/SF average of the 12 Brazos Place units sold via MLS in 2008. We'll see what will happen with the Sabine, but discounts of 20 - 35% off original prices are likely.

The Sabine is an 80-unit condo conversion project of a mostly-empty office building on Waller Creek into a new condo project adjoining the Hilton Garden Inn on 5th Street near I-35. The project was completed in 2007 and the majority of units still remain vacant although they have been removed from the market due to pending litigation. Unit plans range from one-bedroom, 682-square-foot units to two-bedrooms with as large as 1,419 square feet.

Get the full details on the auction here.

Waller Creek Tunnel Project Advances

editor@austintowers.net — 2010-02-07T11:20:32-06:00

On Thursday, City of Austin officials approved eminent domain proceedings to reclaim a parking lot between 4th and 5th street that is required to begin the Waller Creek tunnel project.

The half-block property is essential to development of the mammoth downtown tunnel project. According to officials, it is needed for two tunnel easements, one temporary and one permanent. The approval does not initiate proceedings to claim the property, but allows city officials to do so if they can not reach agreement with property owners.

The Waller Creek Tunnel Project is a storm water bypass tunnel beginning with an inlet structure in Waterloo Park and an outlet structure at Lady Bird Lake near Waller Beach and the Four Seasons Hotel. Nearly, a mile long, the tunnel will vary between 22 and 26 feet in diameter. The project is expected to reduce the size of the 100-year floodplain of the lower Waller Creek watershed by an estimated 28 acres and allow denser development and redevelopment in a very desirable area of downtown Austin. A pump station at Waterloo Park will maintain constant water flow in the creek during the dry season, thus improving water quality and fostering a creek side atmosphere suitable for public venues or natural settings. Creek side inlets located between 4th and 5th streets and 8th and 9th streets will capture and divert additional flood waters south of 12th street.

The tunnel project is comprised of several construction projects, including utility relocation, the tunnel, the inlet, outlet, creek side inlets, and site restoration. The Tunnel project will cost approximately $127 million—an initial estimate based on 2006 dollars. Construction will take place from January 2010 until July 2014.

Waller Creek

According to the Austin Business Journal, "the lot discussed this week is owned by the Strenger Real Estate Holdings Ltd. and is used for paid parking. City technical resource and professional engineer Stan Evans said the temporary easement is needed for staging construction and the permanent section is needed to restore the creek and install draining infrastructure. He said the city and the property owners are currently in negotiations, but if the two do not reach an agreement by an undisclosed deadline, eminent domain will proceed."

Downtown Rail Service to Start in March

editor@austintowers.net — 2010-01-26T22:01:03-06:00

After what seems like endless series of problems and delays, Cap Metro has announced that light rail service will begin in March. Service was originally scheduled to commence on March 30, 2009.

MetroRail will run from downtown to Leaner with stops for Lakeline, Howard, Kramer, Crestview, Highland, MLK, Jr., and Plaza Saltillo. The full 32 mile trip is estimated to take 57 minutes with a maximum speed projected to be as fast as 60 mph. Capital MetroRail will offer service every 35 minutes during morning and afternoon rush hours with fares ranging from $2 to $3 depending on distance. There will also be discounts for monthly passes and certain categories of riders. Senior citizens and children under 6 ride for free.

The trains (shown below) are very attractive. The city's six trains will each have a capacity of 200 passengers with 108 seated and 92 standing. Believe it or not, the train will actually have wifi service on board as well as bicycle racks and work tables. For safety, the vehicles have ten cameras outside and six inside, as well as a sophisticated communications system.

MetroRail was originally approved in 2004 when voters within Capital Metro's territory endorsed MetroRail as part of a long-range mass transit plan, which also includes expanded local and express bus service, as well as a possible streetcar system (modeled after the Portland Streetcar), which would connect downtown Austin, the Texas State Capitol complex and the University of Texas-Austin with the master-planned Mueller Community redevelopment project. Technically, the system is not considered light rail, because it shares the main-line tracks used by freight trains, and because of its infrequent rush hour-focused service.

With a downtown stop in front of the convention center, the train will allow some downtown workers to commute to a limited number of transit friendly city locations. For Austin residents who don't live downtown, the new train will provide a way to bypass rush hour traffic.

With one route, 9 stops, and infrequent service, the train is unlikely to have a dramatic effect on the city when it begins service. In fact, the City is estimating ridership at 2,000 people a day. While a small portion of the population, removing 2,000 cars from downtown and the other destinations on a daily basis would be significant. The important thing to note is that this is the beginning: if it is successful, more trains, routes, and increasingly frequent service may be added in the future.

Austonian Dismantles Crane, Throws Party

editor@austintowers.net — 2010-01-24T21:31:36-06:00

Over the last few weeks, the Austonian has been slowly dismantling its crane, signaling the beginning of the final phase of construction. With the exterior shell complete and the elevators now fully functional, the Austonian invited hundreds of guests to a private party on the the top three floors of the tower last Friday night.

From floors 54, 55, an 56, I was able to see downtown from a new perspective. Needless to say, the first observation is that the Austonian is really, really, really tall. From the 56th floor, the Monarch looks tiny and the top of the Frost Bank Tower is far below. Even the 44-story 360 tower is much, much smaller. It is so tall that your ears will inevitably pop on the way up and down in the high speed elevators. At night, the city streets stretch out endlessly in almost every direction while the capital glows and the lights of sixth street flash their bright colors.

There will be at least one more opportunity for non-residents to get a look at the amazing view before residents begin moving in June. In May, the Austonian will be the site of the Women's Symphony League of Austin's 2010 Symphony Designer Show house which will be open to the public. It will be a great chance to see what can be done visually with a high end condo.

Photos by blimpphoto.com

Update: New Central Library Progress

editor@austintowers.net — 2010-01-17T22:23:05-06:00

The City of Austin has more residents than the cities of Boston (although the Austin MSA is smaller than the Boston metropolitan area), Seattle and Nashville. Austin's central library is 110,000 square feet - 1/5 the size of Boston's main library, 1/3 of Nashville's, and 1/5 of Seattle's. The Austin central library seats 300 people while Boston's library seats 4,400. Austin has 75 public computers vs. 550 in Boston and 400 in Seattle.

Right now, the City is actively working on plans for a flagship central library to be located where Shoal Creek crosses Cesar Chavez facing out over Ladybird lake. The project is slated to be designed by top notch Texas architects Lake|Flato. Additional details are scheduled to be released when the proposal goes before the City Council in February.

Lake, who leads the design of Austin's new central library for Lake|Flato, said the design team is currently reconciling wish lists with budgetary realities. Collaborating architectural firm Shepley Bulfinch is leading the programming phase; the work reflects ideas and input gathered from Austinites and library staff at a series of meetings in November.

According to the Chronicle, the design team is also considering how the library will interact with the site and surrounding urban fabric. "We are keen on making this library a gateway to Downtown, Lady Bird Lake, Shoal Creek, and the trail system," said Lake. The building will be sited right on the shore of Shoal Creek, across Cesar Chavez from the lake. "Libraries are becoming more public-spirited buildings – a city living room," he said. "For Austin, it makes perfect sense to engage the creek and the river. Wouldn't it be great if people could sit out on the library's porch?"

The City's pitch for a new central library is based on the argument that a Central Library with a rich collection of materials and a wide range of services is vital for the continued health of the Austin library system. The hope is that a new library would "foster intellectual energy and excitement among its citizens. It would become a community destination, bringing citizens of all ages to the central business district for pursuit of leisure reading, social interaction, lifetime learning experiences, and for the experience of being in a cultural showcase for the arts."

The current list of ideas envisioned for a new Central Library
include:

- A building located in the emerging civic/cultural center of downtown which would be an architecturally and aesthetically important destination for both residents and visitors
- At least 300,000-400,00 square feet of space to accommodate an in-depth and growing collection for current and future needs
- Rooms for community events and meetings, as well as a public auditorium seating up to 300 persons
- Exhibit and display space
- A separate space for children’s programs
- Additional public computers and classrooms for computer-aided instruction and distance learning for the public and library staff
- Connections for customers who bring in their own laptop computers
- Expanded seating space including designated quiet study areas, group study areas, and lounges
- Parking for 350-475 cars
- Coffee shop, gift shop, and book sales areas
- Drive-up window for quick book return and pickup of reserved materials
- Expanded collection of periodicals, journals, and newspapers
- Collections in world languages and services for non- English speakers and new immigrants

We'll continue to track the library's progress as new details emerge over then next month.

Sabine Auction Planned for February

editor@austintowers.net — 2010-01-10T22:09:25-06:00

After a tenant lawsuit and a recent foreclosure posting, it looks as if 27 of the 44 long-vacant remaining units in the Sabine are finally headed to auction on February 28th.

The Sabine is an 80-unit condo conversion project of a mostly-empty office building on Waller Creek into a new condo project adjoining the Hilton Garden Inn on 5th Street near I-35. The project was completed in 2007 and the majority of units still remain vacant although they have been removed from the market due to pending litigation.

The project has been plagued with problems. A year ago, 35 residents of The Sabine filed suit against the developers for list of problems that the condo owners say have been ongoing for month. The problems included elevator issues (a 12/29/08 elevator inspection exposed 19 code violations including some that were described as serious safety problems), problems with water leaks, window seals, and sound-proofing, and failure to pay property taxes on more than 40 units.

In addition, Compass bank has twice posted the property for foreclosure.

Now, the developer has settled with the tenants and turned control of the HOA over to the current Sabine owners -- an unusual move for a project with so many vacant units. In addition, the developer has committed to major renovations to remedy the issues raised in the lawsuit. With the lawsuit gone, the developers are able to pursue their long-rumored plan to auction off the remaining units. The auction date for 27 of the 44 units has been set for February 28. It is not clear what will be done with the remaining 17 units.

The Brazos Place auctions (as well as the sale of deeply-discounted Shore properties) showed in an even more difficult market that there is strong demand for highly discounted downtown Austin condo units. For potential bidders, auctions like this typically bring a 25-30% discount off the original prices. In the case of the Sabine

21c Austin: Condos Out, Apartments Possible

editor@austintowers.net — 2010-01-03T20:33:09-06:00

In December, the 21c team returned to Austin to comment on the Waller Creek plan and to discuss their future intentions for their prime Waller Creek site adjoining Red River and Cesar Chavez downtown.

For those of you unfamiliar with the history, the project was originally scoped as a 44-story condo and hotel project on third and Brazos street. In a surprise move, the developers abandoned the planned third and Brazos project in favor of a new multi-building complex to be located a few blocks East on Waller Creek.

The new project, also to be named 21c, was slated to include a 16-story hotel with 243 rooms which would be followed by a 49-story condo tower. The hotel was supposed to break ground in 2009 and the condo tower was supposed to break ground by 2010. Then, the project became a victim of the financing crisis that has scuttled most of the other unbuilt Austin projects.

Fortunately, the developers keep trying to make the project work. In December, the 21c provided a basic overview of their current but unfunded plans for the site. First, the condos have been eliminated. In the current environment, it is simply not possible to fund a new high-end condo project in downtown Austin. Instead, the developers are focusing on a 31-story 350 unit apartment tower near the corner of Red River and Cesar Chavez. Rents would start at $1.50 per square foot which would mean $1,000 / month for a 700 square foot unit or $1,500 for a 1,000 square foot unit if they are able to hit the low-end of the target range. The goal would be to make the building 70% 1 bedroom / 1 bath units. As many as 10% of the units for be designated as affordable units with controlled rents.

The second tower -- which is more precarious in the current environment -- would be a 12-story 200 room hotel, spa, and restaurant. The developers are hoping to put parking underground and include ground retail in the project. Although no specifics have been announced, the third tower could include condos if at some point it does get built.

Since the plan remains unfunded, the project is not likely to rise anytime soon. But the fact that the developers are actively working with the city and still try to line-up funding means that a 21c project may be yet to rise.

Exclusive: November Condo Sales Volume Strong, Prices Moderate

editor@austintowers.net — 2009-12-27T22:55:04-06:00

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for November, 2009 and, for the sixth month in a row, MLS sales volumes have increased in comparison to previous year numbers. On a per square foot basis, year-to-date prices are down about 5% over the comparable 2008 numbers.

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Nov-08	8	$460,973	$322	1,361	1989	93%	151
Nov-09	13	$292,018	$286	1,022	1995	96%	78
Change	63%	-37%	-11%	-25%	5.80	4%	-48%

In the month of November, 13 downtown Austin condo units were transacted on the MLS: 5 more than in November of 2009 with an 11% lower price per square foot. In addition, the % of asking price jumped significantly from 93% a year ago and 87% in June to a more typical 96%. Average days on market for units that sold came in at 78, an enormous 48% drop over last year. There are many units that have been on the market for a long time, especially larger and nicer units which have not been moving. The most expensive unit sold in November was $554,750. Continuing a trend toward lower priced units, nine units sold for less than $300,000 including a tiny 454 square foot unit that sold for $110,600.

Sold units were in seven projects including 360 (3), Penthouse condos (3), Milago (3), Five Fifty 05 (2), Railyard (1), and Towers on Town Lake (1). Units in 360 carried the highest price per square foot during the month with an average of $374/SF.

As always, the results show the weakness of the MLS. While 13 units sold through MLS, additional units went ton sale at tSpring and other new projects outside of the MLS. While the MLS numbers continue to show growth in transaction volume, it is difficult to know what is happening in the broader market as sales office transactions are rarely included in the MLS numbers. For example, no Spring units have appeared in any of the MLS sales reports this year.

See the full index here.

New 27-Story Condo/Office Project Announced!

editor@austintowers.net — 2009-12-19T21:15:55-06:00

For the first time in a very long time, a developer has announced plans to construct a new 27-story downtown condo and office tower. The developer is proposing to build a tower of up to 350 feet on the vacant lot between Whole Foods and Austin City Lofts. The announcement is a clear sign that the downtown market is stabilizing and expected to improve dramatically over the next few years.

The building is being proposed by Schlosser Development, a local firm with a significant track record in the 6th and Lamar neighborhood. Schlosser developed the Whole Foods headquarters, the Home Away headquarters across the street, the Officemax building just South of Whole Foods, and the REI / BookPeople building just to the North. This appears to be the company's first tower project.

As proposed, the new building would include:

- Street level retail and parking on the lower floors

- 16 stories of office space

- 90 condo units on the top seven floors

- A companion building on the 2.7 acre site would include three levels of commercial office space with parking and street-level retail. The smaller building allows full utilization of the site which is partially in a protected capital view corridor

Since zoning limits development on the site to 120 feet, a variance would be required to build the project as proposed. The tow buildings would comprise a whopping 600,000 square feet.

The announcement of such a large condo and office project is another sign of a downtown market resurgence. In this case, the developers may have been inspired by the recent leasing of 52,000 square feet of office space on a nearby project to HomeAway. There has been very little new office capacity added downtown over the 5 years: the last large scale office project to be constructed downtown was the Frost Bank Tower which was completed in 2004.

$200M Project Approved for South Shore of Ladybird Lake

editor@austintowers.net — 2009-12-19T20:30:02-06:00

The Austin City Council granted final approval for the $200 million Grayco Lakeshore development on the South sure of Ladybird Lake just east of I-35. In exchange for approving the development of the first four buildings, the Council required the developer to contribute $3.1 million to support affordable housing.

The massive project will include as many as 1,200 apartments and nearly 100,000 square feet of retail. Despite the financial crisis which has depressed development in Austin and across the country, Grayco has continued to aggressively push for development of the site. Under the revised plans, Grayco will replace a four building 520-unit apartment complex with as many as 1,200 new apartments.

The most notable element of this project is its scale: Grayco’s plan seems to be to create an entire district, a whole new neighborhood to attract residents to this emerging near-downtown market. While the final plans have not been released -- and the developers have hinted that the final proposal may be less urban -- the scale of the project is certain to remain large.

Sabine & Star Riverside Posted for Foreclosure

editor@austintowers.net — 2009-12-16T22:15:40-06:00

Two troubled downtown condo projects -- Sabine & Star Riverside -- have run into financial problems and been posted for foreclosure.

The failure of these projects is a combination of market conditions and their own troubled history. The Sabine is a troubled 10-story office building conversion project at Sabine and West Fifth streets that was completed in 2007. With 44 of the 80 units unsold and litigation between residents and the developer over sued faulty and unsafe elevators and leaks, sales of units have slowed dramatically. With the current foreclosure, an agreement is apparently underworks that will transfer control of the building to the building's homeowner association. With the majority of units unsold, an auction is a likely next step to raise additional capital to make the lenders whole.

Star Riverside has had an equally difficult time getting off the ground. As an expensive project located on the wrong side of the lake and the wrong side of I-35, Star Riverside has been repeatedly reinvented as the result of changing market conditions and neighborhood concerns. Construction was halted two months ago, with only the parking garage about 80 percent complete. With prices starting at more than $600K, the low-rise project East of I-35 and South of downtown faces tough odds for success. With the economic decline, the project has lost key financial support.

Despite the bad news, both projects claim that deals will be reached before the projects are but up for sale in the January 5 foreclosure auction. For Sabine, the news is another blow to existing residents who will likely see the remaining units sold at a a significant discount. For Star Riverside, it's hard to believe the project can be created without a significant repositioning that better matches pricing and configuration to the location and current market conditions.

Analysis: Understanding The Density Decision

editor@austintowers.net — 2009-12-14T20:43:07-06:00

This is an important week for the future of downtown development. Over the last few years, the City has advocated dense downtown development as an alternative to suburban sprawl, traffic, and high infrastructure costs. On December 17, the Austin City Council is scheduled to vote on proposals to require developers to provide community benefits such as affordable housing, child care services, or cultural spaces.

While the proposal sounds reasonable, it is unclear whether the proposal will result in high density and new services (good) or higher downtown costs and reduced density (bad). The fact is that the proposal has real costs for the developers and the tenants looking fo housing, companies thinking about moving downtown, and retail entrepreneurs looking to open shop downtown. The proposal will inevitably lead to higher downtown costs for future projects.

In making this proposal, the City is treating density as a luxury that needs to be sold. While similar proposals have passed in Seattle, Tampa, San Diego, Portland, Denver, Nashville, Vancouver and Calgary. Some of these are great cities. But it's hard to compare the forces that have shaped these environments to the specifics of downtown Austin.

The real question is this: Is downtown density a good thing?

Over the last decade, Austin's policy has advocated strongly for downtown density. And there are many reasons why downtown density makes sense: the environmental impact is minimized, public transportation is easier, sprawl is reduced, and tax revenue is high compared to the services and infrastructure required.

Today, unfortunately, Austin is not a high density city: even the central downtown area is relatively low density compared to the core of other major cities. Of the top 25 cities, Austin is the 20th most dense city. In Texas, Houston, Dallas, and San Antonio all have higher levels of density than Austin. If you you think Houston is sprawling, than you probably won't like Austin in a few decades if current growth rates persist. El Paso is the only large Texas city with a lower level of density than Austin.

While many people question whether downtown development is good or bad, there is no better way to improve population density. A dense urban core is vibrant, ecologically-friendly, and traffic-friendly. It is the best antidote to sprawl. While downtown development won't stop sprawl in Austin, it is the first step in the right direction. It provides people who want to bike to work or walk to dinner with an alternative that hasn't previously existed in Austin.

Over the coming couple of decades, Austin will double and triple in size. We have two choices: One is to expand endlessly into the hill country with new sub-divisions and the traffic and environmental impact they bring. The second is to grow downtown smartly with real density. While painful sprawl may be inevitable, every 300 unit downtown project saves 100 acres of land from development while making the city more vibrant. We need downtown parks and services, but we should tax downtown developers and penalize density, especially when we are not willing to do the same with the developers driving suburban sprawl.

Austin: #1 For Being Ranked on Lists

editor@austintowers.net — 2009-12-14T20:18:07-06:00

Austin is no longer a well-kept secret. It seems that hardly a week goes by where Austin does make a list of the top places to live or work or bike or to be indoors or to be outdoors or just about anything else that can be listed. So, thanks to Sam Thacker who created a list of Austin lists in the Austin Business Insight Examiner.

Here are some of the highlights:

- The Milken Institute ranked the Killeen-Temple-Fort Hood MSA as second in the country behind Austin for overall best performance in creating jobs.

- In October, Business Week and The Brookings Institute ranked Austin #2 out of 100 metro areas with the highest metropolitan growth product (MGP) and employment potential.

- In October, CNN-Money ranked Austin #9 as one of the best places to launch a business.

- In October, Portfolio.com ranked Austin #1 out of 100 of the largest cities in the country for job creation. San Antonio, Houston, and Dallas/Ft. Worth all ranked within the top five.

- In September, The Austin Business Journal and IHC Insight named Austin and San Antonio as the first two most likely large American cities to bounce back to pre-recession employment. Of cities highlighted by IHC 6 of the top 20 are in Texas.

- In August, Forbes ranked Austin as the least stressful city to live in out of 40 it studied. Factors it considered were housing values, traffic congestion and unemployment.

It's no secret that Austin is a great place to live, but it is great to hear that the local economy ranks among the strongest in the country. With high potential for job creation, migration, and economic growth, Austin has the key ingredients to exit the economic downturn and see real estate appreciation ahead of the pack.

Austin Home Listings Slide by 20%

editor@austintowers.net — 2009-12-09T21:08:42-06:00

The Wall Street Journal is reporting that the number of homes listed for sale has declined in many U.S. cities in November, reversing a strongly negative trend.

In the 27 metropolitan areas covered in the ZipRealty survey, housing inventory dropped by an average of 28% over the last year and 2.4% during the last month. In Austin, the number of home listings slid by 19.8 percent over the last year and 3 percent between October and November.

The slide in inventory is a positive step: it means that supply and demand are returning to a more normal balance after a very difficult year. While seasonal trends will cause inventories to rise again in January, it's the year-over-year trend that is most important.

According to the Journal, the one month change is less significant as "Inventories typically decrease modestly in November compared with the previous month, according to Zelman & Associates, a research firm. Over the past 25 years, the average change has been a decline of 1.8%."

The Journal also notes that the exact level of supply is impossible to pin down, partly because multiple listing services don't include all the foreclosed homes that banks are preparing to put on the market. As of the end of October, banks and mortgage investors had 639,000 foreclosed homes for sale across the U.S., Barclays Capital estimates. That's equivalent to more than 10% of expected U.S. home sales this year. The bank-owned homes are largely concentrated in Florida, California, Arizona and Nevada.

The MLS also excludes newly constructed downtown Austin condo units that are not being sold by realtors. This means that most of the units in the Austonian, Four Seasons, W, Spring, and other projects are excluded from the inventory numbers. Since the same was true last year, the 12 month change does seem to be a significant development.

$500B in Home Value Disappears

editor@austintowers.net — 2009-12-09T20:51:45-06:00

According to ZIllow, Total home values in the United States fell $489 billion in the first 11 months of 2009. A large drop, to be sure, but it marks a significant improvement from 2008, when homes lost a total of $3.6 trillion in values. In addition, about one-third of the markets we covered (48 of 154) had gains in total home values. The Boston metropolitan statistical area (MSA) topped this list, gaining $23.3 billion. Last year, the Boston MSA lost $53.4 billion.

On the other end of the spectrum, the Los Angeles MSA’s housing market lost the most dollars in 2009 — $60.8 billion. But even that was a significant improvement from 2008, when the MSA lost $345.8 billion. The LA market has actually performed quite well recently, having seen six consecutive months of monthly gains in home values as of October, but the strong negative performance earlier in the year dug the overall market a large hole early on.

View the full report here.

New: Urban Lifestyle and Residential Guide (Free)

editor@austintowers.net — 2009-12-02T22:52:14-06:00

I just received my free copy of urbanspace's most recent Urban Lifestyle and Residential Guide (Get it here for free). The latest edition was released in October and includes profiles on more than 100 condo and rental projects near Austin's urban core. It is the most comprehensive list of cool places to live that we have seen. In addition, it includes hundreds of great urban spots from Justine's to Lustre Pearl to East Side Showroom.

Through special arrangement with UrbanSpace, a free copy of the new 44-page guide will be mailed to any AustinTowers reader who requests one. To get your copy of the guide -- click here. It's a great resource -- get one while they last!

You can get your free copy of the Guide here.

21c Austin: New Renderings Magically Appear

editor@austintowers.net — 2009-11-28T16:22:36-06:00

This week, it has been reported that the developers of 21c are coming back to Austin to provide an update on the status of the project. Apparently, the plans are now complete and they are ready to proceed with a third version of the project on a large site located at the intersection of Red River and Cesar Chavez streets.

The history of the 21c project is quite unique. The original 21c project was late to the game, announced just 2 months before the summer meltdown of U.S. credit markets. The project was originally scoped as a 44-story condo and hotel project on third and Brazos street. Although 21c had been actively marketing condo units through a sales office on 6th and Congress, the office was shut and shackled before the developers announced that they had abandoned the planned third and Brazos project in favor of a new multi-building complex to be located a few blocks East on Waller Creek.

The new project, also to be named 21c, was slated to include a 16-story hotel with 243 rooms which would be followed by a 49-story condo tower. The hotel was supposed to break ground in 2009 and the condo tower was supposed to break ground by 2010. Then, the project became a victim of the financing crisis that has scuttled most of the other unbuilt Austin projects.

21c Version One (3rd & Brazos)

21c Version Two (Red River & Cesar Chavez)

And now, the website is showing a third version of the planned project:

According to the Statesman:

The developers of the proposed 21c Museum Hotel are coming to Austin next week to present an update on the stalled downtown project.

Developers Steve Poe and Craig Greenberg will be speaking to the Waller Creek Citizen Advisory Committee at City Hall on Dec. 3.

The proposed project includes a hotel and condominiums at East Caesar Chavez and Red River streets. City leaders had hoped that the tax revenue from the project would kick-start plans to build a flood control tunnel along Waller Creek, helping spur redevelopment in the area.

Michael Bonadies, president and CEO of 21c Museum Hotels, said the project plans are complete, and they’re ready to move forward.

But there is still a major obstacle.

“We continue to work hard on sourcing construction financing in what has proved to be a difficult environment,” Bonadies said in an email. “However, we remain optimistic, encouraged by some of the feedback we have recently received, which leads us to believe that 2010 will bring a more favorable climate for construction financing.”

We'll see what they announce this week!

Milago: Detailed Comparable Sales Analysis

editor@austintowers.net — 2009-11-23T21:42:01-06:00

Over the last 22 months, AustinTowers has been working closely with urbanspace to track the downtown Austin condo market.

During this period, Milago has sold more units on the resale market than any other project . The 46 Milago transactions over the last 21 months provide an interesting microcosm of the downtown Austin market.

The numbers clearly show the challenges that the market has faced over the last year. Over the last six months there have been 16 Milago transactions averaging $268/SF. Over the previous 15 months, there were 29 transactions averaging $320/SF. This decrease represents a 16% market decline. During this period, average days on market increased 50% from 75 to 113 and the average discount from listing price increased by one point from 4.5% to 5.5%.

The 15 units sold over the last 6 months ranged in price from $175,000 for a 756 foot one bedroom unit on the 11th floor ($231/SF) to $372,500 for an 1,189 square foot 2 bedroom unit on the 9th floor ($313/SF).

Interestingly enough, the 2 bedroom units have commanded a per-square-foot premium over the one bedroom units over the last 21 months. During this period, 20 two bedroom units have sold for an average price of $368,923 ($309/SF) and 24 one bedroom units have sold for an average of $227,256 ($288/SF) representing a 7.5% per-square-foot premium for two bedroom units. In addition, one three bedroom unit sold in early 2008 for $368 / SF.

Finally, over the last year, 22 of the project's 240 units have sold representing 9% of the building's units. An additional 20 units are currently on the market which is equivalent to 10.9 months of inventory.

The good news for Milago owners is that the units continue to sell at a reasonably brisk pace and are relatively liquid. The large number of transactions means that comparable values have been firmly set making pricing key for sellers looking to move their units . For buyers, it means that comparative analysis from a realtor is key to ensure that you are not overpaying.

Austin: 3rd Best City for Development

editor@austintowers.net — 2009-11-19T21:42:22-06:00

From my perspective, it is always great for Austin to be included in a top five list that includes San Francisco, New York, Boston, and Washington DC.

This week the Urban Land Institute, a 2,000 member not-for-profit real estate and developer network, released its list of the 5 cities for development in 2010. In order, the Institute's analysis recommends Washington DC, San Francisco, Austin, Boston, and New York.

The report provided the following rational for picking Austin as the #3 city for development:

Austin, Texas: A growth bastion, Austin’s low state taxes and a pro business environment are expected to contribute to future growth and continuing corporate relocations. Austin fits the “brainpower” model with its state capital, large state university, and offshoot tech and software businesses.

While not everybody is looking for another wave of downtown development at this point, the report does bode well for current downtown condo owners. As the institute analyzes major markets, it is clear that Austin's strengths include a dynamic economy, consistent population growth, and a community that attracts businesses and entrepreneurs. And where there is growth and economic strength, home value increases are likely to follow.

October Surprise: Austin Home Sales Surge

editor@austintowers.net — 2009-11-18T22:04:53-06:00

We reported 9 days ago that downtown Austin condo sales were up 44% year-over-year while prices were down 3%. This was good news but not necessarily indicative of the broader Austin market. Today, newly released MLS numbers show that central Texas existing home sales soared 38% in October with 1,823 houses selling compared with 1,322 a year ago.

While volumes were up, prices were down 5% to $182,000 as a result of a shift in mix to lower priced houses as the demand for inexpensive housing was boosted by the federal tax credit for first-time home buyers.

October sales volumes surpassed October sales in 2008, 2007 and 2006 making this the best October since 2005. The number of homes listed for sale, 8,947, was down 10 percent from a year ago. And pending sales were up 47 percent, with 1,811 contracts waiting to close. Year to date, area home sales are down 11 percent, and the median price was down a very minor 1 percent to $189K.

This is very good news for the Central Texas market and another sign that the worst may be over. That said, the current real estate market remains fragile with low interest rates and tax credits driving mostly low-end demand. For downtown condos, it still remains a buyer's market although the supply of new units priced below $350K is rapidly disappearing. Many reasonable units, however, are still available on the re-sale market.

Houston Condo Market Problems

editor@austintowers.net — 2009-11-16T22:22:00-06:00

The #1 thing going for the downtown Austin Condo market is downtown Austin. In downtown Houston, where they also have a brand new crop of high rise condos, very few people want to live downtown. In the other neighborhoods where towers have popped up, picky residents can live nearby in larger, less expensive housing.

Here is a summary from the Houston Chronicle:

Even as single-family housing shows signs of momentum, Houston's high-rise condo market remains stalled.

Developers who put up shiny new towers during the boom have filed for bankruptcy protection and others are renting their high-dollar units because they can't sell them.

“In all of our projects, the market is really slow,” said Ben Lemieux of Group LSR, which develops condominium buildings in the Houston area under the name InnerLoopCondos.

Sales and prices of these properties have fallen every quarter over the past two years.

During the last quarter, sales were down 17 percent and prices were off 20 percent compared with the same period in 2008, according to data from the Houston Association of Realtors.

Brokers are quick to point out, however, that Houston is no Miami. There, tens of thousands of high-rise units sit vacant, casualties of the nation's real estate crash.

On Houston's Multiple Listing Service — which doesn't include every building on the market — 486 condos are up for sale.

Unlike other cities whose condo markets cratered after investors bid up prices during the boom, Houston's troubles had other causes.

For one, developers misread demand for this type of housing, said Giorgio Borlenghi, whose firm built two condo towers in Uptown Park before the market began to sink.

He believes there's only demand for about 30 high-end units per year in Houston.

“If you have two or three buildings coming up at the same time, it will take some time to absorb,” Borlenghi said.

Still, not everything that was supposed to be built here was.

Some developers pulled out of the market after trying to pre-sell units — but not until after spending millions on sales centers and lavish parties.

They were encouraged by the city's large population and the amount of wealth created by the energy industry.

But what they didn't realize was that the price of a single-family house or patio home in Houston is often less than a high-rise unit just a few blocks away.

“It's not housing you're selling, it's a lifestyle,” Borlenghi said. “And when you're selling a lifestyle, it's an even smaller market.”

New, Less Restricttive FHA Rules for Condo Loans

editor@austintowers.net — 2009-11-11T22:44:54-06:00

In a dramatic temporary reversal of policy, the Federal Housing Administration is giving condo buyers a much-needed break.

Last week, the FHA, the federal agency that insures low-down-payment home loans for private lenders, said it was relaxing its building underwriting guidelines as a way of helping the struggling sector ride out the downturn. The move could help boost sales in condos by making more FHA mortgages available to borrowers.

FHA loans provide qualified buyers an opportunity to purchase units with loans that they would not otherwise qualify for. In particular, FHA loans allow for smaller down payments, often as low as 3% of the purchase price. This month, the rules behind these Federal loans were supposed to change substantially, making many condo projects and buyers ineligible for the first time.

When it comes to downtown Austin, FHA loans are the exception and not the rule. Many new condo developments require deposits and down payments beyond the FHA minimums, diminishing the advantages of an FHA loan. In addition, many units are priced beyond the FHA loan maximum eliminating these loans as a viable financing option. Finally, since the process has always been complex and painful, few projects go through the hassle to be certified.

The new rules - which are temporary - come after more than a year of more stringent standards from lenders, who, after suffering major losses on condos, began vetting and disqualifying condominium projects for purchase loans, regardless of whether home buyers qualified.

The temporary rules are effective for most of the coming year and will help the marketplace transition into a new set of tougher guidelines that bring FHA into closer alignment with the project underwriting practices of Fannie Mae.

Earlier this year, Fannie implemented a slew of new regulations governing condo projects that some claim have strangled the market by stigmatizing condo loans in tough markets such as Florida.

Similar to Fannie regulations, the FHA is also now singling out those markets for special attention by approving projects itself, rather than lenders. Burns said lenders and investors were reluctant and even "scared" to lend money, prompting the agency to step in as a way of calming nerves.

Exclusive: October Downtown Condo Sales

editor@austintowers.net — 2009-11-09T21:57:16-06:00

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for October, 2009. For the fourth month in a row, MLS sales were higher than the previous year's numbers. The most recent numbers suggest that the bottom of the downtown Austin condo market was likely hit this spring. Over the last few months, sales, prices, and price-per-square-foot have all been on the rise.

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Oct-08	9	$456,839	$307	1,483	1991	94%	108
Oct-09	13	$444,173	$323	1,376	1988	94%	151
Change	44%	-3%	5%	-7%	-2.54	1%	40%

In the month of October, 13 downtown Austin condo units were transacted on the MLS: 4 more than in October of 2009 with a 5% higher price per square foot. The percentage of asking price remained constant year-over-year at 94%. Average days on market for units that sold came in at a painful 151, a 40% increase over last year and tied for the highest number on record.

As always, the results show the weakness of the MLS. While 13 units sold through MLS, additional units likely sold at Spring and other new projects outside of the MLS. In peak months, we know that dozens of units have been transacted outside of the MLS at projects like Shore, Spring, and 360. As ratio of resale units to units increases, the MLS will begin to show a more accurate picture of market transactions.

Over the last few months, an amazing proportion of sold units have been priced under $250K. This trend started to reverse in October as only 3 units sold for less than $250K v. 6 units in this price band during September. Similarly, 5 units sold for more than $450K including one for $915K in Austin City Lofts and one for $1.37M in the Nokonah. The Nokonah unit sold for $452/sf --- the highest $/SF we have seen on the MLS in more than a year.

All in all, the numbers show renewed strength in the downtown resale market. For the full details, visit the AustinTowers | urbanspace Downtown Austin Condo Market Index.

Analysis: Downtown Condo Supply & Demand

editor@austintowers.net — 2009-11-05T20:12:36-06:00

Over the last ten years, the Austin metropolitan area population has grown by 500,000 people. Over the last three years, 100,000 more people have moved to Austin than have left the city. In 2008 alone, the Austin population increased by more than 60,000 people.

In addition to explaining why it took 50 minutes for me to drive from Round Rock to downtown Austin this evening, this population explosion provides very important context for the downtown condo market. As Will Wynn, the former mayor of Austin, said about the portion of the metropolitan area population living within the city boundaries: "We have 88,000 more people here than we did 5 years ago. Experts predict at least another 75,000 in the next 5 years. And we've got only 400 new downtown condos remaining for sale for the next 5 years. That's right, only 400."

Over the last year, it has been common to hear the Austin condo market referred to as “overbuilt.” This is an easy claim to make: any new unit is an excess unit in a market like this. What is important to note, however, is that it takes three to five years to bring a new project to market. With capital markets frozen, it’s is unlikely that additional projects -- besides those currently under construction -- will hit the market for another five or six years.

This leaves us with the available inventory in projects currently under construction as the total supply for years to come. If you look at the buildings currently rising, projects like the Austonian, BartonPlace, the Four Seasons, the W Hotel & Residences, and the recently completed Spring, there are actually less than 1,000 units currently under construction in downtown Austin. The best estimates suggest that there are approximately 300-350 unsold new condo units in the pipeline for the Austin market. This is the total available inventory for the next half decade. These units will sell out and the market will be tight before new units are able to be funded, planned, and constructed.

It is important to remember that the fundamentals of downtown living remain strong: people are moving to Austin, downtown is being rapidly transformed into the center of the community, and people from across the region are looking at downtown Austin as a great place for a second home. As downtown Austin reaches a critical mass, the downtown migration is likely to accelerate.

While the downtown Austin market is doing better than almost any other market, there is no doubt that there are more units than buyers right now. Especially on the high end, for million dollar units, inventory absolutely exceeds current demand. But the market is turning — the bottom was likely reached in the early summer. Now, we're seeing sales numbers begin to increase. While it is still a buyer's market and deals can be found, this dynamic will not last forever.

The difficulty in adding future downtown condo supply makes it likely that the current condo slump will reverse sometime in the next 6-12 months. Given that many of the most prominent projects are not scheduled for completion until next year, people who want to live downtown will be limited to unsold units in the most recent projects and resale units in other recent projects until that time.

In summary, while it remains a buyer's market -- fundamentals suggest that the market may be nearing an inflection point. For units priced below $500,000, it's probably a good time to take a deal. For units over $500K, and especially units over $1,000,000, idiosyncrasies in the jumbo loan market and reduced demand will create buying opportunities for a while to come. But sometime in the next 12-18 months, it likely that the downtown Austin condo market will sell out completely.

Exclusive: Strong October & September Downtown Condo Sales

editor@austintowers.net — 2009-11-02T22:05:51-06:00

In the year between the summer of 2008 and the summer of 2009, a typical month saw 8 downtown condo sales captured in the Austin MLS. In four of those months, only 4 units sold. In the best month, 13 units sold.

All of this has changed in the last two months. Between September 1 and October 31 -- a two month period -- 28 downtown condo units ranging in price from $110K (Greenwood Towers) to $1.4M (Nokonah) were sold according to the MLS. In September alone, 15 units sold during the month. This is the second highest number we have seen in the history of the index --- second only to the 22 units sold in April, 2008 during what was probably the market peak.

During the last two months, units have sold in a broad range of existing buildings including Greenwood Towers, 1700 Nueces, Railyard, Milago, Brown Building, 360, Shore, Westgate, Plaza Lofts, Brazos Lofts, Nokonah, 5 Fifty-Five, and Austin City Lofts -- an amazing cross-section of the downtown market.

While a handful of units sold for more than $500K, it should be no surprise that many of the units sold in lower price brackets. In fact, 17 of the 28 units sold for less than $300K and, amazingly, 8 of the units sold for less that $200K.

Here are some of the key statistics on the 28 units sold over the last 2 months:

Statistic	SF	Listing $/SF	Listing Price	Sold $/SF	Sold Price	DOM
Min	472	$189.15	$115,000	$180.92	$110,000	1
Max	3,025	$527.00	$1,400,000	$452.23	$1,368,000	600
Average	1,091	$320.89	$371,836	$300.08	$344,970	11

We'll update the index soon with all of the monthly data through October. . . stay tuned!

Free Downtown Austin Guide Book

editor@austintowers.net — 2009-10-29T21:41:20-05:00

UrbanSpace Realtors, a large real estate firm focused on the downtown residential market, has published a second version of their comprehensive guide to downtown neighborhoods and living options as well as dozens of their favorite dining, entertainment, and cultural destinations. The guide is amazingly comprehensive: it profiles a broad range of living options in and around downtown Austin and shows nearby Urbanspots -- the cool community destinations that draw people downtown. The new book provides greatly expanded coverage of downtown neighborhoods and hot spots.

The Urban Lifestyle and Residential Guide is the most comprehensive listing of downtown properties -- including buildings just to the East, South, North, and West of the downtown core covered by AustinTowers. Through special arrangement with UrbanSpace, a free copy of the new guide will be mailed for free to any AustinTowers reader who requests one. To get your copy of the guide -- while they last -- click here.

You can get your free copy of the Guide here.

New Home Buyer Tax Credits in Works

editor@austintowers.net — 2009-10-29T21:41:03-05:00

The U.S. Senate is working on a bill that would extend the first-time buyer home credit of $8,000 and add a new credit of $6,500 for homeowners who have lived in their current home for 5 years or more. The new provision, if enacted, would go into effect on December 1, 2009. The new bill is expected to cost upwards of $10 billion.

The tax credit has been an important driver of real estate transactions over the last quarter and one of the primary reasons that national real estate transaction volumes and prices have begun to show improvement. The new bill would extend these benefits -- and add the new credit — for homes that go under contract as late as August 30, 2010.

The tax credit is disproportionately beneficial to the central Texas markets where real estate values remain moderate compared to major metropolitan areas in the East and West. It is also important to lower cost downtown condo units. The $8,000 credit represents 40% of a 10% deposit or 20% of a 20% deposit on a new $200,000 unit.

Here are additional details on the proposed tax credit extension:

- First-time home buyers are eligible for up to $8,000 on the tax credit, which is the same as the current credit. The Senate version of the bill creates a new credit of up to $6,500 for homeowners who have lived in their homes for five years.

-The credits expire on April 30, 2010, but home buyers under contract by April 30 would be able to qualify as long as they complete the sale within 60 days.

- This is the third and likely last version of the credit. The original credit became available in mid-2008.

- The tax credit isn't available to everyone. It phases out for buyers with incomes above $125,000 for single filers and $225,000 for married couples and homes that cost more than $800,000 aren’t eligible.

- After 500 minors took advantage of the last credit, the new one is restricted to individuals 18 years of age or older.

AustinTowers: No More Site Security Problems

editor@austintowers.net — 2009-10-27T20:42:28-05:00

This was a rough week --- Due to problems with our hosting provider, Google listed AustinTowers as a "reported attack site" which generates warnings in most of the major browsers. We cleaned the site, replaced all files, and switched hosting providers and now we are clear. Sorry for the inconvenience and thanks to the readers who offered help! We're excited to be back!

W Receives Financing: Averts Crisis

editor@austintowers.net — 2009-10-26T00:23:17-05:00

The W Austin Hotel and Residences is an important project for downtown Austin. It's located at the heart of the emerging Second Street District. It's a $300 million multi-use project including a much-needed hotel, a prominent condo project, retail, and entertainment. It's the home of the new Austin City Limits studio.

Until this week, the failure of the project's primary lender has put the project in jeopardy. While the 37-story building has continued to rise past 25-floors with the developers investment capital, the project could not have been finished without a new construction loan. Unfortunately, these are tough times to get a construction loan for a condo project that is partially constructed.

This week, Austin-based Stratus Properties Inc., the developer of the W, and the Canyon-Johnson Urban Funds announced the closing of a $120 million replacement construction loan for the W Austin Hotel & Residences project. As part of the deal, the developers were required to add partners to raise an additional $45 million in investment capital. As a result of the financing, the project remains on schedule to open in December of next year with condo units being delivered to buyers through May, 2011.

"Our ability to secure a construction loan in the current economic climate reflects the strength and quality of this project and of the relative strength of the local Austin real estate market," said Beau Armstrong, CEO of Stratus Properties. "Unlike many markets, downtown Austin has a small supply of upper end condominiums - just over 400 units - and is not likely to have any additional new supply in the next five years."

The W Hotel and Residences is located on the City's "Block 21" in the heart of downtown Austin`s 2nd Street District. The building will include 159 residential units, 252 hotel rooms and suites, 18,000 square feet of retail and restaurants, 37,000 square feet of office space and a street-level plaza. Also unique to the project, a state-of-the art, live music venue that will serve as the new home of the world renowned Austin City Limits, the country`s longest running televised music series. The venue will be operated by Live Nation.

W Austin Residences will be located on floors 18 through 37, providing views of Lady Bird Lake, the Hill Country, University of Texas Tower, State Capitol Building and the downtown skyline. Homeowners will have access to all hotel amenities including concierge service, an 8,000-square-foot spa and fitness area, private pool and preferred access to property restaurants and the music venue.

Secret Congress Avenue Town Home on Market

editor@austintowers.net — 2009-10-18T22:59:26-05:00

Although not widely known, there are a small number of private town homes on Congress Avenue between 8th street and the Capital. They are well hidden --- when you walk by you would never know that these buildings are private residences. If you have $6 million, if you want to live downtown but need more space than the largest condos, and if you don't want to share your rooftop lawn and pool, this is the way to go.

811 North Congress is a 8,425 historic building near the Austin Museum of Art (AMOA) on Congress between 8th and 9th street. Although built in 1873, the building has been completely renovated for residential use with a cool, modern design. And since it is a historic building, the property taxes are discounted. The building is situated on 0.09 acres and contains 4 bedrooms with 5 full baths and 3 1/2 baths.

The pictures say it all:

Recession Over in Austin: What Will Happen to Housing Prices

editor@austintowers.net — 2009-10-15T18:44:31-05:00

A new report from Moody's shows that Austin and 78 other metropolitan areas (out of 384 cities in the U.S.) moved from recession to recovery during the month of August. The report labels cities on a four level scale indicating (1) Expansion, (2) Recovery, (3) At Risk, (4) In Recession. Austin was rated as (2) Recovery. No city in the U.S. is rated as being in expansion mode which would indicate that the metropolitan area has grown beyond it's pre-recession peak economy.

In Texas, 7 out of 28 metropolitan areas including Brownsville, Harlingen, Dallas-Plano-Irving, El Paso, Lubbock, and San Antonio are listed as being in recovery. No metropolitan areas in Arizona, California, Connecticut, Florida, Washington DC, Hawaii, Delaware, Maine, Maryland, Nevada, New Mexico, New York, Oklahoma, Oregon, Rhode Island, Vermont or Wyoming showed signs of recovery. The parts of the country that have fared best are areas that experienced less of a housing cycle of boom and bust and that benefit more from relatively strong prices in oil and natural gas. This is certainly true of Texas.

Texas is ranked 6th in the country for economic performance with much better employment numbers and virtually no housing value decline. Austin, amazingly, is ranked 7 out of 392 metropolitan areas in terms of employment growth. The study notes that while housing prices have dropped in Austin, strong population growth supports demographically driven consumer demand and a well-educated labor force attracts high value-added tech businesses. On the negative side, competitive pressure of foreign high-tech manufacturing challenges local industry and the tech cycle adds to cyclical volatility of overall local economy.

The following year-over-year numbers compare Austin to Texas, California, and New York:

	Austin	Texas	California	New York
Employment	-0.71%	-2.43%	-5.04%	-2.25%
Single Family Housing Starts	-6.31%	-19.11%	-21.05%	-23.82%
Industrial Production	-12.61	-12.69%	-10.09%	-12.15%
Growth Over Last 6 Months	+	-	-	-

So what does this mean for real estate values? Real estate values are driven by a combination of supply and demand factors including migration, employment, financing options, new construction, and general economic health. On the positive side, migration is strong, employment and general economic conditions are improving, and new supply (outside of downtown) remains lower than in the past. On the negative side, financing options are severely constrained, especially for jumbo loans and first time buyers. Also, the high tech industry -- which is a major part of the Austin economy -- continues to feel the effects of the downturn.

In summary, nobody is expecting values to jump in the near term. The worst, however, may be over and with mortgage rates low it may be a good time to buy. In downtown, the large number of unsold units means that buyers should continue to look for good deals resulting from over-supply and competition between developers and seller of existing units. When this supply is gone, however, it will be a while before new units are able to hit the market.

12-Floor "Capital Terrace" Development Proposed

editor@austintowers.net — 2009-10-09T14:21:08-05:00

A 12-story multi-use project near the Doubletree hotel on Lavaca and 14th street that was originally announced in 2008 is likely to rise next year. The developer, Palmco, is asking the city council on December 10 for a height variance to allow construction of the 163-foot tall building in an area zoned for construction of buildings as tall as 120 feet.

Palmco, the developer, is proposing that "Capital Terrace" will include apartments, offices, shops, five levels of parking, and a restaurant within just a few blocks of the Capitol. Two of the project's parking levels will be located underground. It would have 30 apartments designed for lobbyists and others with business at the Capitol, as well as five floors of office space.

While it is an unusually large project for the north end of downtown, the addition of extensive ground floor retail and restaurant space may help with the creation of a new walkable district. Today, there is minimal pedestrian traffic in this corner of downtown.

The site consists of four lots on just over one-fourth of a city block. There are four buildings on the site, but only one active lease. If they get the appropriate approvals, Palmco would start construction in the second quarter of 2010.

The Downtown Density Debate Resurfaces

editor@austintowers.net — 2009-10-04T21:37:27-05:00

Is downtown density a good thing?

That's the big question this month as the Austin City Council reviews proposals that would dramatically change the rules for downtown development.

Over the last decade, the City has freely granted density variances in order to get more people downtown. During this period, downtown has been the one place where density has been encouraged. In fact, it has been a key part of the City's downtown Austin strategy. There are many reasons why downtown density makes sense: the environmental impact is minimized, public transportation is easier, sprawl is reduced, and tax revenue is high compared to the services and infrastructure required.

Today, Austin is not a high density city: even the central downtown area is relatively low density compared to the core of other major cities. Of the top 25 cities, Austin is the 20th most dense city. In Texas, Houston, Dallas, and San Antonio all have higher levels of density than Austin. If you you think Houston is sprawling, than you probably won't like Austin in a few decades if current growth rates persist. El Paso is the only large Texas city with a lower level of density than Austin.

While many people question whether downtown development is good or bad, there is no better way to improve population density. A dense urban core is vibrant, ecologically-friendly, and traffic-friendly. It is the best antidote to sprawl. While downtown development won't stop sprawl in Austin, it is the first step in the right direction. It provides people who want to bike to work or walk to dinner with an alternative that hasn't previously existed in Austin.

This month, the city council will decide whether or not to add new requirements for projects looking for density variances in downtown Austin. If the new rules pass, developers (and their tenants) will need to pay for parks, music venues, low income housing, child care, elder care, or a similar community offering. These are all good things --- but they all cost money. If density is a good thing, these requirements will act as a tax on new projects, making new development less likely and will likely result in reduced downtown density.

Today, downtown property taxes subsidize suburban infrastructure and services. This makes sense --- downtown property is expensive and residents are more affluent than the Austin median. But it is also true that downtown living is very efficient from a city service perspective: it takes fewer roads, pipes, wires, police officers, sanitation workers, and other city staffers to support dense downtown development than it does to support an equivalent suburban population. For this reason, it seems that the city should encourage additional density --- and not tax it --- and use the tax money it generates to support other City needs, including downtown services. Reducing density and discouraging downtown development --- we're not going to see much downtown development in the next few years anyway -- is not in the City's best interest.

A Tale of Two Unemployment Rates

editor@austintowers.net — 2009-09-29T21:27:56-05:00

In the last week, the following two stories were published on regional unemployment:

"The unemployment rate in the Austin area dropped slightly in August as seasonally-expected hiring offset some of the significant job losses the region has endured."

"California’s unemployment rate in August hit its highest point in nearly 70 years, starkly underscoring how the nation’s incipient economic recovery continues to elude millions of Americans looking for work."

These stories continue to underscore how lucky we have been in Austin. When in comes to real estate values, nothing is more important than employment. People who don't have jobs don't buy houses. People who lose their jobs often sell their house, pushing values down. Job losses also lead to foreclosures which push down values significantly.

In general, Texas has been lucky with an unemployment rate of 8% -- significantly lower than the national rate of 9.7%. At 7.2%, Austin's rate is downright dreamy in these difficult times. In comparison, things are looking very bad in California.

According to the New York Times, "While job losses continue to fall, [California's] new unemployment rate — 12.2 percent, according to the Bureau of Labor Statistics — is far above the national average of 9.7 percent and places California, the nation’s most-populous state, fourth behind Michigan, Nevada and Rhode Island. Statistics kept by the state show California’s unemployment rate was 14.7 percent in 1940, said Kevin Callori, a spokesman for the California Employment Development Department.While California has convulsed under the same blows as the rest of the country over the last two years, its exposure to both the foreclosure crisis and the slowdown in construction — an industry that has fueled growth in much of the state over the last decade — has been outsized.

In Austin, by comparison, the Austin Business Journal reports that "The region added 900 jobs between July and August, with many of the gains coming in areas such as retail trade (600 jobs) and education and health services (300); gains in those sectors are typical in August. The professional and business services sector also saw an increase of 1,000 jobs, but that was offset by losses in areas such as construction (300 jobs lost) and manufacturing (200 lost)."

Throughout the turmoil of the last year, Austin is very lucky to have lost just 7,200 jobs --- less than 1% of its year ago job total. For anyone with a stake in local real estate, this is very good news.

Exclusive: Building-by-Building Condo Fees

editor@austintowers.net — 2009-09-24T21:46:01-05:00

One of the most common questions asked by first time condo buyers is how much individual buildings charge in monthly condo fees.

Condo fees fund the daily operations and maintenance of most condo buildings. They cover security, landscaping, cleaning of common area, common area energy use, maintenance, and other key building functions. In addition -- and this is very important -- a portion of condo fees are held by the building as reserves to fund major maintenance projects. On average, our research shows, condo unit owners can expect to pay $0.41 / SF / per month or $410 in monthly condo fees for a 1,000 SF unit.

Looking at detailed MLS records on a broad range of units and through tips from buyers, we've calculated the rough fees for most of the major downtown condo buildings. The fees are universally calculated on a dollar-per-square foot basis that typically, but not always, remains constant throughout each building. Generally, condo fees are not higher for more expensive units, or units with more bedrooms, or units on higher floors compared to less desirable units of the same size in the same building.

The prices in new buildings that we have looked at are surprisingly varied -- they range from $0.28 / SF / Month to $0.64 / month -- an amazingly broad range. If anyone has numbers for other buildings, send them to us and we will add them to the list. Apprearing for the time on the list is Barton Place with monthly condos fees of $0.38 per square foot and Austin City Lofts with condo fees of $0.48 per square foot.

Here is our updated list of condo fees by project:

Fee by Building - - - - - $ / SF / Month
Avenue Lofts.................$0.28
Milago.......................$0.31
The Sabine...................$0.33
360..........................$0.33
Plaza Lofts..................$0.33
The Shore....................$0.36
Spring...................... $0.38
Barton Place................ $0.38
Five Fifty Five Condos.......$0.40
Austin City Lofts............$0.48
W Hotel & Residences.........$0.61
Four Seasons Residences......$0.61
Austonian.... . . . . . . . .$0.64
Average......................$0.41

Ballet Austin Party Held at Austonian

editor@austintowers.net — 2009-09-17T21:45:09-05:00

This past weekend, the Austonian hosted one of Austin biggest galas --- the Ballet Austin Fete. With dinner on the 33rd floor, a cabaret on the 10th floor, and a wild party in the lobby, it was quite an event for an active construction site. Hundreds of guests moved between venues on rickety construction elevators as the real ones aren't yet operable.

New Federal Courthouse to Rise Downtown

editor@austintowers.net — 2009-09-17T21:45:27-05:00

A bold new federal courthouse is set to rise on the same prime downtown site that Intel abandoned earlier in the decade. With a recent groundbreaking, the project will be constructed on the Western edge of Republic Square Park.

During the tough years of the tech bust, the City lobbied hard for the GSA (Government Services Administration) to build on the Intel site to eliminate a very public eyesore. At this time, there was very little downtown development and few takers for downtown lots. During the peak of the boom, the City changed its mind, lobbying the GSA this time to build on another site and to once again free a very important and valuable piece of downtown real estate.

Federal courthouses come with a few problems. First, they are single-purpose buildings. This means that they do not contain retail, do not engage the street, and are absolutely dead at night and on weekends. In the rapidly expanding second street district, the courthouse will inevitably break the pedestrian-friendly grid. The second big issue is that security requirements will require the City to close the street between the courthouse and Republic park, interrupting the flow of traffic downtown.

The courthouse brings one advantage: bold architecture. Today, Austin is relatively weak when in comes to bold modern architecture. There is city hall and . . . . well . . . .that's about it. Like it or not, the bold brutalist monolithic courthouse soon to rise is adventurous architecture. It will be a strong presence downtown and will add character to an area filled with generic buildings. Over the last few years, the GSA has won praise for investing in innovative architecture, something the government is not expected to do.

Here are the renderings of the project as designed by Mack Scogin Merrill Elam Architects:

For architecture fans, here is the project description from Mack Scogin Merrill Elam Architects:

683 Feet: Austonian Reaches the Top

editor@austintowers.net — 2009-09-17T21:45:24-05:00

When the rains came last week, there was a day when the clouds simply hovered over downtown. The clouds were so low that they seemed to hover just above all of the tallest downtown buildings. All except for one. If you were working on the top floors of the Austonian, you would have been the only people downtown actually in the clouds.

And so today the Austonian officially stopped its seemingly endless ascent. With the addition of the first of six 32-foot steel beams that will define the decorative glass top, the building has finally reached its final height of 683 feet and 56-stories. One of the amazing things about a building this tall is that redefines the view of downtown from almost any angle. The building can be seen from parts of mopac north of 183, 360 west of the hills, and from the tower of the Wildflower center in far south Austin --- places where downtown was never previously visible.

Construction on the $250 million, 188-unit luxury condo tower began two years ago and is scheduled for completion next spring.

New FHA Rules for Condo Mortgages

editor@austintowers.net — 2009-09-15T21:35:21-05:00

FHA loans provide qualified buyers an opportunity to purchase units with loans that they would not otherwise qualify for. In particular, FHA loans allow for smaller down payments, often as low as 3% of the purchase price. Next month, the rules behind these Federal loans will be changed substantially, making many condo projects and buyers ineligible for the first time.

When it comes to downtown Austin, FHA loans are the exception and not the rule. Many new condo developments require deposits and down payments beyond the FHA minimums, diminishing the advantages of an FHA loan. In addition, many units are priced beyond the FHA loan maximum eliminating these loans as a viable financing option. Finally, since the process has always been complex and painful, few projects go through the hassle to be certified.

Starting October 1, new FHA rules will be introduced that will make these loans even more difficult for buyers to obtain. Here are the new requirements:

- Projects not deemed to be used primarily as residential real estate will be ineligible.

- Because of noise worries, FHA insurance will be unavailable when properties are within 1,000 feet of a highway, freeway, or heavily traveled road; 3,000 feet of a railroad; one mile of an airport; or five miles of a military airfield. Projects must take action to avoid or mitigate such conditions before completing the loan review process.

- There will be no more FHA loans if the “property has an unobstructed view, or is located within 2,000 feet, of any facility handling or storing explosive or fire-prone materials.”

- FHA loans will bot be available if the property is located within 3,000 feet of a dump, landfill, or super-fund site.

- Not more than 25 percent of the property’s total floor area can be used for commercial purposes.

- No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units. For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100 percent complete; and only one unit can be conveyed to non-owner occupants.

- No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.

- For new developments, at least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit. Valid presales include an executed sales agreement and evidence that a lender is willing to make the loan.

- At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units. For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units (the minimum presales requirement of 50 percent still applies).

- Projects in designated wetland and flood zones will not qualify for FHA insurance.

- All current condominium project approvals will be invalid (with the exception of projects approved on or after October 1, 2008) and projects must be re-approved under the new options available. Going forward, all projects will require recertification every two years

It's not clear yet how these new rules will effect the downtown Austin condo market. That said, the fewer available funding options, the more difficult it will be for future condo sales to be completed.

Starwood "Hotel 1" Concept Proposed for Warehouse District

editor@austintowers.net — 2009-09-09T21:26:14-05:00

It's been a long time since a new building was announced downtown. Today, Starwood announced plans to build a new 17-story concept hotel called Hotel 1 (Hotel One? One? 1? Hotel1?) on the southwest corner of 5th and Colorado across Colorado from Kenichi.

The new eco-luxury concept will feature 250 - 275 rooms and will be developed by Woodbine, the Dallas hotel developer that built the Hyatt Lost Pines just outside Austin and the Hyatt Hill Country and Westin Las Cantera in San Antonio.

The 210+ foot building will require a zoning change to allow for additional density. In the past, the City has council has typically approved these requests for non-lake front downtown properties in an effort to drive additional downtown density. The warehouse district, however, is an important low-rise neighborhood that will likely require a more careful review of the project.

The new project is one of the first Hotel 1 hotels to be developed in what will become a new Starwood franchise (Starwood operates W, Westin, Sheraton, Aloft, St. Regis, and a few other brands). Previous Hotel 1 projects have been announced for Washington DC, Seattle, and other markets. Recent reports, however, suggest that these other projects may now be on hold.

While every hotel will likely be uniquely designed, renderings of the planned 11-story Washington DC Hotel 1 provide hints of how they may develop the 5th and Colorado site:

Renderings of the Washington DC Hotel 1

This is the first hotel project to be announced in downtown Austin in two years. During that time, a number of major hotel projects have been put on hold including the much dreaded Congress Avenue Marriott (originally proposed as three hotels), the 290 room Hotel Van Zandt and a planned Westin in the warehouse district.

Shore Closeout Promotion

editor@austintowers.net — 2009-09-07T21:55:05-05:00

Since May 2, the Shore has been aggressively trying to closeout sales on the last 82 units. Amazingly, the developers successfully sold 62 units in the first 10 weeks of the promotion between May 2 and July 23. This is twice as many sales as were recorded during the same period for all other DT MLS listings. This is an amazing success stoiry and shows how many people are on the sidelines and ready to move when bargains appear.

As of a few weeks ago, approximately 20 units remained. These units are being offered at 10-25% off list price -- or as little as $206K for a 715 square foot one bedroom apartment.

Here are the most recent details we've been able to uncover for this condo closeout sale:

The Shore Close-Out Promotion: Take 25% off list price

1 Bedroom
Type	Floorplan	Unit #	Interior SF	Terrace SF	List Price
1 BR	A5	2005	714	79	$275,000
1 BR	A7	2206	842	103	$335,000
1 BR + Den	D9	2008	923	77	$355,000
1 BR + Den	D8	1807	879	80	$325,000
1 BR + Den	D8	2007	879	80	$345,000
1 BR + Den	D8	1707	879	80	$315,000
1 BR + Den	D9	1708	923	77	$355,000
1 BR + Den	D8	1907	879	80	$335,000
2 Bedroom + 2 Bath
2BR	B10	1610	1122	186	$470,000
2BR	B10	1910	1122	186	$500,000
2BR	B10	1810	1122	186	$490,000
2BR	B4	2105	1141	347	$455,000
2BR	B4	2205	1141	119	$465,000
2BR	B3	2204	1193	66	$495,000
2BR	B9	1809	1206	204	$510,000


Close-Out Promotion Take 10% off list price for a limited time!
Type	Floorplan	Unit #	Interior SF	Terrace SF	List Price
1 BR	A4	802	905	229	$337,000
2 BR + Den	E4	2202	1513	98	$725,000
2 BR + Den	E3	2203	1610	111	$755,000

Live Work	LW1	101	1674	35	$450,000

July Downtown Condo Sales Show Improvement

editor@austintowers.net — 2009-09-03T21:57:18-05:00

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for July, 2009 and, for the first time this year, MLS sales were higher than the previous year numbers.

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Jul-08	10	$307,500	$279	1,098	1985	97%	106
Jul-09	12	$265,450	$265	1,021	1987	97%	88
Change	20%	-14%	-5%	-7%	2.00	0%	-17%

In the month of July, 12 downtown Austin condo units were transacted on the MLS: 2 more than in July of 2009 with a 5% lower price per square foot. In addition, the % of asking price jumped significantly from a June low of 87% returning to a more typical 97%. Average days on market for units that sold came in at 88, a 17% drop over last year. From an inventory perspective, months inventory droped from 33 months to 24 months -- a significant drop. This number, however, remains high as buyers seem to prefer units in new projects over MLS inventory.

As always, the results show the weakness of the MLS. While 12 units sold through MLS, additional units went ton sale at the Shore and other new projects outside of the MLS. While the MLS numbers continue to show a surprisingly small transaction volume, it is difficult to know whether sales were weakening or whether the most recent sales were simply closed off MLS.

A final observation is that the units that are moving are priced at less than $350,000. In July, 2 of the 12 units were priced uner $200K, an additional 7 were priced under $300K, and only 3 were priced over $300K with the highest priced unit fetching $350K. So far this year, there has only been one sale on the MLS for more than $1,000,000.

See the full index here.

Impressive New W Renderings

editor@austintowers.net — 2009-08-29T13:17:12-05:00

As the W Hotel & Residences continues to rise, the developers have been busy creating new renderings of the high visibility second street project. The renderings look great -- in fact, they make you wonder how they produce renderings this good for a building that does not yet exist. We are particularly impressed by the second image where they superimposed the project into the current Austin skyline -- the building looks as real as any of the others in the skyline.

Sage Auction Results

editor@austintowers.net — 2009-08-24T07:52:03-05:00

At least 18 of 23 units at the Sage Condos, a new low rise development on South Lamar near Oltorf, sold in the third major Austin condo auction of the year. All 23 units received bids and 18 of the bids were immediately accepted by the developer.

The format of the auction was a first for auction with each bidder competing for the right to choose any remaining unit at the point that they bid. The auction drew a large crowd with approximately 300 people packed into the auction at the Hyatt Regency.

Winning bids ranged from $151K for a 1,262 square foot unit to $253K for an 1,847 square foot unit including the mandatory 10% buyer's premium. Winning bids ranged from $121 to $161 / per square foot with an average of $131 per square foot.

Not surprisingly, the units with downtown views fetched the highest prices. The project is located roughly a mile south of downtown on Lamar, a more central location than the Bel Air, which also sold units via an auction earlier this month.

Read more to view the full results of the auction as well as a video of the auction proceedings:

New Condo Investment Model: The Emergence of the Bulk Discount Buyer

editor@austintowers.net — 2009-08-22T14:06:43-05:00

Every condo market is different. Miami, in particular, has been known for over-development spurred by speculative investors. As the market appreciated rapidly, the same buyers kept snapping up more and more speculative units. When prices fell, these investors were left holding the bag.

The Miami market with it's thousands of unsold units has led to a new investment model: bulk investment. In this model, bulk investors or bulk vulture buyers take the pressure of developers by negotiating to purchase multiple units at deeply discounted prices. Often, these investors or investment partnerships purchase 5 or 10 or more units in a single transaction. They than can rent or hold the units to turn a profit. Often, they purchase the least desirable units (small units on low floors) at rock bottom prices.

The presence of sophisticated bulk investors in the Miami market is a sign of the scale of the condo market problems but also a signal that smart buyers see paths to profitability in the chaos. While we have not heard reports of bulk buyers in Austin, over supply and discounting may lead to increased investor interest in the downtown condo market.

Here is a recent report from the Miami Herald on a typical bulk investment transaction:

Following the bankruptcy this week of Cabi Downtown Developers, the builder of the luxury condominium Everglades on the Bay, a new distress marker was revealed in Miami's downtown condo market.

In the lowest bulk price paid for condo units in the downtown area since the market crashed last year, Prodigy Capital Investments, a newly created corporation based in Miami, has purchased 10 units in the Brickell on the River South condominium for $156 per square foot, according to new research from Bal Harbor-based Condo Vultures, a real estate consultancy that closely follows the downtown condo market.
Prodigy Capital Investments, which incorporated in July and is headed by Rodrigo Nino, according to state records, paid$1.9 million for the units,which include five one-bedroom apartments and five two-bedroom units for 12,081 square feet of space. . .

``A key reason for the discount realized on the Brickell On The River bulk deal is the location of the units,'' Peter Zaleweski, president of Condo Vultures, said in a statement.

The 46-story south tower is located at 41 SE 5 St. in Miami. The prices were lower, Zalweski said, because the units, which are primarily suitable for renters, were located on the lower floors of the building.

Get Downtown Austin Condo News Faster

editor@austintowers.net — 2009-08-22T13:43:33-05:00

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Texas A&M Expert: I See the Bottom!

editor@austintowers.net — 2009-08-20T22:27:30-05:00

Mark Dotzour, the director of the Real Estate Center at Texas A&M University, has announced that the Texas real estate market has likely reached bottom.

According to Dotzour: “I feel now is the time to buy a house in most Texas cities. Housing affordability has never been higher, and I never thought I would see 5 percent mortgages in my lifetime. If you plan to live in the house for at least two or three years, now is the time to buy.”

The Texas A&M real estate center is predicting that 2009 will look a lot like 2003 in terms of volumes, listings, and inventory. Prices, however, are definitively higher with the 2009 estimated average price 20% higher than the price in 2003 and lower only than the prices of the last two years. The median price remains at an all time high.

Texas A&M Austin MLS Tracking with 2009 Estimates

Date	Sales	Dollar Volume	Avg. Price	Median Price	Listings	Months Inventory
2003	19,793	3,899,018,519	197,000	154,800	10,340	6.6
2004	22,567	4,487,464,528	198,900	154,100	10,394	5.9
2005	26,905	5,660,934,916	210,400	161,300	8,965	4.3
2006	30,284	6,961,725,607	229,900	172,200	8,695	3.6
2007	28,048	6,910,962,480	246,400	184,200	9,833	4
2008	22,439	5,470,241,896	243,800	188,200	11,585	5.5
2009 e	20,043	4,746,392,079	236,800	188,000	11,244	6.6

It's hard to know how Dotzour's prediction applies to the downtown Austin condo market. The downtown Austin market is less established than other markets and currently faces a surplus of newly constructed and planned units. This surplus, however, is driving unprecedented discounting. For buyers, it is a balancing trick: for how long will prices continue to go down and at what point will interest rates go up?

BartonPlace July Construction Update

editor@austintowers.net — 2009-08-16T22:48:55-05:00

After a week of problems in the Austin development scene it was great to hear from BartonPlace where construction continues as normal. They even sent pictures to prove it!

BartonPlace includes 270 units across 6 buildings each of which is 6 stories tall. According to the developers, sales continue to go well and traffic has increased dramatically in the last few weeks.

On buildings 1 and 2, they are already framing the inside as they simultaneously erect the roof steel. In buildings 3 and 4, the roof installation is almost complete and windows are being installed. In buildings 5 and 6, stone installation is nearing completion. Building 6 is the farthest along with tape and float ongoing and the elevators currently being installed.

BartonPlace has updated its virtual tour with new renderings and images that give a good feel for the project. The tour can be accessed here.

Here are the latest construction images:

Bel Air Auction: More Bad News

editor@austintowers.net — 2009-08-14T23:01:57-05:00

We've received multiple emails from irate participants in the Bel Air condo auction. The most recent reports are that as few as two units actually sold in the auction. The rest of the bids were supposedly rejected by the seller. As more details come out, it is becoming clear that the Bel Air condo auction went very very poorly.

The purpose of an auction is to quickly sell condos at the market price. In the case of Bel Air, the developers didn't like the market price and so they have refused to sell many of the units. When the final bids came in, multiple reports suggest that the average "winning bid" carried a 45% discount off of the original price with the discount ranging from 30 - 60%.

In an unbelievable move, the developer and auction company are now aggressively negotiating with bidders to try to get them to pay more than their winning bids (market price) if they want the units that they won. This is a very problematic tactic and unlikely to succeed. Let's not forget that they must also pay a 4% buyer's premium.

The developers at this point have few choices: they either need to accept market price or take their chances back on the open market. It is hard to believe that they will sell units at above market rates through private marketing efforts or the MLS. With as many as 23 units remaining, the auction is on track to turn out poorly for everyone involved: residents, bidders, the auction company, and the developer will all likely be disappointed when this is over.

The following video shows the last unit to be auctioned and provides an inside look at the auction proceedings. The key words come at the end as the auctioneer clearly states that the unit is sold subject to seller's approval. We'll see if this approval ever comes.

Star Riverside Halts Construction

editor@austintowers.net — 2009-08-12T21:34:31-05:00

Star Riverside, a high end condo project on the south shore of Ladybird Lake just east of I-35, announced today that construction has "temporarily" stopped as a result of the ongoing economic crisis.

Star Riverside

In an emergency change, the project developers are redesigning the project well into the construction process. Apparently, the original plan to offer units starting at $600,000 for the first phase was not viable. The redesigned project will focus on smaller units starting at $375,000.

Star Riverside's challenge has always been location: it is difficult to sell 201 units -- the first 64 of which were priced starting at $600,000 -- in the shadow of I-35 on East Riverside drive during an economic crisis. While the architecture is compelling and the views of the lake and downtown should be beautiful, the project is priced to compete with the most expensive downtown high rise projects which are much closer to the downtown action, much taller, and much farther from I-35.

From the beginning, the Star Riverside developers have been betting that direct access to the lake and hike and bike trail and unobstructed views of the lake and downtown will lure buyers to the south side of the lake. The drastic construction freeze and mid-project redesign shows that the developers are still searching for just the right combination of price and unit to attract more buyers. The redesign and repositioning is a smart move in this market: it is probably the only path to viability. Still, the project may face a difficult market for the location even with a lower price point.

Updated: Bel Air Condo Auction Results

editor@austintowers.net — 2009-08-11T20:14:08-05:00

Contradicting our initial report on the Bel Air auction, it now looks as if the real auction results differ substantially from initial published reports.

In a very unusual auction development, updated reports on the Bel Air condos suggest that while bids were placed for all of the units, only 2 of the bids have actually been accepted by the developers. Despite a large crowd of more than 300 attendees and "winning" bidders for each of the 25 or so remaining units, small print in the auction rules requires acceptance by the developers.

According to Jude at the Downtown Austin blog, the lowest winning bids were in the 60% of original list price range, far lower than the typical 25% - 30% discount typically seen for closeout sales and auctions. To add insult to injury, it sounds as if the bank is now negotiating with some of the "winners" to try to get their bids raised to meet the minimum selling price.

No matter how you look at it, these seem like bad results for everyone involved. Bidders were misled by artificially and unrealistically high minimum sales prices, the developers will likely have many unsold units that are clearly being offered at above market rates, and the current residents will have a new lower market price AND unsold units to contend with if they try to sell.

There is no transparency at this point so it will be very difficult to get a clear picture of how many units actually sold or what the final sales price was for each unit. We're not even sure of the sizes of the units as the official numbers include garage and roof deck space which should not be counted. The best estimates suggest that the size range is 1,100 to 1,500 square feet.

As we have said, the Bel Air results are only marginally relevant to downtown Austin residents and condo buyers. The Bel Air is a low-rise town house project in far south Austin (South of Ben White). While Green and designed to meet the needs of a more urban buyer, the location limits the price premium. It is entirely possible that the economics don't work: that the developers will not be able to recoup their costs while selling the remaining units.

We'll see how this one falls out . . . the biggest casualty may be the Austin auction seen as the most likely bidders may avoid future auctions fearing similarly opaque processes and results.

Bel Air Interior

W Must Replace Troubled Lender to Proceed

editor@austintowers.net — 2009-08-10T21:20:28-05:00

Since long before the 36-Story W Hotel and Residences began to rise earlier this year, the developers have faced the unpleasant task of replacing Corus Bank as their prime lender. Bad development loans in other markets have squeezed the bank's liquidity, making it impossible for Corus to provide the capital required to complete the W.

What is the impact? It's hard to say. But it is a positive sign that the developers continue to poor their own money into the project (the developers will fund the first $128M and must raise an additional $162M in debt or equity financing to complete the building) with the knowledge that the loan balance remains in limbo. The Corus problems have been known for months: if the developers did not believe that the project would be fully financed, they would likely have paused development already.

The W is an expensive project. At $300 million, the project will include an attractive mix of 252-room W hotel, 165 condo units, 35,000 square feet of office space, retail and restaurant space and a new theater to host KLRU's Austin City Limits. The frame of the project has already reached 14-stories, and the developers say that construction will continue to proceed normally for the time being. The development partnership has invested approximately 2/3 of it's available capital. The project team is currently in discussions with banks to secure a loan to replace the previous Corus obligation.

Analysis: Understanding New Condo Pricing and Risk

editor@austintowers.net — 2009-08-09T22:12:23-05:00

Condo fire sales at Brazos Place, the Shore and other projects have led readers to question the value of purchasing condo units directly from the developer during or prior to construction. In these and other projects, full price buyers have seen the value of their units plummet when the developer dumped excess units at a deep discount.

For example, one reader told us that their large Shore unit recently appraised for $525K, roughly $250K less than last year and $200K less than what they the developer prior to completion of construction. This 28% drop in value is a big deal for any buyer -- and rightfully leads people to ask what the best strategy is for purchasing units in a new condo project.

Housing prices are set by supply and demand. When developers sell new or pre-construction units, pricing is based on construction costs, demand, and the developer's perception of market trends. The final price, however, is set by the sale of the first few post-completion units. So let's look at different scenarios for a fictional 100 unit project:

- If the developer sells out all 100 units, the final value will be set by the first resale units. In a strong market, they may very well be higher than the initial price as buyers who missed out on their original attempt to get into the project. The price growth may very well be higher than the appreciation in comparable units. If construction costs are rising quickly as they did between 2004 and 2007, than the original pre-sale prices may never be matched.

- For the same project In a weak market, prices will likely be lower than the original market price. The price drop will likely be similar to the overall market drop for comparable condo units.

- If the developer sells 95 units and then drops the price by 10% prior to completion of the project and sells the final 5 units (still preconstruction), the final price will still be set by the first post-completion resale transactions. Thus, the price will likely increase or decrease in line with the general market.

- If the developer only sells 50 of the 100 units at the point the project is completed -- this has happened a couple of times this year -- than it will likely be bad news for the original buyers. To sell the remaining units and to try to move them fast, the developers will cut prices by 10, 20, or as much as 30%. The value of the original owners' units will fall at a similar pace. If the units do not sell, it will be very difficult for the original owners to resell their units at anything but a substantially discounted price.

There are lots of reasons to buy a pre-construction unit. If you have found the perfect building and perfect unit with the perfect view at a price you can afford, it's probably a good thing to do. If you want to stay put for a long time, your risk will be low. If the market is rising and costs are going up and you want to lock in on a unit, it may be a good time to buy. If the market is a mess and prices have been slashed to clear out inventory, it may also be a good time to buy.

But here is the important thing to remember: in exchange for getting an early pick and a pristine new unit, you will be facing additional risk and variability than you would on a completed unit on the resale market. To see short term appreciation, the building will need to sell out, the initial pricing will need to have been fair, and the market pricing will need to be stable or positive.

To maximize your chances of success, it is very important to remember that most people pick a building and than a unit. Cheap units in an undesirable building will be unlikely to appreciate as well as units in the most popular buildings.

In another year, this post would be very different. It would talk about how to pick the building with the best appreciation and how to get in early on the hottest projects. In 2009, there are no hot projects. It's a tough market. In a tough market, however, buyers can do very well by purchasing discounted units in desirable projects or by getting great units in buildings on track to sell out at current pricing.

Sage Announces Auction Plan: Here We Go Again

editor@austintowers.net — 2009-08-03T22:16:43-05:00

First Brazos Place. Then Bel Air. Now the Sage.

This week the Sage Condos in South Austin -- 1702 South Lamar -- announced that they will be selling the remaining 23 units through an auction on August 22. This is the third major auction in the Austin market. In May, the Brazos Place auctions saw strong demand. The second auction, for the Bel Air condos in far south Austin, is scheduled for this coming weekend.

While it remains to be seen how the successive two auctions fare, there is a big difference between Brazos Place and the other two projects. In particular, Brazos Place was a moderate high rise in a prime downtown location: the other projects are not downtown condos and not tall. In fact, the Sage is about a mile south of the city on Lamar and the Bel Air is far far south, located on Congress Avenue south of Ben White. While the Sage may likely attract people who want to live close to downtown, far South Lamar living is very different from being downtown. The opportunity for both sites is to attract people who want to live in a centrally located condo at a bargain basement price.

The Sage auction is unique on a couple of dimensions. First, 10 of the 23 units are selling without minimum bids and reserves: the auctioneers will take the highest bid no matter how low. The developers will have a minimum bid for the other 13 units. Prior to the auction, the units were originally priced from $299,000 to $469,900.

According to the Downtown Austin blog, "The auction of the Sage Condos will use a different system than the auction at Brazos Place or the Bel Air. Rather than auction each individual unit, the auctions are for the right to choose which unit you want. Everyone bids and the highest bidder gets to choose the unit he/she wants. The auctioneer repeats this process until 10 units are sold."

This sort of auction is suspicious, it much less straightforward than the typical auction where buyers bid on the unit they would like to purchase. While this auction method may be effective, it's suboptimal for buyers who may be attached to a particular unit, floor plan, or view. For these buyers, the only way to ensure their choice is to be the top bidder. We'll see how it works: it is a very risky move for a struggling mid-rise project on South Lamar.

June Downtown Condo Sales: Mediocre

editor@austintowers.net — 2009-07-30T22:10:38-05:00

We've crunched the numbers and updated the AustinTowers | urbanspace Downtown Austin Condo Market Index fro June, 2009 and the results are amazingly unremarkable.

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Jun-08	13	$308,927	$300	1,027	1982	98%	60
Jun-09	8	$431,738	$292	1,400	2000	87%	117
Change	-38%	40%	-3%	36%	18.00	-11%	95%

In the month of June, only 8 downtown Austin condo units were transacted on the MLS with all the key metrics showing market stress. While the units were bigger, newer, and more expensive than the units sold in any month in recent history, the $ / SF dropped 3% and the % of ask dropped from 98% to 87% -- a big drop. Average Days on Market soared from 60 to 117 days.

While June sales show market weakness, the results also show the weakness of the MLS. While 8 units sold through MLS, approximately 15 units went under contract at the Shore alone, all of which were being transacted outside of the MLS. Over the last year, the MLS records a total of 94 downtown sales while we know that more than 400 units were sold at 360 alone. So while the MLS numbers show a surprisingly small transaction volume, it is difficult to know whether sales were weakening or whether the most recent sales were simply closed off MLS.

Interestingly, 3 of the 8 units sold on the MLS were in Milago. Looking at the last 10 Milago transactions, the average price has settled in at $286 / square foot. The 3 June Milago units were all under 1,000 square feet while the other 5 units sold were all over 1,000 square feet. Two June transactions were for units larger than 2,000 square feet --- very large by downtown Austin standards.

The New Downtown Street Parking Model: Stay Longer, Pay by Credit Card

editor@austintowers.net — 2009-07-26T06:37:08-05:00

There is a new street parking model for downtown Austin. New solar powered "pay stations" will soon replace the City of Austin’s 3,800 single space parking meters. One of the most significant changes to customers will be the ability to pay for on-street parking with credit or debit cards, in addition to coins. The first new pay stations will be rolled out on North Congress Ave. on July 22, with the remaining meter replacement complete by Thanksgiving.

The new pay stations are accompanied by a new parking ordinance which includes an incentive to reduce carbon emissions of motorists in the urban core. Now two-wheeled vehicles, including motorcycles, mopeds and scooters will be allowed to park for free for up to 12 hours per day in parking areas at all City of Austin meters and pay stations.

To use the new pay stations, simply insert coins are a credit/debit card and choose the amount of time you want to park. Print a sticker and affix it to the inside of your windshield on the side closest to the street. The pay stations operate in multiple languages.

According to the city, the new pay stations will offer multiple benefits:

- Payment flexibility – Stations accept Master Card, Visa, and debit cards or coins
- Instructions in multiple languages – English, Spanish and Chinese
- Printed receipts provide a convenient record of expenses for business purposes
- Receipt can multi-task - allows the user to take the remaining time on the ticket to another parking spot with City of Austin meters
- Longer parking time – customers can pay for up to three hours at most locations and up to five hours at other locations versus the current two-hour limit
- Credit card safety – the built-in security features provide for an instantaneous credit card transaction and does not store the card information to prevent fraud
- Increased parking availability - parallel parking spaces will not need to be defined so cars can squeeze into a block as space allows. Cities normally see a 10-15% increase in parking availability.
- No more broken meters – customers can obtain a parking receipt from any pay station. The City will save time on repairs and have a predictable revenue stream.

Like every change, this one also has a few negatives:

- The new pay stations will eventually allow the city to more easily raise the price for street parking. With meters, it is difficult to go beyond the current price of $0.25 per 15 minute interval.
- Longer parking intervals, 3 hours v. 2 hours and up to 12 hours for 2 wheeled vehicles, means that fewer spots will be available at any one time
- 3,800 Fewer places to lock up bicycles downtown although the city plans to compensate with the installation of new bicycle racks downtown.

Why the change? An Austin Transportation Department analysis of the current Parking Meter System in Summer 2008 found the system to be in failing condition. Approximately 3,800 single space meters, with expected operational life of 10 years, had been in service 13 plus years. More than 18,000 meter failures were predicted for 2008-2009, increasing city staff labor costs to repair meters and forfeiting hundreds of thousands of dollars in revenue to the City.

The City Council on March 5 approved the replacement of 3,800 single-space meters with pay-and-display (Pay Stations) and authorized a purchase of up to 750 stations for $8,399,743. The City will use parking revenue from the Pay Stations to pay off the purchase in approximately eight years. The new pay stations have an expected operational life of 15 years.

The Parking ordinance passed by the City Council on June 11 maintains the existing fees and hours of operation previously established. Free parking privileges are continued for former Prisoners or War, Pearl Harbor survivors, and Purple Heart recipients. (State law provides free meter parking privileges for persons with a disability.)

904 West: A New Condo Project to Rise on 9th & West

editor@austintowers.net — 2009-07-16T16:45:04-05:00

A new low-rise condo project is set to rise on 9th Street and West Avenue. The $8 million development is close to the Nokonah in a corner of downtown that has seen very little condo development.

The $8 million project will include 33-units, 9 of which are described as "work/live" units and 22 of which are purely residential. In addition, the two story project will offer underground parking and two commercial units. The project, which is named 904 West and located at 904 West Avenue, is scheduled for completion by this winter.

The building is trumping its green features including solar panels, tankless water heaters, and LEd lighting. Solar panels are unusual on high-rise condo projects because the roof area is such a small portion of the total square feet of the project. For a two-story development like 904 West, it is possible to harness enough solar energy to help reduce electrical bills.

Enfield Condos To be Completed After 2-Year Pause

editor@austintowers.net — 2009-07-16T16:45:03-05:00

For the last two years, a modern condo project on Enfield between Mopac and Lamar has been sitting idle as the result of a dispute between former designer-builder of the project, QMET Building Co. LLC, and the former owner, Bolter Corp.

Now, the bank has foreclosed and, in an unusual move, hired a construction manager to continue the project on its own. While the shell of the attractive modern project is nearly complete, the bank is looking at demolishing the building and replacing it with a much larger and uglier traditionally designed complex on the same site.

The bank is hoping for construction to restart within 90-days and for the project to be completed within the next 18 months. Neigbors who are relieved to see construction proceed are concerned that the bank will over-develop the lot with a large structure and minimal setbacks. For interesting modern building such as the original project on Enfield, a change in architects can be disastrous as the resulting building leverages the original frame but "tones down" the interesting modern elements to meet the needs of the new owner and developer. .

25 Bel Air Loft Condo Units to Be Auctioned

editor@austintowers.net — 2009-07-11T10:01:45-05:00

A second Austin condo project has announced plans to close out its condo inventory through a one-day auction. Bel Air, an 83-unit condo project that opened on South Congress Avenue more than two years ago, has announced plans to sell the remaining 25 units on August 9. This is the second large condo auction in the Austin market after 20 units were sold in Brazos Place in a packed 90-minute auction on May 17.

Bidding for Bel Air units will start at $90,000 for the least expensive unit, originally priced at $273,000, and will rise to $130,000 for a unit that was previously priced at $399,900. The auction will be run by Kennedy Wilson -- the same firm that completed the Brazos Place Auction. The opening bid does not mean that units will be sold at those prices, there is often a separate higher minimum bid which must be met for a unit to sell.

For the Bel Air auction, bidders will need to bring a $2,500 cashier's check in order to participate. Winning bidders will need to submit a personal check for 3 percent of the purchase price.

While potentially good for buyers, condo fire sale auctions like these infuriate existing owners who paid much more for their units and will likely see the value of their units reset to the auction price. While the auction is painful for existing owners, the large developer inventory of 25 unsold units is equally problematic as a large new inventory makes the resale of existing units difficult. The sale of remaining units and elimination of inventory could help by pulling inventory off the market. While the auction will be public record, the sales will likely not be recorded in MLS and will not appear in realtor comparables. As with the unfounded worries about the Brazos Place auction, the biggest worry for residents should be a failed auction: it would be bad if a large number of units went unsold, especially if some units sold at prices far below recent comparables.

Bel Air Lofts is located far south on Congress Avenue, close to Ben White. With original prices starting at $273,000, the project was charging downtown-like prices for a far south Austin location. The auction will provide a much clearer picture of demand and price sensitivity for condo projects located outside of downtown.

Bel Air Lofts

The New Downtown Austin Rental Market

editor@austintowers.net — 2009-07-05T19:41:44-05:00

Eleven years ago, if you wanted to live downtown there was really just one choice: the pink Railyard apartments near the convention center. In fact, the Railyard is so close to the convention center that half of the units needed to be knocked down to build the convention center extension. The remaining units are no longer pink, and they are no longer rentals. But there are now more choices than ever after an amazing decade-long expansion of the downtown rental market.

Last year alone, more than 1,200 new downtown rental units emerged. Unbelievably, more than 900 of these have already been rented. These units fetch some of the highest rents in central Texas. At the Ashton, a new project in the 2nd street district across from the Dell Discovery Center, rents average $2,500 a month. That will rise to about $3,000 once incentives of two months of free rent ends. The 36-story $110 million project features marble-tiled bathrooms, two-story penthouses, a wine cellar and private movie theater.

Summary: Recent Downtown Austin Rental Projects

Project	Address	Units	Occupancy
Monarch	800 W Fifth St	305	97%
300 N. Lamar	300 N. Lamar	154	96%
Red River Flats	901 Red River St.	120	96%
AMLI Downtown	201 Lavaca St	220	95%
Robertson Hill Apartments	1000 San Marcos St.	290	94%
AMLI on 2nd	421 W Third St	231	93%
Crescent	127 E. Riverside Dr.	169	93%
Legacy on the Lake	43 Rainey St.	187	84%
Gables on 5th St	1611 W. Fifth St.	150	62%
Cole	300 S. Lamar	119	33%
The Ashton	101 Colorado St	259	8%
Gables Park Plaza	W Cesar Chavez St @ Lamar	294	New
Gables Pressler	507 Pressler St.	160	New
Total		2658	78%

While units are being absorbed at a record rate, it's taken lots of incentives to get leases signed. Most projects are offering 1-3 months of free rent to get people to sign leases in this soft, hyper-competitive market. Downtown rents vary greatly, from close to $1,000 per month to more than $6,000 per month.

Here is a summary of incentives from the Statesman:

- At the 29-story, 305-unit Monarch on West Fifth Street, developers are offering two months of free rent on some two-bedroom units, and three months of free rent on the four remaining penthouses. The project is 97 percent leased.

- At Greystar Red River Flats, at Red River and Ninth streets, rents for one-bedroom units have been lowered to $1,250 a month from $1,650, and two-bedroom units are renting $1,850 a month, $575 off the market rate, said Candiss Escobar, regional property manager. The project is 96 percent leased.

- On top of rent discounts, some complexes are offering incentives for tenants who sign a lease within 24 to 48 hours of seeing a unit, said Shannon Sullivan, leasing consultant for Robertson Hill Apartments on San Marcos at East 10th Street. With the three-month rent special, one-bedrooms at the complex now start at about $950 a month, down from $1,260 a month, and two-bedroom units normally priced at $1,800 a month are renting for about $1,400 a month, she said.

- At Cole, 119 new apartments on South Lamar Boulevard just south of Lady Bird Lake, it's been "extremely busy," said Jessica Higgins, a leasing professional with Lincoln Property Co. On average, five new leases a week have been signed since leasing began April 15, Higgins said. With current specials, studios start at $1,202 a month compared with the $1,420 a month market rent; one-bedrooms start at $1,384 a month, down from the $1,636-a-month market rate, and two-bedrooms start at $1,947, down from $2,301 market rent.

Austonian Now Tallest Building in Austin

editor@austintowers.net — 2009-06-29T22:12:36-05:00

According to the Austonian, after 640 days of construction, tonight The Austonian will become the tallest structure in Austin at 571 feet. The next milestone comes in December when The Austonian's glass crown is installed. The 56-story building will reach 683 feet at that point making it the tallest residential building in the western United States. Amazingly -- for those who have looked up at the tower recently -- the building still has 112 feet to go. The picture below shows the pouring of the 51st floor. When completed, the tower will be 56 stories tall.

Austonian: Sweet Services for Visiting Guests

editor@austintowers.net — 2009-06-24T20:39:51-05:00

The Austonian is already the tallest building in Austin. It will have great views and a perfect location on second and Congress.While the project is somewhat pretentious, the Austonian team is working hard to differentiate the project through services. In their latest update, the project team has announced a unique catalog of services and amenities for hosting and entertaining guests.

First, formal dinners may be arranged in home or at the 55th-floor Austonian Club, which offers 360-degree views of downtown Austin, the Colorado River and the Texas Hill Country from the tallest building in the city. The Austonian Club has a private dining room for smaller affairs and a flexible space accommodating up to 200 people.

Rendering: The Austonian Club

In addition, there are additional outdoor entertaining options on the 10th floor Lawn, including outdoor kitchens, swanky private cabanas with flat-screen televisions and in-pool lounging areas. Indoor entertainment-geared amenities on the 10th floor include a billiard and game room outfitted and a 12-seat screening room.

Rendering: Austonian Cabana & Pool

One of the great things about high-end downtown projects is that many include rooms for overnight guests. This is huge: it allows residents to purchase smaller units but to still host guests when they need to. In the case of the Austonian, four guest suites on the 10th floor have feature custom bedding, Egyptian cotton sheets, a flat-panel television, a refrigerator and both wired and wireless Internet access. Four separate private terraces offer views of the city and nearby Lady Bird Lake. The guest suites, like the other residences of the building, are supported by a team of Austonian Assistants providing personal service 24 hours a day, seven days a week. Suites may be reserved in advance; the only fee is a per-suite cleaning fee.

I am sure there will be more to come as the building nears completion . . .

Austonian Construction Progress

EXCLUSIVE: Downtown Condo Market Surges

editor@austintowers.net — 2009-06-18T22:05:04-05:00

Over the last 8 weeks, the downtown condo market has taken a dramatic positive turn. After 20 tough months, buyers have begun snapping up units at a surprisingly strong pace.

While the MLS data shows 11 units having sold during May -- 2 less than last year -- the real story is much more dramatic. Since May 1, bargain hunters have put more than 40 units under contract at the Shore and another 20 in the Brazos Place auction. In addition, pre-sale units continue to move at the W and Spring. In fact, inventory numbers have dropped over the last month. If this rate continues, there could be a shortage of mid-price inventory by the end of the year.

As for the May MLS data, which does not include the Brazos Place transactions and does not yet include the Shore contracts, there was a 1% year-over-year increase in price per square foot and a 31% decrease in average days on market.

One-Month Sales Report
Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
May-08	13	$297,792	$304	995	1969	95%	91
May-09	11	$347,045	$308	1,150	1989	96%	63
Change	-15%	17%	1%	16%	20.91	1%	-31%

May sales represented a surprisingly broad set of transactions with sales in Austin City Lofts, the Brown Building, Cambridge Condos, Milago, the Nokonah, Railyard condos, and three units in 360. The average price per square foot for the May 360 units was $360 per square foot.

While the 1-month data is inevitably a small sample, our 12-month rolling index echoes the trend, showing the lowest Average Days on Market reading of the year.

See the full AustinTowers | urbanspace Downtown Condo Market Index -- including the monthly sales and inventory reports and the 12-month rolling index here.

The Worst Condo Project Ever?

editor@austintowers.net — 2009-06-15T21:42:00-05:00

Some condo projects are better than others. After reading a story in the New York Times, I can safely say that the worst condo project in the country is not in Austin.

For the bargain price of $1,300 per square foot, you could own a piece of the Sheffield57, a 50-story condo conversion project on the west side of manhattan. At more than $400m, the original building purchase (prior to conversion) is supposedly the most expensive residential building sale ever. With the completion partially complete, you could own a $7M unit with $6,000 in monthly taxes and fees in what may be the worst condo project in the country.

How bad can a condo project be? Here are some facts about the project:

- One of the developers is accused of siphoning off $50m in development funds for personal use

- In retaliation, another developer hit the first developer in the head with a metal ice bucket during "a rather intense business meeting". He was arrested and charged for harassment and pleaded guilty. He was sentenced to community service.

- After 2 years of marketing, only 40% of it's 597 units have been sold

- The condo owners are suing the developers

- Rental tenants (who have lived in the building since before it was converted) are suing claiming improper eviction and failure to maintain the building

- The developers are suing each other

- Unpaid contractors have placed liens against the individual units.

- The State Attorney General has halted future sales in the building

- The developers are in default on $100 million in loans

- The lenders are preparing to foreclose on the developers

- The developers failed to pay $5.4 million in common charges for the hundreds of units that they still own

- Tenants have reported severe structural defects including collapsed ceilings, extensive water leaks and damage, and asbestos contamination

While no project is perfect, Sheffield57 offers an important lesson to condo buyers. Condo projects are not always completed as marketed. The track record of the developers, their ability to meet their commitments, and the ability to deliver a quality product will determine the final value of a condo unit. While most projects turn out well, it's important to complete due diligence on the developers and commercial lenders. However, like any other speculative project, condo developments come with speculative risks that are difficult to completely eliminate.

3 Dead in UT-Area Apartment Construction Accident

editor@austintowers.net — 2009-06-10T20:44:22-05:00

In a very sad accident, three men died after scaffolding collapsed on the 11th floor of 21 Rio, a 21-story rental apartment complex rising in the West Campus neighborhood near UT.

The three men were standing on the scaffolding when part of the platform collapsed. The luxury student apartment complex is scheduled to open later this month.

Episcopal Church to Develop Downtown Block

editor@austintowers.net — 2009-06-09T19:50:15-05:00

The Episcopal Church has purchased the downtown block bounded by Seventh, Eighth, Trinity and Neches streets for $9.5 million. The national church organization plans to spend an additional $40 million to create a new complex to house its national archives.

When completed, the building will be as tall as 5 stories with 70,000 square feet of archive space, a garage, some public spaces, and limited ground floor retail. Since the block is in a capital view corridor, development is limited to no more than 75-feet. Because of the capital view restrictions, it was never a prime candidate for high-rise or condo development.

Here is a summary from the Statesman:

The Episcopal Church has bought a block in downtown Austin where it plans to build a facility to house its national archives and provide space for meetings, exhibits, research and other purposes.

The church purchased the block, now a parking lot bounded by Seventh, Eighth, Trinity and Neches streets, from Jimmy Nassour, an Austin real estate attorney. The purchase price was $9.5 million, said Mark Duffy, director of the Archives of the Episcopal Church.

The church, which borrowed against its endowment to buy the land, plans to launch a capital campaign next year to raise money to repay that loan and pay for the new facility. The cost of the project, which is in the "very preliminary" planning stages, will be almost $40 million, Duffy said.

The building probably will be five stories, with up to 70,000 square feet and a garage with some public spaces. Duffy said the start of construction is at least two years away.

In addition to archives and meeting space, the building will be a place "for Episcopalians nationally to gather and to study, reflect on and feel proud of their heritage," Duffy said.

"The idea is to build something that will be a visible presence for the Episcopal Church in the community, as well as a place where church members and the public can explore issues of vital importance to the church today," Duffy said.

Austin Leads Nation in Job Growth - AGAIN!

editor@austintowers.net — 2009-06-03T21:02:12-05:00

This just in: Austin led the nation's big city job markets for the third month in a row. In fact, Austin was the ONLY large metropolitan area to add jobs between April 2008 and April 2009. With 3,400 new jobs, Austin employment grew at 0.4% during the period.

Since job growth is one of the strongest drivers of real estate values, it is a positive development for Austin's downtown condo market and for broader home sales and prices.

Here is a summary from the Statesman:

By adding 3,400 jobs, Austin was not only ranked #1 but the only metropolitan area

The Austin area was the nation’s strongest big-city job market last month, according to a new report from the Bureau of Labor Statistics.

Among the 38 metro areas with a workforce of at least 750,000, Austin was the only one that gained jobs from April 2008 to April 2009, the bureau said. It was the third month in a row that Austin had earned that distinction.

Austin added 3,400 jobs in that period, a 0.4 percent gain, during that period.

Among other technology hubs, the Silicon Valley area lost jobs at a 4.4 percent annual rate in April. Portland, Ore., was down 4.7 percent, Seattle was down 3.4 percent and Raleigh, N.C., was down 3.3 percent.

Some smaller cities also racked up gains, including Midland, up 2.2 percent, and Odessa, up 2.9 percent.

The Ugly Side of Downtown Austin

editor@austintowers.net — 2009-06-02T21:31:43-05:00

The shooting of 8 people last Thursday night outside a downtown nightclub was an anomaly for Austin. The terrible incident at Spiros nightclub, however, brought to light the problems that come with the vibrant alcohol-driven nightlife on sixth street and the surrounding blocks.

After the incident, the Austin Police Department released an amazing set of statistics on Spiros nightclub:

- Since 2008, the police have responded to calls at Spiros 172 times
- Since November 2007, there have been 115 known thefts within 500 feet of the club
- During the same period, there have been 47 reported burglaries within 500 feet
- There have been 25 aggravated assaults in the immediate vicinity of the club
- There have been 7 assaults on a peace officer at the club
- APD reports 95 instances of possession of controlled substances, dangerous drugs, and marijuana

While Spiros may be one of the worst offenders -- the City is now trying to shut the club down -- it is an example of the ugly side of downtown. While the live music scene is one of the City's cultural crown jewels, the best clubs are joined by more problematic venues. As in New Orleans and San Diego and Nashville, the combination of music, youth, and alcohol means that nightlife and crime often go hand in hand. That said, it is worth noting that no major downtown condo projects are in the immediate vicinity of Spiros and the worst 6th street crime.

WOW! Austin Home Prices Rising!

editor@austintowers.net — 2009-05-27T21:30:09-05:00

Across the country, most major metropolitan areas are seeing home prices continue to drop. In fact, housing values are down 20% from their peak nationwide. Housing prices in Austin, however, never experienced the same loss of value. While inventory remains high and sales volumes have dropped -- April 2009 sales were down 33% from the peak April 2007 volume -- prices have remained amazingly stable.

Today, one major index of home values reported that Austin home prices actually increased by 2.2% in March, 2009 over the year ago period -- a very positive development for the Austin market. In the same index, nationwide prices were down by 11.5% during the same period.

Why has Austin stayed strong? There are three reasons:

(1) Austin never experienced bubble-like run up in values during 2006-2007 that many other markets experienced

(2) Austin continues to see strong net inbound migration which helps stabilize values

(3) Austin employment has remained strong. Amazingly, the most recent data shows a decrease in the local unemployment rate.

As a result, Austin continues to be one of the strongest real estate markets in the country.

Here is a summary from the Austin Business Journal:

According to First American CoreLogic’s Home Price Index, 33 states saw home prices decline at a faster rate in March. However in the major Texas cities, including the Austin-Round Rock metro area, prices increased. In the local area prices rose 2.2 percent in March compared with March 2008. That’s down slightly from the region’s February home price increase of 3.2 percent compared to the previous February.

Housing price declines are slowing in states that have seen the highest declines in the past three years, but prices are dropping faster in states that have seen only moderate decreases in that time period, the research found.

Nationally, housing prices fell 11.5 percent in March compared with the same month last year, down from an 11.7 percent annual decline in February.

The number of states with double-digit annual declines has doubled in the last year, according to the index, from seven states in March 2008 to 14 states this March.

Nevada remained the top-ranked state for annual price depreciation in March, with an average home price decline of 26 percent. California followed close behind with a housing price decline of 25 percent compared with the same month last year. Rhode Island, Florida and Arizona round out the top five.

W Hotel & Residences Developer Faces Delisting

editor@austintowers.net — 2009-05-22T20:56:53-05:00

Stratus Properties, the developer of the W Hotel & Residences in the 2nd street district, is facing delisting from the NASDAQ for failure to promptly file financial reports.

While this sounds bad, the event alone should not jeopardize the project. However, the developer's accounting irregularities and delinquent financial reports will limit financial flexibility until the issue is resolved. This is an especially important issue for the W as one of it major lenders is in precarious financial shape. It could also violate covenants of the project's bank financing.

The best indicator of the situation is the fact that the stock continues to trade at a healthy value, signaling the market's belief that the issues will be resolved. While stock in Stratus is down 50% from it's 2009 high set on January 2nd, it's more than 50% above its March 9 low.

Article Continues:

New Downtown Restrictions to Limit Lakeside Skyscrapers

editor@austintowers.net — 2009-05-22T20:51:43-05:00

The most contentious Austin zoning battles relate to development close to Ladybird Lake. The prime downtown lake is considered one of the city's most important natural assets. As a result, the City has been closely examining proposals to protect the lake from future development. Essentially, the City Council would like to limit the height of development on sites directly adjacent to the lake.

Essentially, the City has two goals: first, to control development around the lake. Second, to ensure access to the lake. The appropriate policy action becomes complicated with an important hypothetical: where there are gaps in the hike and bike trail, should the city provide height variances in exchange for trail extension or improved public access to the lake? It's this very real example that been the focus of City Council debate.

Last night, after much discussion, the Council gave the second of three required approvals that limit building heights around the lake to either 60 or 96 feet depending on location. To address the above example the council decided that developers could be allowed to exceed 96 feet "if they can prove doing so would be substantially better for the community." This is a fair compromise that will provide the City with the appropriate zoning tools to protect the lake in the future.

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Brazos Place Auction Results: All Units Sell, 29% Discount

editor@austintowers.net — 2009-05-17T16:11:19-05:00

Today was a big day for Brazos Place as all 19 remaining units were sold in less than 90 minutes to a packed room of bidders.

On average, the units sold at a 29% discount to the original listing price. This is, however, a useless barometer as the units were not selling well at the original prices. More useful is the average price / square foot which at $281/SF is a 9% discount to the 2008 downtown condo average of $308. Unfortunately for current Brazos Place residents, the units sold for 24% less on a $/SF basis than the $370/SF average of the 12 Brazos Place units sold via MLS in 2008.

Here is the complete auction data:

Unit	Plan	SF	Listing	Opening Bid	Sold (incl. 4% Fee)	$/SF	Discount
709	1 Bedroom / 1 Bath	1272	$414,900	$170,000	$288,080	$226	31%
1007	2 Bedrooms / 2 Baths	1399	$479,900	$190,000	$339,040	$242	29%
708	2 Bedrooms / 2 Baths	1358	$519,900	$210,000	$329,680	$243	37%
1008	2 Bedrooms / 2 Baths	1324	$494,900	$190,000	$326,560	$247	34%
1108	2 Bedrooms / 2 Baths	1324	$504,900	$200,000	$329,680	$249	35%
705	1 Bedroom / 1 Bath	891	$304,900	$120,000	$229,840	$258	25%
1208	2 Bedrooms / 2 Baths	1324	$514,900	$210,000	$346,320	$262	33%
710	1 Bedroom / 1 Bath	623	$199,900	$80,000	$168,480	$270	16%
1103	1 Bedroom / 1 Bath	832	$324,900	$130,000	$229,840	$276	29%
808	2 Bedrooms / 2 Baths	1324	$519,900	$210,000	$374,400	$283	28%
1107	2 Bedrooms / 2 Baths	1399	$489,900	$200,000	$399,360	$285	18%
1109	1 Bedroom / 1 Bath	884	$359,900	$140,000	$255,840	$289	29%
908	2 Bedrooms / 2 Baths	1324	$484,900	$190,000	$385,840	$291	20%
1203	1 Bedroom / 1 Bath	832	$332,400	$130,000	$244,400	$294	26%
1207	2 Bedrooms / 2 Baths	1399	$499,900	$200,000	$418,080	$299	16%
707	2 Bedrooms / 2 Baths	1399	$519,900	$210,000	$422,240	$302	19%
706	1 Bedroom / 1 Bath	812	$339,900	$140,000	$250,640	$309	26%
1210	1 Bedroom / 1 Bath	623	$259,900	$100,000	$200,720	$322	23%
PH	Custom Plan	2745	$1,575,000	$600,000	$967,200	$352	39%

According to the auctioneers, more than 1,000 people pre-viewed units in advance of the auction. A large number bid in person. This is testament to the string demand for downtown housing at the right price. In this light, the auction was a major success. For existing residents of Brazos Place, however, the news is much less positive. Every existing owner most certainly paid substantially more money for their unit than today's auction prices. For them, the real test will be when units sell again on the resale market: prices will likely be somewhere between the original price and the auction discounts.

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BartonPlace Event Invitation

editor@austintowers.net — 2009-05-17T16:11:09-05:00

BartonPlace would like to invite Austin Towers readers to a live radio discussion on "Dissecting Downtown
Facts vs. Fiction" to be followed by a construction tour of BartonPlace and an afternoon reception.

The details are:

What:
Live Talk Radio Show (1:00pm)
BartonPlace Site Tour(3:30pm)
Afternoon Reception (4-5pm)

When: Sunday, May 24th @1:00pm

Where: BartonPlace PresentationCenter
(1800 Barton Springs Rd)

RSVP by May 20th to ashley@bartonplaceaustin.com

Star Riverside Proceeding with Construction

editor@austintowers.net — 2009-05-14T16:39:20-05:00

Star Riverside has announced plans to proceed with construction of the first two planned buildings with completion expected in the first quarter of 2010. The project may be the last major condo development to break ground during the current building boom. With tight credit markets and slack demand, most drawing board projects have been indefinitely delayed or cancelled.

Star Riverside is an Australian-driven development on the south shore of Ladybird Lake near I-35. The $150M project will feature to 64 units in the first phase. According to the developers, the first two buildings will feature large units (2,000SF+) which will be priced from $600K to $1M+. A second phase would offer smaller units starting at as little as 4375K. These offerings do not match, however, with current MLS listings which include 6 units with prices ranging from $345K for a 670 square foot 1/1 to, $517K for a 935SF 2/2, $792K for a 1,280SF 3/2 and $1.34M for a 2,315SF 3/2.

The developers, Constellation Property Group, report that they have lined-up financing for the first two buildings but not for future phases. They hope to raise additional money to complete the remaining buildings by late 2011.

Here is a summary from the Statesman:

The first phase, Star Riverside, will have 64 units in two six-story buildings overlooking Lady Bird Lake. It is expected to be finished in the first quarter of next year.

Prices for the units, all of which will have about 2,200 square feet, will range from the high $600,000s to about $975,000, said Eugene Marchese, president of Constellation Property Group.

The second phase, Revolution Riverside, will have about 140 units in two buildings of nine and 11 stories. Construction is expected to start in mid-2010 and be completed in late 2011, Marchese said.

Those units will be priced from $375,000 to about $650,000 and will have about 1,200 square feet.

Marchese said he has scrapped plans for Star Luxe, an ultra-luxury part of the project that was to have had units of 4,000 square feet or more, priced at $1 million and up.

Nationally and in Austin, "I think we will see the luxury end of the market struggling for at least the next three to five years," Marchese said, adding that the high-end sector is troubled across all industries, from condos to retailing in general.

"I think there's just been a paradigm shift across the world," he said.

Economic outlook: Marchese said he has financing in place for the first phase of his project but not for the second phase. He said he thinks the capital markets, which have largely been locked up, will loosen next year.

Although some real estate experts say the economy hasn't hit bottom, Marchese said: "I think we're seeing the bottom, and we're going to bounce along here for the next six months. And then within 12 months, we'll start to see a definite turn in the overall economy, and the capital markets will follow suit."

Brazos Place: Auction Fine Print

editor@austintowers.net — 2009-05-06T22:22:01-05:00

In eleven days, Brazos Place will auction as many as 20 units to the lowest bidder. The May 17 auction has received lots of press and attention -- in particular because the units are being promoted with incredibly low opening bids. The opening bids start at a too-good-to-be-true $80,000 -- as much as 58% lower than the original unit price.

Are the opening bids too good to be true? Like any auction, it's important to read the fine print. Here are some of the rules of the Brazos Place condo auction:

- The opening bids are not the reserve bid: the reserve bids have not been made public. The units absolutely will not be sold for the starting bid price.

- All buyers must pay a 4% buyers fee on top of their bid.

- Like any resident, buyers will need to pay a monthly condo fee. The average is $400 per month.

- To participate, you must register by 5/14.

- Before you bid, you must provide a $2,500 deposit via cashier's check for each unit you are approved to bid on. You need to show them the check to bid, but you don't hand it over unless you win.

- Successful bidders need to put a 3% deposit if they are purchasing one unit or a 5% deposit if they are purchasing multiple units. This needs to be paid upon successful bid but can be paid with a personal check.

- To be eligible to bid, you must be pre-qualified by Bank of America -- even if you have other arrangements for a loan.

- You can register your broker / agent and they will receive a 2% commission.

- You must close within 30-days (or 45-days for an additional $1,500).

- If you don't close, you will lose as little as $2,500 or as much as 3% of the purchase price.

These rules are not unusual for a condo auction -- in fact, they are quite fair. But it is very important for bidders to understand how the auction will work. In particular, it is essential for buyers to know that they will need to meet a reserve price and pay a 4% buyers premium, important considerations for bidders looking for a great deal.

New Condo Mortgage Restrictions

editor@austintowers.net — 2009-05-02T16:07:58-05:00

Earlier this year, Fannie Mae stopped guaranteeing mortgages in new or newly converted condo developments in which fewer than 70 percent of units have been sold or are under contract. Fannie's previous rules set the cutoff at 51 percent. Freddie Mac recently sent a bulletin to sellers and servicers announcing plans to adopt similar restrictions beginning July 1.

The restrictions essentially raise mortgage rates for otherwise conforming mortgages (i.e. under $417,000 in Texas) where the condo development is effected by any of the following issues:

- A new project in which 30% of units have not been sold (or under contract) at the time of completion or closing.

- Existing condo communities where 15 percent or more of owners are delinquent on their association fees by at least 30 days.

- New or existing condo communities where more than 10 percent of units are owned by a single entity.

- New or existing condo communities where more than 20 percent of the total space in a project is used for nonresidential purposes.

Fannie has some flexibility in its presale rules. Developers who don't meet the 70 percent threshold can ask Fannie to waive the restrictions in certain circumstances. So far, more than 90 exemptions have been provided nationwide.

These changes should not have a dramatic effect on the largest and highest profile projects as new units in the big projects are typically priced well over the conforming threshold. For the lower cost high-rise projects where loans are likely to conform, sales rates have been high. Most of the major projects look on track to hit 70% by the time of completion. Most likely to be effected are smaller low-rise projects near downtown and condo conversions in downtown.

Star Riverside Auction: Bizarre Side Show or Outright Scam?

editor@austintowers.net — 2009-04-30T19:51:38-05:00

Star Riverside, a large condo project under way on the south shore of Ladybird Lake near I-35, has announced that it is going to auction 64-units in partnership with ibidcondo with no minimum price and no minimum bid. Before you call your mortgage broker and grab your credit card checks, the fine print on the Star Riverside auction is downright absurd.

Instead of using a starting or reserve price, ibidcondo starts the process by selling a limited number of "virtual auction seats" which are sold until a minimum price is reached. The auction seat price for each of the 64-units is $100. Here is the crazy catch: the auction doesn't actually happen until enough people have paid $100 for ibidcondo to purchase the unit. So, for the typical $690,000 condo, 6,900 people need to buy $100 seats before the auction starts. Once the auction starts, 6,900 people (or fewer if someone buys multiple seats to compete against themselves) compete to buy the unit. The highest bid wins. The proceeds are then donated to charity after the company takes its undisclosed but likely significant fees.

After the auction, 6,899 people are losers: they are down $100. The one lucky winner gets to participate in one of the least friendly buying processes ever: they have 48 hours from the close of the Auction to (1) deposit the entire bid price into an escrow account maintained by iBidcondo at the Nominated Title Company and (2) execute a purchase and sale agreement with the developer or owner of the property.

Unlike the real auctions taking place soon for units in Brazos Place, this auction is somewhere between a scam and an ill-conceived dot com get-rich-quick scheme. For all the units in Star Riverside to sell, 441,000 bid seats would need to be sold. This, obviously, is never going to happen. The big question is why Star Riverside would associate themselves with such a sketchy endeavor: each auction is bound to leave a bad taste for 6,899 bidders and maybe even the one winner. This is a terrible way to try to sell condos.

On the auction site, there is a link to see previous sales from the company. Currently, the link does not work.

See the ridiculous auction firsthand here.

CNN Report: Condo Auctions Common (Mentions Brazos Place)

editor@austintowers.net — 2009-04-28T17:25:12-05:00

An article from earlier today on cnn.com discussed the national condo auction market (it is growing fast) and the incentives provided to move condos nationwide. The issue is that condos take years to develop while condo demand can change very fast. As real estate markets across the country have retracted over the last year, condo developers continue to deliver units that have been on the drawing board for years before the current downturn.

While the announcement of the upcoming condo auction at Brazos Place sent shock waves though the Austin condo market, further analysis has shown that these auctions are increasingly common, and that final prices are not nearly as low as the teaser opening bids suggest.

Here are highlights from the CNN article:

A free Lamborghini in Miami, Florida.

Complimentary housekeeping in Phoenix, Arizona.

Two bedrooms for the price of one in Atlanta, Georgia.

It's a buyers market again for condominium shoppers after years of artificially high prices and speculation. Marketing gimmicks, along with auctions, upgrades and incentives, continue to be wildly popular for developers desperate to relieve the inventory glut.

"We want to move the products as fast as we can," said Summer Dunham, marketing manager for Starpointe Communities, which develops luxury condominiums in Scottsdale, Arizona, one of the first states slammed by the nation's housing crises. "It was very slow in 2008. Everyone had difficulty selling."

So in February, the determined company auctioned off 20 four-story condominiums overlooking a golf course, private park and three swimming pools against a mountain backdrop. The upscale properties were priced as high as $1.6 million before the market sank.

The auction was declared a success for the company, which sold nearly all of its units in a weak market where only 115 out of nearly 2,000 available units have closed in the first quarter of this year, according to a report by Metrostudy, a research firm tracking the condo market.

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Exclusive: March Downtown Condo Sales Disappoint

editor@austintowers.net — 2009-04-26T23:27:35-05:00

We've updated the AustinTowers | urbanspace Downtown Condo Market Index for March and the news is not good. While month-by-month results fluctuate wildly, March saw a drop of 71% in the number of units sold -- from 14 units last March to just 4 this March. For the first quarter of 2009, sales dropped from 25 units sold in 2008 to 14 units sold in 2009.

Needless to say, March of 2008 was a very strong month. Amazingly enough, it wasn't a new project that drove last year's volume: sales during the month included 14 units in 11 projects including Milago, 5 Fifty Five, Brazos Place, Westgate, Railyard, Sabine, and the Brown building.

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Mar-08	14	$355,004	$345	1,022	1977	94%	86
Mar-09	4	$431,625	$285	1,442	1985	94%	107
Change	-71%	22%	-17%	41%	8.00	0%	24%

On the bright side, this March saw sales of three units larger than 1,000 square feet including a 2,500 SF unit in the Nokonah. However, this 41% increase in avg. SF was accompanied by a modest 22% increase in average price As a result, $/SF dropped by 17%.

During the same period, Inventory dropped from 187 units to 183 units with an average listing price of $613K.

See the updated index here.

Analysis: Brazos Place Auction

editor@austintowers.net — 2009-04-22T07:38:05-05:00

The Brazos Place auction is big news: residents are outraged, bargain hunters are taking note, and the media is marking the first downtown condo auction with glee. The big story is that opening bids start at less than half of original listing price for most units. The real question should be: what will the units likely sell for? This answer is most relevant to Brazos Place residents and potential buyers alike.

On the assumption that this is not the first condo auction that Beverly Hills-based Kennedy Wilson has conducted, we've done some research.

Last December, 300 people packed the underground basement of a Hyatt in Seattle to bid on 15 units from the Capital Hill Press Condos (shown below) in a similar auction run by the same firm. The auction drew a youngish crowd of potential buyers, in particular people who previously felt priced out of Seattle's downtown condo market. As in Austin, the units were listed at about 50% of their previous listing price.

So what happened? All 15 units sold during the auction. The teaser opening bids worked: the auction was packed and competitive and the units sold for an average of 80% of the listing price. While 20% is still a good discount, it's a lot less than the 50% lowest bid that lures many people to look at the property. When the developers consider mortgage interest, taxes, real estate commissions, marketing costs, and the price of maintaining model units, sales staff, and a sales center, it's easy to see why these auctions are becoming more common around the country.

In Los Angeles, a similar Kennedy Wilson auction drew similar crowds with minimum bids set at nearly 50% off the last asking price. As a result, more than 1,500 shoppers toured the models and about 4,000 requested auction catalogues. On auction day, 387 registered bidders showed up. One again, all units sold during the auction with an average price that was more than 50% above the minimum bid. According to the LA Times: "Even successful bidders said they offered more than they planned on bidding."

While these auctions provided similar results, every building and every market is different. If anything, these comparable auctions show why the developers may have chosen this path. Supposedly, Kennedy Wilson auctioned more than 1,000 condos and houses last year alone. The Brazos Place Auction, it's turnout and activity, will provide a more vivd picture of demand for downtown Austin and for units in converted buildings in particular.

Units at Capital Hill Press Condos in Seattle Were Auctioned in December

Surprise "Fire Sale": 20 Brazos Place Units in Upcoming Auction

editor@austintowers.net — 2009-04-20T22:22:14-05:00

In an unfortunate turn for the downtown Austin condo market, the Detroit-based developers of Brazos Place -- a 72 unit condo conversion project on 8th and Brazos -- have posted the remaining 20 units for sale in a surprise auction on May 17.

Like most auctions, the starting bid price is very low -- as little as $80,000 for a small 1/1 to $200K for a 1,400 SF 2/2. While low prices draw the crowds, the units likely have higher reserve prices making it unclear how good a deal awaits buyers. For the developers, the auction is a desperate move: they are clearly sacrificing profits for quick cash, signaling either an immediate cash crisis or, even worse, pessimism in the marketability of the project.

With an average starting bid of $154 / SF, the auction prices start with a 58% discount off the average sale price of $370 for the 12 units listed on MLS over the last year. As a result, current Brazos Place residents are furious. They are rightfully concerned that the fire sale disposal of comparable units will devalue the building and the units that they have invested heavily in.

In reality, it is very difficult to assess the impact of the auction on current residents. First, it's a problem for residents that 20 units are currently on the market. Such a large new developer inventory makes the resale of existing units difficult. The sale of units and elimination of inventory could help by pulling inventory off the market. While the auction will be public record, the sales will likely not be recorded in MLS and will not appear in realtor comparables. The biggest worry for residents should be a failed auction: it would be bad if a large number of units went unsold, especially if some units sold at prices far below recent comparables.

The problem with auctions of this type is that they are really only likely to attract bargain hunters and investors. Unlike with single family homes and cars and furniture and other auctionable goods, condos are not a commodity. The problem is that condo buyers tend to pick the building they want to live in (based on a number of factors including price) and then look for the perfect unit. An auction like this diminishes the value of the primary asset -- the building and its brand -- at the same time it tries to lure 20 buyers to bid in a process that is very different than the normal buying process. The result is likely to attract bargain hunters who will walk when the prices rise towards market levels.

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BartonPlace Construction Update & Pictures

editor@austintowers.net — 2009-04-19T22:45:41-05:00

I walked by BartonPlace on Barton Springs Road today and was shocked at the rate of progress on construction: the 6-story multi-building development has already topped out. In fact, the steel is being put in place to form the project's distinctive curved roofline (the top units actually have 15' curved ceilings -- some are still available). In addition, we received a full construction update from the developers:

- Roof Installation on Buildings 5 and 6 is ongoing.
- Level 6 of Buildings 3 and 4 will be poured next week.
- The entire garage structure is complete.
- Masonry and Window installation on Buildings 5 and 6 has begun.
- MEP and Sprinkler rough-in continues in Buildings 3, 4, 5 and 6.
- Interior Framing in Buildings 3 and 4 has begun.

In other news, the developers announced that buyers at BartonPlace will receive complimentary Social memberships at Onion Creek Club in southeast Austin. Onion Creek Club has a 27-hole Jimmy Demaret designed golf course as well as other fitness and recreational activities. They also announced and upcoming construction tour at 3:30pm on Sunday, May 3rd (following the taping of Real Estate 101 for 1370AM at Uncle Billy's next door) and a 4PM wrap party at the BartonPlace presentation center. RSVP here.

60-Unit East Austin Condo Project Sells Out

editor@austintowers.net — 2009-04-16T20:47:55-05:00

While it's not our primary focus, there are plenty of interesting condo developments rising outside of downtown Austin. In the portion of East Austin, close to 6th street and within a mile of I-35, a number of affordable, interesting mid-rise projects have risen over the last couple of years.

Today, the 4-floor 60-unit 2124 Condos (located on 6th, one mile East of downtown) announced that they too had sold out. 2124 offered 3 configurations of units ranging in price from the $190s to the $280s. According to the developer, units offer 11ft ceilings, concrete floors, granite countertops, and amazing views of the city. About a dozen units are currently listed for sale or lease on the Austin MLS.

These days, it is simply great news to hear the words "sold out" and "condo" in the same sentence. An article in the Statesman provides additional details:

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Austin's Unique Urban Employment Core

editor@austintowers.net — 2009-04-12T20:56:47-05:00

Austin Contrarian discovered a very interesting report on "job sprawl" in major metropolitan areas. The report looks at 98 major metropolitan areas and tracks job decentralization -- the increasing percentage of jobs located more than 3 miles from the urban core. According to the report, 95 of 98 cities, including Austin, saw the percentage of jobs located outside of the urban core increase.

This trend is no surprise. As cities grow, it's easier to add jobs to newly developed areas than to the previously developed urban core. More alarming, however, is that quite a few metropolitan areas actually lost jobs in their urban core during this period -- a trend which shows the urban deterioration of many metropolitan areas. On this list were Houston, Dallas, and San Antonio with absolute job losses of 17,683 (a 6.5% decrease), 19,356 jobs (a 7.8% decrease), and 2,655 jobs (a 2.6% decrease) respectively.

While Austin saw the percent of jobs located in the urban core slide from 27.8% to 24.4% between 1998 and 2006, the City actually added jobs to its urban core. During the period, Austin's urban core added 16,400 jobs, an amazing 12.6% increase. With 24.4% of jobs located in the core, Austin is far ahead of the average of 19.6% across all metropolitan areas.

What makes Austin different? First, in addition to a mostly-commercial downtown, the City has the University of Texas and most State government workers located well within 3 miles of the core. During the period covered in the report, a significant amount of office space was added downtown with the construction of the Frost Bank Tower, City Hall, CSC, and 300 West 6th Street to name a few.

Looking forward, the next decade may not show the same trend. With minimal downtown office construction planned, most of today's growth is occurring outside of Austin's urban core. Condo development may reverse this trend; if new projects bring residents downtown to live, retail and office capacity may not be far behind.

WSJ: Austin Apartment Vacancy Surges

editor@austintowers.net — 2009-04-07T22:11:47-05:00

The Wall Street Journal is reporting that Austin experienced one of the largest increases in apartment vacancy rates last quarter among major metropolitan areas. The vacancy rate, which jumped to 9.2% from 7.5%, is both high and rapidly growing --- a major problem for landlords and apartment developers.

The problem with the rental market is rooted in recent history. For a long time, Austin has been one of the strongest rental markets in the country in terms of absorption and rent growth. Even as developers rapidly increased the number of units earlier in the decade, the market remain strong as vacancy rates stayed very slow. When the market run finally ended, Austin developers had a record number of units still in the pipeline. The glut of new units is one of the major drivers behind the high vacancy rate.

This phenomena has played out downtown as well with delivery of the Monarch last year and the upcoming completion of the 36-story 259 unit Ashton at 101 Colorado and 31-story 183 unit Legacy on Town Lake. Making things worse, condo investors in major projects such as 360 are adding their units to the leasing market as well.

With oversupply and more units coming, rental rates are bound to drop. Already, existing and prospective tenants have found lots of room to negotiate as the major projects work hard to fill their units. When rental rates drop, there will also be a small negative effect on the condo market as the equation for condo investors shifts for the worse. With strong restrictions on investors in most new projects, this part of the downtown Austin condo market remains relatively small.

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Federal Courthouse to be Constructed by Republic Square Park

editor@austintowers.net — 2009-04-04T16:09:14-05:00

Thanks to the Federal stimulus package, a controversial Federal courthouse will be constructed on the west side of Republic Square Park in the heart of downtown.

The $116 million project will be constructed on the former Intel site. Earlier in the decade, the city pushed the feds hard to locate the courthouse on the abandoned Intel site, only to reverse course later. Once downtown started to flourish with development, the City decided that the prime block would be better used with a multi-use project that would engage the neighborhood. Due to security concerns, the mammoth brutalist courthouse will result in the permanent closure of San Antonio Street between 4th and 5th, assuming that the original plans will be followed. In addition, the single-use building will not include any retail or restaurant space, it will simply be a highly secure federal courthouse.

Here is a summary from the Austin Business Journal:

The long-delayed federal courthouse planned for downtown Austin has been approved for construction with money from the federal stimulus package, according to a congressman’s office.

The White House today approved $116 million from the American Recovery and Reinvestment Act for the U.S. federal courthouse in Austin, said Wyeth Ruthven, a spokesman for U.S. Rep. Lloyd Doggett.

“This $116 million means local construction jobs now when we need them most, a significant addition to downtown Austin, and a long overdue improvement benefiting all who rely upon our federal justice system,” said Doggett, DÂ-Austin. Doggett voted for the stimulus package.

The planned seven-story Austin courthouse has been delayed for years because of financial reasons. It will be built at the corner of Fifth and Nueces streets, across from Republic Square Park. The design is mostly done.

Condo Values by Building: Austintowers Exclusive

editor@austintowers.net — 2009-03-29T23:08:54-05:00

When you buy a downtown Austin condo, you are really buying part of a building. The services, staff, amenities, maintenance, location, style, community and construction quality are more important than the particulars of any individual unit. That's why our listings are organized by building -- research shows that buyers first choose a building and then pick a unit. When it comes to urban Austin condos, the building is the product.

Not surprisingly, price per square foot varies widely for downtown Austin condo buildings. With values ranging from $197/SF at Greenwood Towers to $472/SF at the 5 Fifty Five Condos atop the Hilton, the data clearly shows that the building is the most important determinant of condo values. So, when you buy a condo unit, remember that the building will be the most important determinant of investment return.

Here are the details on actual building-by-building MLS sales over the last 14 months:

Downtown Condo Transactions: 1/1/2008 to 2/28/2009

Building	Year	# Sales	$/SF	Avg SF
Five Fifty 05	2004	6	$473	1430
Nokonah	2001	7	$442	1414
Brazos Place	2008	12	$370	927
360	2008	4	$368	775
Austin City Lofts	2003	11	$353	1718
Milago	2006	26	$344	1047
Westgate	1965	4	$325	699
Sabine	2007	5	$312	1287
Railyard	1983	8	$296	892
Plaza Lofts	2002	3	$291	1190
Posada Del Rey	1964	5	$282	1015
Avenue Lofts	1999	2	$279	1095
Penthouse	1973	5	$254	728
Cambridge Condos	1964	11	$254	1456
Brown Building	2000	6	$250	848
Villas on Town Lake	1982	5	$241	1080
Towers Town Lake	1983	8	$228	1467
Greenwood Towers	1966	5	$197	667

As usual, these values exclude private transactions for units not listed on MLS. For example, hundreds of original transactions in 360 conducted by first time buyers purchasing from the sales center are not included. All resale and new transactions listed on MLS should be included.

Weaker Austin Housing Market May Lead to Tight Future Supply

editor@austintowers.net — 2009-03-23T20:51:24-05:00

Angelos Angelou, a local Austin economic guru, commented recently on the long-term effects of the current housing slow down. With tight credit, reduced transaction volume, and a slight dip in housing prices, builders have reacted by dramatically cutting the number of new housing units under development. From 2007 to 2008, Austin housing started plunged 55% from 18,000 to 8,100. This number is predicted to be as low as 6,000 this year.

With more than 40,000 new residents arriving in Austin each year, new housing units are very quickly absorbed. Since housing prices are determined by supply and demand, reduced supply relative to population will help restore market equilibrium, and may eventually cause prices to rise again.

Here is a summary of the very interesting article from Community Impact News:

National builders’ woes will halt new home construction in a still-vibrant Austin market, Angelos Angelou predicted in his 2009 economic forecast, released in January.

“My fear is that national developers may have overreacted, and Austin may be penalized in the form of lower home starts, which eventually can create an artificial shortage,” said Angelou, principal executive officer for AngelouEconomics.
Central Austin housing market data

According to Angelou’s math, Austin has grown by about 60,000 people annually in recent years, with a natural growth (the difference between births and deaths) of about 18,000 per year. That means 42,000 people are newcomers to the area in need of housing.

In 2007, Austin had 18,000 home starts, but in 2008 only 8,100 housing units were built. He said 6,000 units are expected in 2009.

“That’s not enough. The ideal number of home starts for Austin is 11,000. Obviously, business conditions dictate that only so many units are being built because the credit markets are frozen,” Angelou said.

The largest decline in home starts has been in the $200,000 and under price range since fourth quarter 2006, according to data from housing data analysis firm MetroStudy.

“Capital constraints faced by builders and the tightening in credit for buyers played large roles in this decline,” said Eldon Rude, head of MetroStudy in Austin. “While starts of homes priced below $200,000 will likely continue to slow in 2009, most of the decrease in activity will be in the higher price points.”
Wait, wait — don’t sell me

Angelou said that now is an ideal time to buy, but those thinking of selling should wait for the housing shortage.
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“You don’t want to be selling now. This is not a seller’s market at all; it’s a buyer’s market,” he said. “I would not even think of selling a house until two years from now, at least.”

Owners whose home values have dropped should not panic and sell, said Mark Sprague, Austin partner for Residential Strategies.

“You haven’t lost any equity if you haven’t sold your house,” he said. “It’s like a stock. You have to wait for that equity to come back.”

Renting out homes instead of selling them could be a viable option for homeowners wanting to move immediately, Angelou said. Rental prices are expected to remain stable, and the rent money collected should help cover the payments on a new home.

Read the full story here

Austin Market Fundamentals: 2 of 3 Indicators Strong

editor@austintowers.net — 2009-03-19T22:25:03-05:00

When thinking about the strength of the Austin real estate market during normal times, there are three important variables that drive home values: population growth, job growth, and interest rates (you need to look separately at conforming and jumbo rates).

While job growth does not seem to be occurring -- layoffs are being announced every week in Austin much like the rest of the country -- the other two variables are surprisingly strong.

According to the Census Bureau, Austin/Round Rock was the 2nd-fastest-growing metropolitan area between 2007 and 2008. According to the Austin Business Journal, "the population in the Austin-Round Rock area grew 3.8 percent to 1.65 million between July 2007 and July 2008. Among major U.S. metros, that growth rate was second only to Raleigh-Cary, N.C., which experienced a 4.3 percent population uptick during the 12-month period."

This week, mortgage rates have dropped within striking distance of the all-time lowest rates, a record set earlier this year. 30-year fixed mortgage rates now average 4.98% for loans under $417,000. Jumbo rates, unfortunately, are still close to 7%. For all buyers, credit requirements remain tight.

While there is lots of bad financial news right now, the Austin market continues to hold its ground. While sales volumes have dropped significantly, prices have not. Hopefully, strong population growth and low interest rates will hold off the crisis that has effected much of the country.

Problems at the Sabine: Residents Sue Developer

editor@austintowers.net — 2009-03-16T22:40:58-05:00

This week, 35 residents of The Sabine filed suit against the developers for list of problems that the condo owners say have been ongoing for month. The Sabine is an 80-unit condo conversion project of a mostly-empty office building on Waller Creek into a new condo project adjoining the Hilton Garden Inn on 5th Street near I-35. The project was completed last year although many units still remain on the market.

According to the residents:

- The building seems to have serious elevator problems. In fact, a 12/29 elevator inspection exposed 19 code violations including some that were described as serious safety problems.
- Problems with water leaks, window seals, and sound-proofing.
- Failure to pay property taxes on more than 40 units -- a delinquency which may result in additional litigation

While it is difficult to tell how long it will take to resolve these issues, the problems do indicate quality issues for the newly completed condo conversion project. Litigation like this is rare, and shows that residents are angry and ready to revolt. These problems certainly illustrate the risks of being the first occupants of any building. Buyer have little choice but to take the developers word that they will deliver a quality building without cutting corners.

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February, 2009 Downtown Condo Sales

editor@austintowers.net — 2009-03-12T21:17:04-05:00

We've received the latest monthly downtown Austin condo sales report from our friends at urbanspace realtors. Here are the results from February, 2009:

Month	Sales	Avg. Price	$/SF	Avg SF	Avg Year	% Ask	ADOM
Feb-08	6	$279,017	$309	897	1977	98%	89
Feb-09	6	$400,833	$322	1,258	1998	90%	116
Change	0%	44%	4%	40%	21.00	-8%	30%

Despite a substantial increase in downtown units over the last year, February sales remained flat year-over-year. The market, however, showed surprising strength given the world changes that have occurred over the last twelve months.

February sales included two transactions greater than $600k -- one in the Nokonah and one in Austin Citty Lofts -- a positive sign for the upper end of the market. Dollars per square foot increased to $322 from $309 last year. There were three transactions under $300K, two of which were in 360. With four transactions so far this year, units in 360 have sold for an average of $368 / square foot. The range has been a very broad $327 to $405 / square foot.

While the February downtown condo sales numbers are generally positive, "% of ask" dropped substantially to 90% (from 98%) and "Average Days on Market" increased 30% to 116 -- both of which suggest sluggishness.

As usual, these results do not include units sold directly by developers in buildings such as 360, the Austonian, Spring, etc. The monthly MLS data tends to under-report sales, especially of high price units.

The full results and current inventory are available on the new AustinTowers | urbanspace Downtown Austin Condo Market Index.

Thinking About the Austin Market

editor@austintowers.net — 2009-03-12T21:17:00-05:00

Even during tough times, Austin has fared better than most cities. urbanspace posted an online slide show that tells the story of downtown Austin through statistics and awards. If you're depressed about everything else in the news, this should make you feel better! See the slides here.

The 10 Mile Loop: Austin to Proceed with Hike & Bike Trail Extension

editor@austintowers.net — 2009-03-08T23:52:07-05:00

Over the last few months, the City has been floating a proposal that would achieve one of Austin's most important urban planning goals: filling the 1.2 mile gap in the 10.1 mile hike and bike trail around Lady Bird Lake. While land owners along the 1.2 mile stretch of the lake have objected, the City has decided to proceed with a proposed over-water boardwalk to complete the loop.

The Boardwalk Trail at Lady Bird Lake would extend the Lady Bird Lake hike and bike trail more than one mile from the east side of the Austin American-Statesman building to Lakeshore Park. Currently, pedestrians, runners and bikers are forced to use the Riverside Drive sidewalk over Interstate 35. While there are some opportunities for extension of the trail on the shore, the trail will be primarily over the water.

The extremely popular trail is a great community asset for anyone who spends time downtown. The bold $15 million project will complete the trail, improving bike and pedestrian access throughout downtown Austin.

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Keeping up with AustinTowers

editor@austintowers.net — 2009-03-05T21:01:30-06:00

For our thousands of frequent readers, there are more ways than ever to keep up with the News on AustinTowers!

If you have a Twitter account, you can follow us at http://twitter.com/austintowers. We regularly use twitter to send flash news updates, check the validity of rumors, and pass on market insights from experts that we talk to. Twitter is free to join and a great way to keep up with Austin Towers news.

As always, if you use Google for search, we've made it easy to add our news feed to your google home page. Simply click on the "Add to Google" button on the right and you will be directed to Google to create an iGoogle search page like the one below, to add AustinTowers to an existing iGoogle page, or to add AustinTowers to Google Reader. Once added, you'll see our latest headlines whenever you visit your iGoogle page to conduct a web search. If you later change your mind, it's easy to remove the AustinTowers feed or to revert to a basic search page.

As many of you know, you can also subscribe to the AustinTowers feed on this site by simply clicking the Orange RSS feed button on the sidebar or by following this link: AustinTowers RSS Feed

Thanks for visiting the site! If you have ideas or feedback, send us a note to register and add comments! We love to hear from our 10,000 monthly readers!

Austin May Eliminate Downtown Meters! (there's a catch)

editor@austintowers.net — 2009-03-05T21:01:23-06:00

Good news! The City of Austin is considering eliminating 3,800 single space parking meters!

The only downside is that they plan to replace the 3,800 meters with 750 whole block "pay station kiosks" that will make you walk down the block to figure out how to use a complex machine to print a ticket to place on the inside of your car after you walk back down the block.

Why? Apparently, each of the existing meters fails every 90 days on average -- and replacing them with a large complex machine with ink, paper, and an internet connection should eliminate this problem. Coincidentally, it would also allow the city to take credit cards and charge higher prices for downtown parking over time.

All this for just $8.4 million!

Articles Continue Here:

On Sale! Bridges on the Park Now 20% Off?

editor@austintowers.net — 2009-03-02T21:25:49-06:00

In a highly unusual strategy, Bridges on the Park has announced a "March Sale" in which they have reduced unit prices by 20%. With the reduction, prices start under $300,000 for a 1 bedroom 1 bath unit and under $400,000 for a 1,349 square foot 2/2 unit. The pricing reduction shifted the price per square foot from $350-$430/SF to $285-$340/SF.

Bridges on the Park is a six floor 104 unit project on a 2.5 acre site just south of the lake and the hike & bike trail on South Lamar. The project was recently completed.

During construction, Bridges on the Park raised prices to their current rates after lining up a surprisingly strong waiting list for reservations. When the final prices were announced and the economy turned south, the reservations did not turn into sales as expected. Now Bridges on the Park has restored prices to levels closer to the originally announced amounts. While a highly unusual sales tactic, for new buyers looking to get close to downtown at reasonable price, this is very good news.

Here are some examples of units currently for sale at Bridges on the Park:

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Urbanspace Finds Success During Downturn

editor@austintowers.net — 2009-02-26T22:05:28-06:00

While the economic crisis and continuing problem in the national real estate market dominate the news, Austin's own urbanspace realtors today announced that the firm has added 12 new realtors and plans to move into a new downtown headquarters. For followers of the downtown market, their strength and growth is a powerful sign of the continued interest in downtown Austin living.

Here are some details from the announcement:

As Austin is growing, so is urbanspace. In concert with the growth of the urban market place, the Company has expanded both its team and physical space. In the past six months, the urbanspace team has welcomed 12 new residential and commercial agents to better serve the specialized needs of a dynamic Austin urban market. urbanspace's move into its new home allows it to complement its growth with a space designed to enhance the client experience as well as create a warm work environment for its agents.

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Everyone Agrees: The January Real Estate Uptick

editor@austintowers.net — 2009-02-25T22:16:16-06:00

In conversations with realtors and developers who focus on downtown Austin, everyone agrees that the last few months have been really tough. Ever since the fall economic collapse, the downtown real estate market has essentially ground to a halt. Surprisingly enough, everyone also seems to agree that there was a noticeable uptick in January.

While the AustinTowers | urbanspace Downtown Market Index shows 4 transactions totaling roughly $1.5 million, we have been able to $10 million in downtown condos that was either put under contract or closed. After a very slow November and December, January was a positive surprise.

According to the analysts, price drops and record low interest rates have helped to spur a new round of real estate transactions. January, however, also included a couple of $1 million + reservations in new projects which would not have benefited from reduced interest rates (jumbos are high) or aggressive pricing. While one month does not make a trend, it's good to see increasing strength downtown and across the city. While activity has picked up, it is important to note that prices are not on the rise. Most experts still predict modest declines for central Austin during the first half of the year.

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Spring: The View from 41

editor@austintowers.net — 2009-02-24T21:32:58-06:00

Tonight, Spring hosted hundreds for a special party on the 41st floor of the newly formed tower. After a shaky ride in a 20-person exterior construction elevator, visitors were treated to some of the highest views in Austin from a vantage point that has never before existed.

The views were amazing. Most notable was the ability to watch the city and the traffic and the water and the Long center and Whole foods and all of the downtown action from a quiet perch in the sky. As we have reported, Spring is now 55% sold with units remaining priced from $300K to roughly $1 million. In addition, there is a full-floor 42nd floor penthouse which will be available for $5.5 million.

We saw Kevin Burns from urbanspace at the event who provided good advice on picking a view: go for a corner with both water and city in sight. The water is always beautiful, and the city lights provide visual interest when the hills and the rest of the city disappear after dark.

Here are some images from the top of the tower:

More Images Here:

Project Updates: Spring, Four Seasons, 360

editor@austintowers.net — 2009-02-23T21:07:36-06:00

In spite of the difficult economy, the major downtown Austin condo projects continue to move toward completion. Lots of news updates this week:

- Tomorrow, Spring will celebrate its topping off. The 42-story building on 3rd and Bowie just east of Lamar has reached the top and is on track for completion in July. The 246 unit tower will be the first project delivered in 2009. According to the developers, an impressive 55% of units have already been pre-sold. With units starting around $300k, Spring is the most affordable downtown skyscraper currently under construction.

- 360, which was completed last year, has now officially sold 99% of its 430 units, making the project effectively sold out.

- The Four Seasons released a very detailed update of current sales and downtown market conditions including the news that they have now pre-sold nearly 50% of units:

"As we enter 2009, Four Seasons Residences Austin is nearly 50% sold. Understandably, the last quarter of 2008 was slow, but sales activity in 2009 has picked up considerably. In the last week we signed a new contract for a 2,700 square foot residence and have a number of additional contracts in process. We continue to see an inﬂux of interest from people who love Austin and are exploring the opportunity to live at Four Seasons. . .

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The New AustinTowers | urbanspace Downtown Condo Market Index

editor@austintowers.net — 2009-02-16T00:01:24-06:00

AustinTowers is very pleased to announce one of the biggest enhancements to the site: up-to-date information on downtown Austin condo sales and inventory.

The AustinTowers | urbanspace Downtown Austin Condo Market Index provides a month-by-month snapshot of the strength of the downtown Austin condo market. The index includes three components which will be updated each month:

- The Monthly Sales Index provides a snapshot of actual downtown Austin condo sales including the aggregated number of units sold, sales price, price-per-square-foot, and average days on market.

- The Monthly Inventory report provides aggregated data on all downtown condo units listed on the market.

- The 12-month Rolling Sales Index looks at the previous 12 month sales average to better capture current market trends. Unlike pure monthly results which fluctuate wildly with seasonal changes and the effects of outliers on small transaction volumes, the 12-month index provides a clearer view of the trend over time.

The index can be found on the main navigation bar under the heading "Market Index." The results will be update each month when the prior data becomes available. AustinTowers would like to thank our good friends at urbanspace realtors for providing the data to make the index possible!

See the index here.