New Year's Eve: 100,000 People Expected Downtown

Austin’s First Night New Year’s Eve celebration is expected to draw 100,000 people downtown for a full day and evening of activities celebrating the arts in Austin. Starting at 3 pm and stretching until fireworks ring in the new year, First Night is Austin’s biggest party of the year.

For Austin residents who long for a more vibrant downtown, filled with people, art, and activities, News Year’s Eve is the one day where downtown Austin fills to capacity and lives up to its highest potential. To make 100,000 people fit downtown, To make it all work, the city is working overtime to coordinate public transportation, law enforcement, and parking logistics.

With sky-high hotel prices and endless taxi lines, New Year’s Eve will be a great day to live downtown.





More information is available at www.firstnightaustin.org.

Las Manitas Quickly Demolished

No downtown Austin project is more controversial than the mammoth Marriott complex between 2nd and 3rd between Congress and Brazos. The massive and thoroughly unispiring project has many enemies across the city for many reasons. First, the project is large and architecturally mediocre. Second, the project lacks a plan to extend the retail streetscape on a critical downtown block. Finally, it displaced a number of beloved local businesses including the restaurant Las Manitas, the folk art store Tesoros trading company, as well as a downtown daycare center.

Although the global economic crisis has delayed the $275 million 1,000 room project, the existing storefronts were demolished this week. Now, the critical block at the intersection of Congress Avenue, the Second Street District, and the Convention Center district will lay empty. The Marriott compex has managed to eliminate three core businesses from Congress street with no future project in site. Fortunately, Tesoros has reopened on South Congress, the day care center is moving, and Las Manitas is expected to open at some point in the future in a different building on the same block.

Las Manitas Demolition (Photo by Paul D’Arcy)
Las Manitas Paul D'Arcy Copyright

Read More...

Uh Oh. Austin Homes Sales Fall 39% in November, Prices Down 3%

Last month, at the peak of the national economic crisis (so far), Austin home sales dropped 39% from last November, dropping from 1,805 units in 2007 to 1,086 today. During the same one year period, the median sales price fell 2.9% from $185,200 to $179,900.

In looking at this data, it’s the sales volume that is the big news -- much more so than the small price drop. From a volume perspective, last month was the weakest November in 11 years. The number of transactions was roughly half the number 2-years ago during the 2006 market peak. While median sales prices dropped 3% year-over-year, it’s important to note that median price changes do not necessarily mean that home values have changed. The median price factors home sales prices and the mix of sales. So, if prices increase slightly but sales boom for inexpensive houses while sales fall on expensive house, the median price will likely decrease while house values may actually go up. In the current market, we’re seeing both ends of the market under unusual pressures: new home buyers have trouble getting credit and high-end houses are being hurt by very high jumbo mortgage rates.

The rapid drop in sales volume clearly reflects uncertainty about the ongoing economic crisis. While many forces effect sales --consumer confidence, mortgage rates, credit availability, net migration, and local employment --it is important to note that mortgage rates have dropped to a nearly 40-year low since the end of November, providing a very strong reason for buyers to jump back into the market and reverse the November trend.

For historical context, the following table shows November sales volumes and median sales prices in the Austin MLS for the last 15 years:

Year # Sold Median $
2008 1,086 $179,000
2007 1,771 $185,200
2006 2,141 $172,200
2005 1,975 $167,900
2004 1,630 $147,500
2003 1,362 $151,500
2002 1,304 $149,800
2001 1,388 $152,400
2000 1,245 $148,000
1999 1,340 $130,800
1998 1,222 $119,300
1997 1,004 $113,600
1996 861 $109,400
1995 928 $103,200
1994 727 $ 98,100

SOURCE:
TAMU

The numbers reinforce the point that sales volumes have dropped dramatically -- to 1997 levels -- while median prices have dipped just slightly, behind only last years record levels. Read More...

Downtown Water Treatment Plant Decommissioned, New Neighborhood to Emerge

For those who feel that the heart of downtown Austin is the aging Green water treatment plant, today is a sad day. After 83 years, the Green plant has been decommissioned as a first step to redevelopment of the prime site just north of Ladybird lake.

With the removal of the plant, the City begins ones of its most important and ambitious urban redevelopment projects. Over the next few years, the City and developer Trammell Crow will remove the plant and replace it with large scale multi-use development that restores the natural street grid. In fact, Trammell Crow was selected because they proposed the most dense and ambitious plan for the site

When the project is complete, as many as five high-rise buildings - some as tall as 40-stories -- will be added to the Austin skyline. In addition, a new retail district will connect the 2nd street district to the Seaholm development, creating a vibrant new downtown region which will draw many more residents, workers, and visitor downtown for shopping, dining, and entertainment.

Renderings of Proposed Green Water Treatment Plant Redevelopment


The Trammell Crow proposal for the Green site includes the following components: Read More...

Higher & Higher: Austonian Keeps Going Up

Each week, 55 truckloads of concrete and 50 tons of structural steel are added to the structure of the Austonian, growing what will be the tallest building in Austin by one more floor. This week, the Austonian hit the half-way point -- the 28th floor was poured ad the project continues on its march to completion in 2010.

Since it has been a little while, here are the key facts on the Austonian:

Height of Building: 683 feet; 56 stories

Gross Area Square Feet: 850,000

Total Residential Area Square Feet: 600,000

Total Number of Units: 188

Unit Size: 1,221 to 8,379 square feet

Shared Amenities: Over 40,000 square feet

Price Range: $559,000 to $8M+

Amenities: 24-hour concierge and security services, 24-hour valet service, housekeeping, dry cleaning and laundry services, Lobby-level retail, Secure climate controlled wine storage, Billiard room, 4 Guest suites, Private spa treatment rooms, Screening room with seating for 12, Conference room, Swimming pool, fitness center.

The Austonian under Construction (D’Arcy)


Here is the summary from the Statesman: Read More...

Mortgage Rates Dropping, Treasury Plan Aims to Push Rates Down, Down, Down

Before the economy entered a total nosedive, the first signs of real estate problems began with the credit crunch and out-of-control mortgage rates. Starting 18 months ago, mortgage rates began to spike -- especially for jumbo loans over $417,000.

Over the last few weeks, mortgage rates have dropped significantly. While jumbo loans are higher, lending standards are stricter, and down payments are required, rates are once again becoming very attractive. According to Zillow, the average rate on a conventional 30-year loan is now 5.42%. On 15-Year loans the rate is now 5.11% -- and some 15-year loans can even be found for under 5%. Jumbo loans, however, still remain well over 6%.

As mortgages continue to drop, the Treasury Department has begun to circulate a proposal for the government to boost the sagging U.S. real estate market by backing programs that would drop 30-year conventional mortgage rates nationally to as low as 4.5% for new home purchases. These rates would mark historic lows and would certainly drive new buyers into the market.

For downtown Austin, falling rates and new low rate programs would certainly spur demand, helping to fill out vacancies in many of the projects currently under development. These changes would be unlikely, however, to effect the tight commercial credit and investment markets, still making it hard for developers to bring new unfunded projects to market.

Here is the summary of the Treasury program from CNN:

NEW YORK (CNNMoney.com) -- Lobbyists are pushing the Treasury Department to consider a plan to purchase mortgage-backed securities in the hopes of driving mortgage rates to as low as 4.5%, an industry source said.
Read More...

Kevin Burns Interview: Expert Analysis of the Downtown Austin Condo Market

Today, AustinTowers is very lucky to have the opportunity to interview Kevin Burns, the visionary founder of urbanspace Realtors. Kevin is a long-time downtown resident and a true expert on the downtown Austin condo market.

Founded just 8 years ago, urbanspace has made its name as the most important downtown-focused real estate agency. In this short period of time, it has grown to become one of the most successful agencies in the city.

Urbanspace was AustinTowers first sponsor and we have been working hard to get Kevin to sit down and share his insights on the local market.

Kevin Burns Urbanspace Realtors Austin
Kevin Burns
urbanspace CEO & Broker


Here is transcript of our interview with Kevin Burns:

How long have you lived in Austin?

I have lived in Austin for over 13 years. I came here in 1995 to attend the University of Texas. I fell in love with this city and never left. I earned my real estate license in 1997 between my sophomore and junior years at UT. In 1999 I graduated from UT with a degree in economics along with a concentration in real estate investment and finance.
 
Where do you live?

I have lived in Austin’s urban core since 2000 when I founded urbanspace Realtors, LLP. I have owned and lived at the Talisman condominiums on Barton Springs, The Austin City Lofts, The Milago Condominiums, a home on south 3rd st 11 blocks from Lady Bird Lake and my next residence is at the W that I currently have under contract. I chose the W because of its proximity to Lady Bird Lake, Second Street Retail District, Whole Foods and the warehouse district. Furthermore, it offered the size unit that would allow my wife, two daughters and dog to live comfortably. I also like the design of the building, the layout of the units and access to the hotel amenities. Also not to forget the easy access to Austin City Limits below.
 
Why live downtown --- what are your favorite reasons to be downtown?

Why live downtown… There are so many reasons to live downtown. I have lived in both the suburbs and the urban environment. I choose downtown. Why, because of the quality of life that it affords. I hate sitting around behind my tv… when I live downtown there is always something to do. I like being around people… there are always people around in downtown. Because downtown is so pedestrian friendly, I seem to run into friends, business acquaintances and neighbors almost every time that I take a walk downtown. Chance encounters on the street are one of my favorite things and this happens all the time in downtown Austin. I like the convenience of downtown… I can walk, bike or drive to anything I need inside of a few minutes. I never have to go north of MLK or much south of Ben White. I love being able to get on the trail and be a part of nature while still being in the center of the action. You can buy whatever you need (and want) in downtown Austin now. That was not always the case…  I like being a regular at my favorite, restaurants and bars downtown that are just a short walk from home. I like the views from the buildings that I have lived in. I like not having to maintain a yard, take my trash cans to the curb, deal with a roof leak, etc… I like having a concierge accept packages, call my cabs, greet me at the door. I like the sense of security of being in a high rise. I like having a pool, spa and fitness facility at my disposal. I like the camaraderie of the different buildings. Each building has its own personality and style. I have found living in the different buildings that each one has afforded a different style, group of people, etc… some of my best friends I met because we lived in the same building. You do not seem to get that in the suburbs… In the W, I know half of the people that have purchased there… and they are all great, unique, interesting people… and they are all very different.
 
Whether size, view, or décor, what is the coolest downtown unit that you have seen?

Regarding my favorite residences in downtown… I have several picks. One of my favorites is PH22 at the Milago. It is a 2/2.5 with a study that has one of the best views of Lady Bird Lake and downtown. It was custom designed for the developer of Milago. The developer let his interior designer go all out with no expense spared. From the lighting and electronic curtains to the agate countertops and Miele appliances. Another one of my favorites is unit 102 at the Austin City Lofts. It is a unique first floor unit tucked away off of the street overlooking the pool and Shoal Creek. It is perched about 15 feet off the ground so it looks right at the bamboo and trees. You almost forget that you are downtown in this unit. The owner of this particular residence has traveled the world and brought back bits and pieces of his favorite places. From the 11’x11’ antique doors from India to the muralist from central Mexico to the modern clean lined cabinetry.
 
What led you to start urbanspace?

I founded urbanspace because I have always have loved urban environments. I grew up in downtown Charleston, West Virginia a block from the Capitol, next to the river and in the heart of the historic district. This is what I know. When I started my career in real estate, I did everything under sun. One day I was selling a ranch in Blanco County, the next I was doing a downtown commercial lease. I realized that if I was every going to become great at what I do, I had to focus, be passionate about what I was selling and most importantly become mayor of my zip code. Will Wynn has definitely given me a run for my money… The mixed use aspect of the urban core is what drives me. When I founded urbanspace there was very little product and variety to sell downtown, so I spent most of my time in the early days of my business advocating for downtown. It has now paid off…
 
How would you describe the different downtown lifestyles available to buyers?

Here is how I would describe the downtown lifestyles available in Austin:
 
High rise: The high rise lifestyle is rich in amenities, service and views. The floorplans are more traditional in nature with partitioned spaces. HOA fees are usually a bit higher, however you get what you pay for.

Low Rise: 
In many cases, fewer amenities, no concierge or doorman, stairs are the way you to your residences, etc. Floorplans vary from partitioned traditional spaces to open lofts. HOA fees are usually cheaper than highrises.

Loft:
Open environment, usually in a converted building (adaptive reuse of an office or warehouse building). These spaces work well for singles and couples, not so much for families. They are great for entertaining, artists, etc… they can be found in high rise or low rise environments. Amenities vary based upon building.

Single family home:
Believe it or not there are quite a few single family home options in downtown. The advantage is you get a yard and you make all of the decisions about your property. The disadvantage is you have to make all of the decisions about your property.

Townhouse: a nice compromise between single family and highrise. If you need a yard, yet you do not want to deal with maintenance, this becomes a nice option.
 
How much interest do you see in downtown living?

Seems like everyone is at least curious about downtown living. I do not think it is for everyone, however I have found that downtown Austin is one of the most diverse neighborhoods in Austin. I have also noticed that most people that try living downtown love it and stay. I continue to see very strong interest in downtown Austin, especially due to the increased number of options that have become available over the past few years.
 
Describe the typical downtown condo buyer?

The typical downtown condo buyer is anyone that enjoys being a part of a vibrant, convenient, pedestrian friendly neighborhood. Demographics are completely across the board. From singles to young families to empty nesters. The days of downtown being only for bachelors, artists and homeless people are long gone.

Why does a buyer need a realtor, can’t they just go sales office to sales office until they find the right unit?

A buyer can go directly into a condominium sales center without a Realtor, however I recommend working with a Realtor that is knowledgeable about downtown Austin. In many cases there can be substantial differences in value of a unit based upon a myriad of factors. A knowledgeable Realtor can help you through the process in finding the right you to fit the buyer’s needs. Furthermore, the Realtor can work as the buyer’s advocate through the process. I also feel that it is important to view multiple properties before buying so that you can make sure that you find the unit and building that fit your needs and personality best. A Realtor can show you all available properties in the marketplace.
 
What is different about buying a condo v. a single family residence?

There are several differences between buying a condo vs. a single family residence. It is very important to understand health of the Home Owner’s Association for a condominium project. Your value in a condo is directly tied to the condo project. If it is a desirable project, it can increase the value of the condo significantly. If it is not a desirable project or has a weak HOA you run the risk of the value of the condo being affected. The same holds true with which neighborhood you buy your single family home in. Other important things to consider when purchasing a condominium is the parking situation, views along with factors that could affect your view, HOA fees, etc…
 
What advice do you give people who are beginning their search for a downtown condo?

My advice to someone who is beginning their search for a downtown condo is to contact urbanspace. (or another knowledgeable downtown real estate company).
 
Can you share one fact that most people don’t know about the downtown condo market?

Each of the condominium projects are alive. They each have their own personality, strengths, weaknesses, etc… it is very important for a perspective buyer to figure out what is important to them and then learn about the personalities of each of the buildings before making a decision on which building to buy into.
 
Kevin, thank you again for your time! If you have further questions for Kevin, he can be reached here.

State of the Downtown Condo Market

Last week, the Statesman wrote a very strongly worded article suggesting the impending collapse of the downtown condo market. The article was based on the following assertions:

- With mortgages tough to get and consumer confidence eroding, it is a tough time to sell real estate
- The capital markets are a mess, making it difficult for new projects to get the financing they need to get off the ground
- Sales absorption has slowed as the economy has weakened

These comments are all true and all derivatives of a single fact: the national economy is a mess. Over the last few months, the financial markets have plunged, the government has invested $8 billion in bailouts, and U.S. real estate is experiencing an unprecedented erosion of value.

It is true, it is a very difficult time to be raising money for a project or selling real estate --- no matter who you are. The Austin economy and real estate market has eroded but still remains much stronger than similar markets in almost every other city in the country. And the problems here are the same whether you are selling a million dollar house in Barton Creek or a million dollar condo: fewer people think it is a good time to buy real estate.

What does this mean for the downtown condo market? Let me start by what it does not mean: it does not mean that the new buildings will never be filled, it does not mean additional buildings will never be built, and it does not mean condo values will plunge disproportionally. What it does mean is that the condo market is not isolated from the real estate problems facing the rest of the city, especially when it comes to million dollar units. In addition -- because condo projects take a long time to be built -- it means that the new units currently under construction will be all that is available for the next 2-3 years.

For buyers, the current market provides additional leverage. In this environment, buyers should be able to get price reductions or free upgrades in many of the projects. At this point, there is no fire sale: developers would prefer to wait out the market than give unbuilt units away.

As part of their survey of the market, the Statesman provided updated sales numbers for four of the largest projects:

360 - 96% under contract, 91% closed
Spring - 50% under contract
Four Seasons Residences - 50% under contract
W Hotel & Residences - 45% under contract

As usual, the Austonian did not provide any sales numbers. As we wrote in mid-2007, “It remains to be seen how many high end condo units can be absorbed by the Austin market. In the Austonian alone, there will likely be more than 100 units priced over $1 million -- that is a lot of inventory in one building. The project's construction budget alone is greater than $1 million per unit which should provide an indication of the average unit selling price.”

Here are key excerpts from the Statesman Article: Read More...

How Many Units Exist Today in Downtown Austin?

Local realtor Jude Galligan published a very useful count of known residences in downtown Austin. His analysis counted -- building by building -- all of the downtown residences he could find. Other than a few Congress Avenue residences and the Johnson family apartment in the Littlefield building, the list is very comprehensive.

The list included 35 buildings with a total of 3,954 units. Of these, 2,380 of these units are condos and 1,574 are rental units. All of them are available for occupancy today although many may not yet be occupied (i.e. The Monarch). As would be expected, 75% of available downtown units are in just 15 buildings:





Rank
Project

# Units

1

360

430

2

Monarch

305

3

Milago

240

4

Gables West Ave

239

5

AMLI on 2nd

231

6

AMLI downtown

220

7

Shore

192

8

Legacy on the Lake

187

9

Towers on Town Lake

183

10

Cambridge Tower

169

11

404 Rio Grande

140

12

300 North Lamar

126

13

Red River Flats

120

14

Greenwood Tower

112

15

Railyard Condos

112


The other buildings included in the count are-- in size order -- 555, the Nokonah, Brown Building, Westgage Towers, Austin City Lofts, Penthouse Condos, Sabine on 5th, Brazos Place, Plaza Lofts, Posada del Rey, Villa on Town Lake, Regency, Avenue Lofts, Brazos Lofts, Littlefield Quarters, 904 West, House Park, Hickory Hill Apartments, 706 West, North Cottage, and the Burke Hendricks House.

AustinTowers is currently tracking another 781 condo units which are currently under construction and expected to be delivered over the next 2 years. A number of large rental project are also currently under development.

For a metropolitan area with nearly 1.6 million residents, there is enough capacity downtown today to house a miniscule .5% of Austin residents. With high land and construction costs, however, downtown units remian out of reach of a large portion of Austin area home buyers.

Interestingly enough, the estimated downtown Austin population of approximately 6,000 residents is substantially lower than the number of Austinites who used to live downtown in the 1940s, 1950s, and 1960s. In 1940, when the entire population of Austin was 87,930, approximately 13,000 people representing nearly 15% of the population lived downtown. During this period, residents lived mostly in single family homes and small housing projects. During the later half of the 20th century, Austin’s downtown population steadily declined as commercial, retail, and industrial development displaced downtown housing and as many residents fled for the newly emerging suburbs. The downtown population bottomed out at 3,500 in the 1980s and has been slowly increasing ever since.

While the current downtown building boom is unprecedented, it will not create enough capacity to meet Mayor Wynn’s goal of 25,000 downtown residents.

Austintowers.net now also Austintowers.com

With the help of our sponsors, Austintowers.net is pleased to announce that we have purchased and taken control of the domain Austintowers.com. While Austintowers.net will remain our primary address, you’ll be able to find the just as easily by typing the convenient “.com” equivalent!

Seaholm Redevelopment Inches Forward

One of the most exciting downtown projects is the redevelopment of the decommissioned Seaholm Power plant. The $117.2 million project, a partnership between the city and Southwest Strategies, will result in a 22-story hotel, 60 condo units, and 180,000 square feet of retail and commercial space.

This week, the project inched a step closer to beginning construction in 2009 with City approval of a financing scheme to generate revenue for the site preparation and infrastructure enhancements that the site requires. Essentially, the city issued bonds which will be repaid through the incremental property tax revenue generated by the development.

Once complete, the 150,000-square-foot decommissioned power plant will be the centerpiece of the 7.8-acre property across Cesar Chavez Street from Lady Bird Lake. With offices, retail, and at least 3 acres of open space, Seaholm will shift the center of downtown activity to the west. 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 exciting part of the project is the redevelopment of the Seaholm facility itself. When complete, the art deco structure will include nearly 100,000 square feet of retail and restaurants. Construction will begin 2009, with the final project scheduled for completion in 2011.



Here is a summary from the Austin Business Journal:

The city of Austin approved the creation of a tax increment financing reinvestment zone to pay for public improvements for the Seaholm redevelopment project.

The TIF will be within the area bounded on the west by the planned Seaholm Drive, on the south by Cesar Chavez Street, on the east by West Avenue and on the north by Third Street. . .

. . . Under state law, a tax increment reinvestment zone contributes property taxes from the increase in real property value within the district toward the project’s public improvements. The public infrastructure and power plant rehabilitation will be primarily funded by issuing debt that will be repaid from the tax increment revenue. The TIF has a 30-year duration.

360 Listings Now on Austin Towers

If you are shopping for a downtown condo but are averse to visiting sales offices or speaking with realtors, 360 has been a very frustrating project. They have refused to list units on their website, have avoided the MLS, and generally made it difficult for buyers to engage. With a supposed waiting list of more than 200 buyers for 430 sold out units, many prospective buyers decided it was a waste of time to even call.

Even with residents moving in and with some likely to sell, restrictive covenants have prevented buyers from selling their units. As a result, the 360 mystery has remained intact.

Now,with the project finally complete and the waiting list long ago evaporated, the sales office is finally listing units on the MLS. As always, we have added 360 to our Listings page. Currently, there are 9 listings for units in 360 ranging from $250K for an 812 square foot 1/1 on the 20th floor to $528K for a 1,308 square foot 2/2 unit on the 35th floor. While all units include 10 foot ceilings, oak flooring, 24-hour concierge, and a shared pool and fitness center, some units include upgraded appliances and features.

View the 360 listings here.

Here are additional images from the listings:






Our Hosting Provider Was Hacked

While our website has been working perfectly well, If you tried to access Austin Towers through a major search engine over the last few days, you were probably surprised to be redirected to a random site. We were surprised as well. It turns out that our hosting provider was hacked: some sneak changed a single file on every domain that automatically redirected searches from yahoo, google, and others to their site.

We apologize for the problem and are working with our hosting provider to prevent it from ever happening again. For the technically curious, here is a thread on the web about the attack. For everyone else, the good news is the problem has been fixed and AustinTowers is back to normal.

La Vista on Lavaca is Back: to Proceed With Construction

La Vista on Lavaca, an eight-story residential mixed-use tower consisting of 19 condominiums on the top four floors, a three-floor Executive Business Center, and first floor restaurant, is set to emerge from its construction freeze after months of inactivity.

After running into financial problems, the project was halted during a rare mid-construction freeze. Typically, projects do not break ground until they have lined-up enough sales to receive financing to support the entire construction process. The developers of La Vista on Lavaca -- which billed the project as “Downtown Living for Grown-up Texans” -- began construction after receiving a building permit and a street closure permit last April. They renewed the street closure permit once in November but failed to renew it at it’s recent anniversary. With the interest accumulating quickly and contracts that typically require developers to meet tight deadlines, mid-construction stoppages are extremely rare. Typically, stoppages only occur when projects run out of money or when the developer and key contractors win-up in a legal dispute.

In the latest move, one of the founding partners has sold the shares of another partner to a syndicate of three new investors. With fresh capital injected into the project, La Vista on Lavaca is set to resume construction in January.





Here is a summary from the Austin Business Journal:

A $30 million condominium project near the University of Texas that’s been delayed for eight years has new partners that plan to move it forward again.Mary Guerrero-McDonald, one of the original partners in the project, says she has sold a portion of the LaVista on Lavaca condominium project for an undisclosed amount to three new partners: Mac Pike, a partner in the Sutton Co.; Austin real estate developer Jimmy Nassour; and a third undisclosed partner.Guerrero-McDonald had previously partnered with Gene Fondren, a lobbyist for the Texas Automobile Dealers Association who suffered a stroke. Guerrero-McDonald says she sold Fondren’s portion to the three new investors, and says she will remain involved as a partner.Pike declined to say how much Sutton and the two investors paid for the project, but says construction should start again in early January.


BartonPlace Construction Update

Austin Towers checked-in with BartonPlace this week and learned that construction continues to progress on schedule. BartonPlace is a 6-building, 6-story condo project with 270 total units located on Barton Springs Road near Zilker Park.

As of this week, the developers have completed the garage structure, courtyard, and first floor of the two southernmost buildings. In mid-November, construction will begin on the next two buildings. At this pace, the first two buildings will be complete at the end of 2009. According to the developers, buyers in those buildings are making palette selections during the month of November 2008.



BartonPlace still has 1,2, and 3 bedroom units available starting in the high $200’s. Some units can be seen on the Austin Towers listing page.

Massive 30-Acre Riverside Development to Proceed

Grayco partners of Houston has been assembling a mammoth parcel of land on Riverside drive -- just East of I-35 -- for a development that was originally planned to encompass 50 acres, as many as 2,150 apartments and condos, and as much as 450,000 square feet of commercial space.

Despite the financial crisis which has depressed development in Austin and across the country, Grayco this week announced it’s intentions to proceed with large scale development of the site. Under the revised plans, Grayco will replace a 30-year-old 1,000-unit apartment complex with as many as 1,380 new Apartments, condominiums and townhomes that will be priced from the low $200s with rents for the apartments starting at $1,100 per month. The new project will encompass 30 acres and will also include as much as 97,000 square feet of retail, commercial, and restaurant space. The project is slated to begin construction in early 2009.

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.

For those who have been anxiously watching the broad redevelopment of downtown Austin and worrying about the effects of the current crisis, this project reminds us of the strong long-term fundamentals of the downtown market. For developers who take a long-term perspective, the market remains attractive. With strong population growth, limited downtown housing, and a sizable population of people who want to live downtown, long-term demand should be strong for reasonably priced condo and rental units.

Renderings of Grayco’s Riverside Project as Originally Planned
Grayco Austin Condo Rental Project Riverside Lakeshore

Here is a summary from the Statesman:

The economic downturn hasn't derailed plans for the biggest redevelopment project proposed along East Riverside Drive.

But talk among city leaders about the possibility of running light-rail service from downtown to the airport has caused the developer to postpone planning for a portion of the project.

Houston-based Grayco Partners is moving forward with most of its proposed 30-acre project between Riverside and South Lakeshore Boulevard, where it plans to replace blocks of aging apartments and retail strip centers with a dense district of townhouses, condominiums and higher-end retail.

But the developer has decided to remove nearly 10 acres along Riverside from its initial rezoning request to the city to see if the proposed rail line championed by Mayor Will Wynn and Council Member Brewster McCracken will become a reality.

City leaders have encouraged dense development around rail stations along the commuter rail line scheduled to open next year.

They think so-called transit-oriented development can accommodate large numbers of people without adding substantially more traffic to the city's congested streets. They also hope that these mixed-use developments will generate more tax revenue for the city while costing less to service than more spread-out, single-use development.

A rail line along Riverside would be more ambitious than the initial commuter rail line because it wouldn't run along existing tracks.

ROMA Design Group, a consultant hired by the city to develop a downtown plan that includes transportation, has recommended running a line from the old Mueller airport property through the University of Texas and downtown and then out Riverside Drive to Austin-Bergstrom International Airport.

ROMA estimates the 15.3-mile line would cost $550 million to $614 million to build and $21 million to $23 million a year to operate. . . .

Grayco initially sought approval to build as much as 450,000 square feet of retail. Most of that would be built near and along Riverside Drive. With that property excluded from the current rezoning request, Grayco is seeking to build about 97,000 square feet of commercial, retail and restaurant space, along with up to 1,380 residential units.

Grayco's attorney Steve Drenner said a rail station near the property wouldn't necessarily result in greater density near Riverside, but the developer didn't want to move forward with the costly and time-consuming planning of that portion of the property without knowing what city leaders would want to see built there.

"We don't know whether the city would want us to be a transit-oriented development or what type of retail mix use they might want to see along there," Drenner said. "Rather than try to guess at it and convince the city that was the appropriate way to go we thought we'd take that out of the zoning case."

McCracken said Grayco has discussed two versions of that portion of the project with him, and the developer was leaning toward a more traditional suburban design in the absence of rail service.

Drenner said the slowdown in the real estate market had nothing to do with the decision and shouldn't affect Grayco's goal to begin construction in 2009 because the developer planned to build the townhouses and condos along and near Lakeshore Boulevard first.

"We didn't have to have a decision about the frontage in order to proceed with first phases," Drenner said.

But Grayco has decided to indefinitely postpone buying 20 additional acres from Cypress Real Estate Advisors. That property, just east of Grayco's land, will be allowed to have 1,000 attached residential units.

Original Series on Downtown Austin TV

First there was Austin City Limits. Then came the Real World: Austin. Now there is DOWNTOWN (The all caps effect is actually part of the name).

While not widely known, Austin public TV station KLRU produces a great original TV show on life in downtown Austin. The award-winning show, called “DOWNTOWN” promotes itself as covering diverse issues “such as dense urban cores, downtown living, transportation, accessibility, arts and cultural vitality, retail development... zombie walks... pillow fights... and more!” The whole series is focused on life in downtown Austin.

Over the last three years, the show has included segments on the Seaholm power plant redevelopment (shown below), high rise elevators, downtown films, popular restaurants, and the downtown fashion scene.

DOWNTOWN is produced by the Downtown Austin Alliance, Action Figure, and KLRU-TV, began airing on KLRU-TV in 2005 as a series of 30-minute programs. In 2008, Seasons 1, 2 and 3 of DOWNTOWN were made available online as individual segments or full programs. Season 4 of the series can be viewed on KLRU-TV, Austin PBS, beginning on October 16, 2008.

The show -- including previously aired episodes -- can be found here: http://www.downtownaustintv.org/

DOWNTOWN TV Images from the
segment on the redevelopment of Seaholm:


New York Times: Downtown Austin is Attractive Second Home Location

An article in yesterday’s New York Times analyzed downtown Austin as a second home location. The enthusiastic article shed light on an important trend in the downtown market: the popularity of downtown condos with out-of-town buyers looking for a weekend getaway. We have heard first-hand from many developers that affluent Houston and Dallas residents, especially this with children attending UT, have been active buyers in the downtown Austin condo market.

The New York Times also indicated that buyers are increasingly able to negotiate with developers and condo owners for price reductions and free upgrades. In this tough market, where too few buyers can get decent loans, developers are increasingly eager to cut deals with prospective buyers.

Here is the full article from the New York Times:

MORE than 200 live music sites, weather with annual temperature averages in the 70s, and thoughtful urban planning make downtown Austin an appealing second-home location.

Beginning in the 1990s, city planners decided to model its urban core on the downtown in Vancouver, British Columbia. The result is an area of high-density housing; vertical mixed-use building; plenty of cafes, restaurants and bars; and pedestrian-friendly public spaces that include biking and hiking trails around Lady Bird Lake (formerly Town Lake).

Buyers of second-home downtown condominiums come from larger cities like Boston, New York, Dallas, Houston and San Francisco. Some choose the area based on their experiences there while attending the University of Texas. Others, like young technology professionals, come to the city while on business, then choose to purchase small units for use on weekends or vacations.

Retirees and those who are about to retire are often attracted by the area’s amenities, real estate agents said. Another group of buyers are people who don’t want to be dependent on cars.

Eric Winkler, owner of E. J. Winkler Realty Company in Austin, said the supply of new construction condominiums now exceeds the demand. “Prices are negotiable,” he said. “I’ve seen $90,000 come off a $490,000 list price.”

Buyers at the Plaza Lofts at Republic Square Park can find one-bedroom units listing for about $329,000. Cory Culpepper, an agent at van Heuven Properties, said that the price is about $100,000 less than a year ago.

Dave van Heuven, owner of van Heuven Properties, said that changes in lending practices, not an excess of building, account for a trend in pricing. “If you look at the 43-story 360 Condominiums, all 432-plus units were sold out, most of them preconstruction,” he said. “Now some of these same units are being offered again because of financing that didn’t go through.”

At the low end, listings range from about $250,000 to $450,000 for an 800-square-foot unit in a new building. At the high end, prices range from about $750,000 to $1 million, with penthouses in luxury buildings listing for up to two-thirds more.

HIGH

Overlooking Republic Square Park, this 12th-floor, 2,900-square-foot penthouse condominium is in a six-year-old building called the Plaza Lofts at Republic Square Park. A staircase inside the unit leads to a private rooftop terrace providing more than 600 square feet of outdoor space. The living area includes floor-to-ceiling windows, custom-made wood cabinets, polished and stained concrete floors and 13-foot-high ceilings. Electronic solar shades cover the windows, and the heating and cooling systems are zoned and computer-controlled. Glass inserts in interior walls allow natural light to pass through. The master suite is 900 square feet, and there are two and a half bathrooms. The building’s amenities include concierge service, a rooftop pool and a fitness center. Fees: $1,040 monthly. Taxes: $21,869. Listing agent: Kumara Wilcoxon, van Heuven Properties, (512) 480-8944; www.downtownaustinliving.com.

LOW

Ten-foot floor-to-ceiling windows and a 64-square-foot balcony face west from this condominium with a view of Lady Bird Lake. It has 812 square feet of living space, which includes oak hardwood floors, granite countertops in both the kitchen and the single bathroom and an area for a stackable washer and dryer. Stainless steel appliances are included. The building provides wireless Internet service in all common areas. Other shared amenities include a ninth-floor activity deck with a lap pool, an outdoor living room with a fireplace, a catering kitchen, a movie theater, a fitness center and 24-hour concierge service. Fees: $247 monthly. Taxes: $5,590. Broker: Taylor Andrews, Andrews Urban LLC, (512) 477-0360; www.lifesurroundsyou.com.

AustinTowers.net Featured in NBC Story on Downtown Austin Rental Market

Austin Towers Editor Paul D’Arcy was featured Thursday in a KXAN NBC Austin News story on the downtown Austin rental market.

As we have reported, Austin has been one of the strongest rental markets in the country. As rents increased while supply grew, developers continued to come to Austin to add new rental capacity. Over the last few months, this trend has reversed. With thousands of new units hitting the market and economic conditions deteriorating, both rents and vacancy have begun to slide.



Watch the full story here or read the transcript below:

Apartment rental prices are going down in Austin. A new report by Dallas-based Axiometrics said Austin's annual rents only grew nearly 1 percent for the third quarter 2008, compared to 5.6 percent in the third quarter of 2007. Rental market experts said they are also seeing huge price drops across the city.

"Some of the big projects have actually gone back to renters with huge price drops as much as 30 percent to keep them in their units without them even asking for it," said austintowers.net Editor Paul D'Arcy.

D'Arcy said supply is going up as well.

"We expect to see thousands of new units for the rest of this year," said D'Arcy. "We expect to see thousands of more units hitting in 2009 and that is only going to put more downward pressure on rental prices."

Renters are already experiencing drops in prices and more incentives offered to get them to sign leases.

"In August, as things started to slow down, at least the prices began to drop a little more and the specials started coming out," said Melvin Bunkley, who moved into the Waters Edge Apartments in North Austin. "They really want the renters."

He said he had plenty of options in apartment choices but decided on Waters Edge because of the amenities.

"Renters have bargaining power, there is no doubt about it," said D'Arcy.

Nationwide, rent increases went from 2.1 percent to 0.8 percent. Vacancies in Austin are at 6 percent compared to 5 percent in the third quarter of 2007.

September Update: Prices Hold Steady

The September MLS statistics on sales of existing single family homes are out and the news is about as good as can be expected. During the month, sales of existing homes fell by 8 percent while the median price stayed flat. Notably, prices are actually up approximately 10% from September of 2006. While the rest of the country struggles with massive price erosion, the Austin market continues to hold its ground.

The news, in general, was stronger in some of the more central areas and weakest in the more distant high-dollar suburbs. In Area 1B, just west of downtown, prices dropped by 2.8 percent. In far out 8W, just outside the 360 loop South of the bridge, prices dropped by a whopping 26.4 percent.

While downtown condo numbers have not been published, the numbers tend not to be very useful anyway. Most new downtown units are never listed in the Multiple LIsting Service -- they are sold directly by the sales office -- and as a result they never hit the MLS statistics. The inventory of existing downtown condos remains very small and only covers a part of the market (existing buildings). As a result, the market statistics are not always representative of the downtown Austin condo market.

Here is a summary from the Statesman:

Sales of existing homes fell 8 percent in September, but the median price was flat at $182,600 — the first time in months it had not increased, according to the Austin Board of Realtors.

The year-over-year price drops included 2.8 percent in Area 1B, which includes Tarrytown; 7.6 percent in Pflugerville; 26.4 percent in 8W, the affluent suburbs of Southwestern Travis County; and 18.2 percent in west Georgetown.

Local real estate experts had been anticipating that prices would start to drop, as a near-record supply of homes for sale gave buyers plenty to choose from. New-home builders also have been offering aggressive incentives, providing more competition for buyers.

In other parts of the country where prices have been falling for months, sales have picked up sharply. For example, Southern California home sales jumped 65 percent last month as prices fell 33 percent to a five-year low.

In Central Texas, there were 1,670 sales last month. There were 1,520 pending sales — transactions in the pipeline — down 10 percent from a year ago.

There were 10,217 homes on the market, up 2 percent from a year ago.

BartonPlace Video Commercial

You don’t see many commercials for new condo projects on Austin’s major television stations. While this is unlikely to change, BartonPlace recently produced a profile video on the project that is currently posted on youtube. While the video could use more fancy renderings and images of the units, it’s always interesting to hear real people talk about why they chose the project.

Here is the BartonPlace video:

Austin Rental Market Deteriorating

Over the last decade, Austin has been one of the strongest rental markets in the country. As rents increased while supply grew, developers continued to come to Austin to add new rental capacity. Over the last few months, this trend has reversed. With thousands of new units hitting the market and economic conditions deteriorating, both rents and vacancy have begun to slide.

Since the vast majority of Austin rental units are outside of downtown, the recent slide most effects large commodity complexes in the areas surrounding the city. In downtown, where there are few units but where prices are much higher, developers are working equally hard to fill large new projects such as the Monarch & Legacy on Town Lake. For these developers, the hardest units to fill are the most expensive. Demand still remain solid for all sorts of affordably priced downtown housing, whether condos or rental units.

Here is a summary from the Austin Business Journal:

The Austin apartment market experienced one of the biggest drops in annual rent growth in the country during the third quarter, a new report shows.

Austin’s annual rents increased just under 1 percent in the third quarter, down from a 5.6 percent increase in the third quarter 2007, according to the report from Dallas-based Axiometrics.

“We’ve seen a big change in Austin from a year ago,” Axiometrics President Ronald Johnsey says. “Austin had been experiencing incredible job growth, and now that’s fallen off the cliff. The apartment vacancy rate has increased from 5 percent to 6 percent in the last year. Meanwhile, developers are delivering 8,000 new units this year.”

Johnsey predicts the market’s vacancy rate will rise to 8.1 percent in 2009. But developers have recognized the need to curtail new product. New multifamily permits dropped nearly 30 percent in the last year, and that leveling of product against demand should help stabilize the market in coming years, he says.

“That makes me a little more optimistic for Austin going forward,” Johnsey says.

Austin is likely to fare better than the rest of the country in the rental realm. Nationwide, rent growth is the slowest its been since early 2004, the report shows. The apartment vacancy rate increased to 6.5 percent last quarter, up from 5 percent a year ago.

Johnsey attributes both factors to the slowing economy and lack of new jobs. He says the significant inventory of unsold houses and condos has put pressure on housing prices nationwide and made it more difficult for apartment companies to raise rents.

Be it Known: Austin is Very, Very, Very Lucky

An important article in today’s Wall Street Journal exposed how dire the national housing crisis has become. Today, across the country, one in six homeowners is underwater in their mortgage. By this, The Wall Street Journal reports, nearly 16% of U.S. homeowners owe more on their mortgage then their home is worth. In a county where the economy has been fueled during tough times by homeowners drawing upon their home equity to maintain their standard of living, the evaporation of equity is a major contributor to current economic problems.

According to the Journal:

The result of homeowners being "under water" is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.

And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home's value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.

About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.

The comparable figures were roughly 4% under water in 2006 and 6% last year, says the firm's chief economist, Mark Zandi, who adds that "it is very possible that there will ultimately be more homeowners under water in this period than any time in our history."


In Austin, however, we are very, very, very lucky to have been spared from the worst effects of this emerging crisis. While real estate values across the city have dropped by a percent or two, we have largely avoided the catastrophic drops that have plagued California, Florida, Michigan, Arizona, Nevada, and other parts of the country.

When home values spiked across the country, values in Austin grew at a much more moderate pace. This trend has benefitted Austin on the way down: As the bubble burst across the country, Austin prices have stayed relatively stable.

Wall Street Journal Map: Red Indicated Areas Where Large a % of Homeowners Are Under Water


When home values fall dramatically, homeowners are left without attractive options. In addition to losing their down payments and home equity, buyers across the country have found themselves unable to refinance unattractive mortgages because they lack real equity in their homes. In addition, many buyers are unable to sell their houses because they do not have the cash required to bridge the gap between the homes value and the large mortgage balance that they owe.

While national financial markets continue to deteriorate, the Austin market could always turn negative. So far, however, reasonable prices, a strong local economy, and net inbound migration have kept prices stable. If the current trends continue and Austin real estate values hold, we should count ourselves as incredibly lucky.

October, 2008: Austin Market Analysis

As financial markets retreat, the credit crisis looms, foreclosures spike, and mortgage problems persist, the national housing market is clearly struggling. In this tough environment, even the Austin market has turned negative with a year-over-year pricing decrease of a little less than 1%.

While times may be rough, the truth is that bad times are relative. Despite the year-over-year drop in housing values, it turns out that at least one Austin zip code is doing well. According to Business Week, Austin Zip Code 78749 is the second fastest moving market for houses in the country. With average days on market of 68 days, only Sunnayvale, CA is faster -- at a slightly more impressive 66 days.

78749, in South Austin near Circle C, is definitely doing better than the rest of the local market. While Austin remains one of the strongest real estate markets in the county, the trend is in fact negative. Over the last year, days inventory has grown by 33% to a full 6 month supply. Pricing, however, has remained strong with the both the average and the median increasing year-over-year through August.

The toughest segment of the Austin market seems to be suburban new construction. Here is the full analysis from a recent article in the Austin Business Journal:

----------

New reports show home construction and closings of recently completed homes in Austin remain depressed, but that’s unlikely to bring prices down any time soon.

Area homebuilders started work on 2,382 new houses in the third quarter, a 37 percent decline from third quarter 2007 starts, according to the latest report from Residential Strategies Inc. Through the first nine months of the year, builders started 7,546 homes, a nearly 30 percent drop compared with the same period in 2007.

Meanwhile, the number of home closings fell to 2,732, a 33 percent decline compared with the same period in 2007. The number of closings so far this year dropped 25 percent from the first nine months of 2007 to 8,643. . .

“While Austin area builders are battling a weak housing market, it is important to recognize that this region remains in much better shape than most other areas of the United States,” Sprague says.

That relative health compared with other markets is helping prevent prices from falling. The latest report from PMI Mortgage Insurance Co. shows that the Austin market is one of the least likely to see a drop in prices in the next two years. Also on that list are the other major Texas markets: Dallas/Fort Worth, Houston and San Antonio. While the housing markets of those cities have been affected by the current economic environment, builders have been able to control their inventory better than in most parts of the country while continued demand in Texas is expected to help the state weather the housing crisis.


----------

While this sheds little light on the downtown Austin condo market, the broad strength of the Austin housing market is beneficial to developers and owners of downtown condo units. The worse thing for downtown would be a collapse in the broader housing market. If this were to happen, it much more difficult for buyers to sell their units to purchase downtown housing and much harder for developers to justify downtown prices relative to the weakening broader market. With the relative strength of the Austin housing market, downtown developers continue to survive -- and some actually are thriving -- as they wait out the down market.

Analysis: The Impact of U.S. Financial Market Turmoil on the Downtown Austin Condo Market

It has been a tumultuous few weeks in the financial markets. With the failure of major financial institutions, the government rescue of Freddie and Fannie, the volatile value of oil and the dollar, and the on-again off-again financial rescue package, the dynamics of U.S. markets are rapidly changing.

Like all major products and markets, the downtown Austin condo market will be directly effected by this economic turmoil. Here are some of the ways that downtown condo projects may be effected:

(1) Conservative Spending Will Slow Demand: Yesterday alone, more than a trillion dollars in value was lost in U.S. equity markets. While the markets rebounded today, severe drops in major markets have left buyers with less money, and less confidence in the earning power of their assets. During bear markets, even the rich reduce spending to preserve assets in the face of uncertainty. In tough times, large discretionary purchases are often the first to be deferred. While the Austin real estate market remains one of the strongest in the country, the market turmoil will inevitably hurt demand for downtown condo units -- especially demand for units that may have been purchased as second homes.

(2) Mortgage Rates are Rising: After the rescue of Fannie Mae and Freddie Mac, conforming mortgage rates dropped significantly across the U.S. Last week, with turmoil in the markets, mortgage rates jumped again as credit markets began to freeze. In addition, the gap between the rates on conforming loans and jumbo loans over $417,000 remains large. With many units priced over $500K or even $1 million, rising rates will also likely effect demand.

(3) Precarious Project Funding: While many of the projects currently under construction are fully financed and will be able to continue development as long as sales continue at a steady rate, turmoil in the credit markets will make it difficult for new projects -- including some projects still in the pre-sale phase -- to receive financing. If the market problems continue, we may see some yet-to-be-built projects cancelled.

(4) Lower Supply Increases Long Term Appreciation: For owners of downtown condo units or buyers currently waiting for delivery, the current turmoil could ironically lead to higher long-term appreciation. Demand for downtown housing remains very strong and continued migration into Austin will lead to a steady stream of new downtown residents. With the current turmoil and the general real estate meltdown of the last year, fewer units will be built over the next few years than might have been. When the market does recover, more buyers will be competing for a smaller pool of units, pushing prices higher than if more units had been constructed.

(5) Unexpected Consequences: Since Austin is not a closed economy, it’s hard to know all of the ways that this week’s market turmoil will effect the downtown Austin condo market. When times get tough in California, home owners may cash out and come to Texas, providing an unexpected boost to the local market. If economic conditions hurt the technology industry, Austin may be disproportionately hurt by the downturn.

Nobody knows how long the current economic crisis will last or how it will effect the downtown Austin condo market. While things may get better or worse, one thing is clear: national economic events will have a direct effect on the local real estate market, and a particularly strong effect on the nascent high-dollar downtown Austin condo market.

Where are the 360 units?

It’s been four months since 360 opened to the first residents and yet not one unit has hit the MLS. What’s up? Is there any way to get into 360? When will the units hit the market?

360 has been successful because it is tall, offers great amenities, is well located, and also because it’s priced affordably with the bulk of units originally priced between $200k and $500k.

While much has been made about the project’s sales -- they have been very strong -- we have received recent reports of units becoming available through the sales center. While 360 does have a wait list for some units, it’s still possible to get into the project if you are flexible when it comes to view, floor, and floor plan.

But, given that they have built 430 units, why have no resale units hit the market? The answer lies in specific rules put in place by the 360 developers:

- A non-refundable earnest money deposit is required at the signing of the contract and will be applied to your purchase at closing. At 360, we are offering a six-day rescission period on all contracts. After the six-day rescission period has passed, you may not terminate your purchase contract without forfeiting your earnest money. Also, resale of homes will not be allowed within six months of the first home closing.

- Unless it is otherwise approved in writing in advance by 360 (who has the sole discretion of withholding approval), you may not advertise your 360 home to a third party or offer your 360 home for sale until 6 months from the date of the first home closing.

- The contracts that buyers will be executing for homes at 360 are not transferable to 3rd parties. If you are unable to close on a home you have under contract, 360 will retain the home and earnest money.

- 360 Investor restriction: In total you may purchase two homes; one as a primary residence and one as an investment.

Because of these rules, the first resale units are likely to hit the market around Thanksgiving. Given the demand, it will be interesting to see if these first units carry a premium over the original units prices.

One Day Only: Tour the Major Downtown Condo Projects

For downtown Austin condo shoppers, there is no better way to survey downtown living options than the annual DANA Downtown Living Tour. DANA just announced the details for the upcoming 2008 tour. Here is the announcement:

The Downtown Austin Neighborhood Association (DANA) is holding its 5th Annual Downtown Living Tour Sunday, October 19th, from noon to 5 pm.  The event showcases homes and the benefits of living in downtown Austin.
 
The Downtown Living Tour attracts hundreds of attendees each year and funds DANA-sponsored activities and charities.  Participants take walking tours of downtown residences and retail and entertainment spots.
 
This year's tour will feature the 360 Condominiums, Gables West, Austonian, and other residences.  Second Street retailers will also be catering to the tour’s attendees, and a happy hour (5 - 7 pm) with complimentary food and beverages will follow the tour at the Belmont.  On the eve of the event, VIP ticket holders will enjoy music, food, and drinks poolside at the 360 Condominiums.
 
Tickets are available through DANA's web site at www.downtownaustin.org/DLT.html.  Prices range from $15 for the Tour and $30 for the Tour and VIP party.  The Austin Parks Foundation will receive a portion of the proceeds from this year’s tour.
 
The tour's title sponsor this year is Urbanspace Realtors.  “Over the last 10 years, downtown Austin has experienced intelligent, thoughtful development, fostered by the Downtown Austin Neighborhood Association,” says Urbanspace’s Kevin Burns.
 
“With parks and Lady Bird Lake, shopping, entertainment, food, and arts, downtown Austin has developed into one of the most vibrant urban cores in our nation.  Since 2000, Urbanspace has been an ambassador of urban living, and has grown with Austin’s downtown neighborhood,” says Burns.
 
DANA's mission is to improve the quality of life for those who live, work and play downtown. DANA influences decisions that affect downtown, educates and listens to residents and stakeholders about downtown and issues that affect them, and fosters a downtown community through social events.

Important New Downtown Development Site

With the large number of downtown building projects under construction, planned, or pending, there are not too many open lots awaiting development. Now, an important new site is about to hit the market just a block from the prime 6th & Congress intersection.

The Texas General Land Office is selling it’s now-vacant prototypical 50s building, formerly the Texas Comptrollers office, to raise money for the State’s Permanent School Fund.

The site is located in a prime downtown location on 6th and Colorado street. Free of Capital View Corridor restrictions, the site will most likely be developed as condos, commercial office space, or as a hotel.



According to the Austin Business Journal:

A major downtown tower could soon replace the vacant 1950s building at the corner of Sixth and Colorado streets.

The Texas General Land Office confirms it’s working with CB Richard Ellis Inc. to put the 76,000-square-foot Starr Building and adjacent garage up for sale. A deal has not been signed, but the GLO hopes to contract with CBRE to put the property on the market in the next month.

The GLO acquired the four-story building in 2005 on behalf of the state’s Permanent School Fund for just over $4 million. That same year the building’s last tenant, the Texas Comptroller’s Office, moved out and the property has been unoccupied since.

The GLO staff has determined the best use for the property would be to demolish the building and build a new structure on the site, Press Secretary Jim Suydam says. The GLO will evaluate the purchase proposals it receives and likely choose the one that nets the most money for the school fund. The Permanent School Fund’s board would have to approve the sales agreement.

Moscow. Dubai. Austin? Star Luxe to Build "Real Estate Collectors' Dream" in Austin

In a surprise move, Constellation Property Group (CPG) of Australia has added a new ultra-high-end project to it’s $200 million condo development. With 18 units starting at 4,000 square feet and priced well above $1 million, Star Luxe is the second phase of CPG’s development just East of I-35. The first phase, Star Riverside, will feature 64 units overlooking the lake and starting at $600k. To follow are Revolution Riverside, the likely third phase, which will feature units priced at $400K - $700K and a fourth and final building which may be a hotel. Star Luxe is planned for completion in 2010.

For Star Luxe, the developers are shooting for the stratosphere. According to Eugene Marchese, President of both CPG and it’s design firm, "Sotheby's is handling the sales," he says. "They've already gone out and tested the project with their international offices and we're getting good responses from as far away as Moscow and Dubai." As reported in the Statesman, “The musically inspired units will have curved walls to evoke the shape of a guitar. Each unit will have a balcony of about 600 square feet — larger than some of downtown's lowest-priced condos. Owners will be driven from the airport in the building's "signature fleet," where they will be received by a white-gloved valet and waited on by 24-hour concierge service.”

While I could write lots about this project, nothing conveys how bold this project is better than the press release:

Award-winning Australian developers Constellation Property Group (CPG), acclaimed for such projects as the Bondi Beach “Icebergs” and the recent sensation STELLA in San Diego, have announced their newest project Star Luxe, a limited collection of opulent, one-of-a-kind penthouse residences. Selecting Austin as their next point of U.S. discovery, the developers will once again collaborate with architects Marchese + Partners International (MPI), who were inspired by the imagination of Texas’s capital while designing the project on Lady Bird Lake. Eugene Marchese, President of CPG and MPI says, “Star Luxe will be one of the most exceptional structures the world has seen. The size and design of each residence will make these customizable homes a true ‘real estate collectors’ dream.”

Inspired by Austin’s immersion in art, music, and architecture, Star Luxe will deliver three grand designs: ‘The Guitar’, shaped by the instrument’s exquisite lines, ‘The Salazar’, fashioned after an imagined artist within the Art Nouveau movement, and ‘The International’, modeled after Marchese’s signature ultra-modern designs and premium technology. Star Luxe supersedes any previous definitions of luxurious real estate with these lakefront penthouses situated alongside Austin’s lively Hike and Bike Trail. The project’s immersion in art, music, and architecture seems to keep in line with Austin’s anti-gentrification slogan of keeping the city ‘weird’.

Star Luxe’s approach to servicing its residents is to free them from everyday concerns. Residents will feel immediately settled upon entry with their “Demands List” previously arranged, instructing the 24-hour concierge of their ‘re-stocking’ requirements such as preferred groceries, clothing, beverages, reading materials, toiletries, and even a 5-course meal. Additional desires such as private trainers, nutritionists, personal shoppers, maids, and even the latest movies and music accessible from sophisticated in-home technology will all be arranged as well. Each unit at Star Luxe includes a safe room with comprehensive surveillance, secure garage spaces, wine storage, water filtration system, and exclusive Italian kitchens with Gagganeau appliances. “Collapsible” glass walls will be a central feature of each residence, blurring the line between indoor and outdoor spaces. The palatial 4,000 square foot penthouses with their massive balconies allow owners to enjoy the feeling of a lakefront private home with urban style living conveniences.

Star Luxe residents will take advantage of the property’s four acres which includes a private spa, outdoor pool with BBQ, private cinema, pet exercise area and a lush Zen garden. Marchese explains, “Star Luxe owners will want for nothing; this will be their place to experience privacy, inspiration, and sumptuousness like never before defined.”

Star Riverside

Major SoCo Infill Project Announced: New Hotel & Retail to Emerge

Over the last year, commercial brokers have been shopping one of the largest remaining south Congress parcels -- a full block across from Vespaio -- to a variety of potential commercial tenants.

Today, developers announced that the prime site will be developed with a 90-room boutique hotel, ground-floor retail and restaurants, a plaza with the Hey Cupcake Airstream trailer, and 350 spots of underground parking (a first for the neighborhood). The property is owned by the adjacent church and currently used for parking. One early requirement of the development was to provide ample Sunday parking for the Church. This may be one of the reasons that the developers plan to include 350 spots for a 90-room hotel and It is this requirement which supposedly made condo and rental development difficult on the site.

Dick Clark South Congress Hotel
DICK CLARK ARCHITECTURE

The project is being developed by a team led by Bill Gurasich, a founder of GSD&M and co-owner of the Mansion on Judges Hill, a beautiful boutique hotel on MLK bvld between Lamar and Guadalupe. The project will be designed by Dick Clark, a well-established Texas contemporary architect who also designed the nearby “04” retail, restaurant (Mars), and condo project.

The developers are planning to include two “major” restaurants. Work is expected to begin in 2009 with the project to be completed in 2010.

While development in the heart of the South Congress ecosystem is always sensitive -- it’s truly one of the City’s great assets -- the existing weed-ridden block today serves mostly to break the flow of pedestrian traffic. A small hotel, underground parking, and extensive retails and restaurant are about as good a use of the block as can be expected. And Dick Clark is one of the few architects who has proven that he can successfully integrate new development into the South Congress streetscape.

A Radical New Plan for Zilker Park Residences

Last November, 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. Over the last few weeks, as listings were pulled from the MLS, it became clear that a change was in the works.

Today, the developers announced a radically different plan for the site with revised plans that include a reduction from 74 to 40 larger units, the addition of a hotel, and an expansion of the site through the purchase of an adjacent restaurant (formerly Wanfu Tool).

Here are the key details on the new project:

- 40 units ranging in size from a 1,515 square foot one bedroom to the largest 3,241 square foot unit.

- Prices range from $659,000, one of the highest starting prices of any project in Austin, to $1.4 million. According to the developers, about 1/3 of prospective buyers are contracting for multiple units, the highest priced of which has been near $3 million for 6,700 square feet.

- The project will include three 5-story condo buildings and a fourth building will house the newly-announced 65-room boutique hotel

- Although the project has not received construction financing, work is expected to begin in March with the first residents moving in as early as March of 2010. No clear timeline has been disclosed for construction of the hotel.

- As expected, access to the adjacent park is the top selling point and key differentiator for the project.

- 16 of the 40 units, or 40%, or have been sold (or are pending) with deposits of 10-15%.

- According to the developers, most of the buyers are empty-nesters and many are paying in cash.

- A sales center will open in the former restaurant building as soon as November.

The repositioning of Zilker Park Residences shows that while the market is tough, well-positioned boutique projects can be successful. With 40% of units accounted for, ZIlker Park Residences is off to a strong start. The up-market repositioning of the project based on early sales shows that demand remains for high-end downtown housing is real, and this bodes well for other projects currently under development. In addition, it also shows that demand for boutique hotel rooms remains strong. No doubt, this will be the toughest hotel room to book during the Austin City Limits Festival.

ZIlker Park Residences


Here is a summary of the project from the Austin American Statesman:

Developer John Wooley has added a boutique hotel to his proposed condominium project on Barton Springs Road bordering Zilker Park. He also has a new financial partner — the real estate development firm of Fort Worth billionaire Ed Bass.

Original plans for the project, announced in November, had 74 condominium units at the eastern edge of the park. The new design includes 40 condominiums and a 65-room boutique hotel whose operator Wooley said he's not ready to disclose.

Wooley also has purchased the former Wanfu Too restaurant site on Barton Springs Road, expanding the size of the project to just less than two acres.

His partners in the project are his brother, Jeff Wooley, and Sands Harris, a Harvard-educated architect and veteran developer of condo and mixed-use projects, including five such projects in the 72-acre master-planned Victory development in Dallas.

Fineline Diversified Development, Bass' development and investment arm, is a new equity partner. Bass was the equity partner in La Frontera, the 330-acre master-planned commercial development in Round Rock . . .

Prices are expected to range from $659,000 for a one-bedroom unit with 1,515 square feet to $1.4 million for a unit with 3,241 square feet. However, Wooley said about a third of prospective buyers are contracting for combined units, and the highest priced of those is in the $3 million range, for a unit with 6,700 square feet.

All will have balconies and screened porches.

Wooley said he decided to go with fewer but larger units based on the response to his initial marketing efforts.

Most potential buyers "are empty-nesters or people who soon will be," he said. "A lot of them have pretty large families, and when their children and grandchildren come home, they don't want to be in a loft or a one-bedroom."

Wooley said he has signed or pending contracts for 16 units, with buyers paying deposits of 10 or 15 percent.

Wooley said most of the buyers "are clearly planning on not having a mortgage," and thus won't be affected by the credit crunch that is limiting the availability of home loans.

Boecker said the project was appealing for several reasons, including the involvement of Sands and John Wooley, and the location near Austin's most prized park.

Development Update: The other 13 Buildings Rising Downtown

Austin Towers focuses on downtown Austin condo development, tracking the top projects currently under construction in the downtown area. As any observer can tell, there are many other downtown projects currently under construction downtown. Whether hotels, dorms, garages, or retail, all of these projects will change the face of downtown Austin

Here is a run-down of other important projects (information provided by City of Austin) which are currently under construction downtown:

Austin Market District, South Block Ph. II
The so-called Austin Market District is a four block zone spanning from 5th street to sixth street on Lamar. This project, on the Southeast corner of fifth and Lamar, involves construction on the garage portion of this second phase of an existing project. When completed, the 2nd phase will add a seven-story parking garage, 10,000 sq. ft. of retail space and 10,000 sq. ft. expansion to Pure Austin Fitness.

Hotel Van Zandt
The site has been cleared and San Diego-based JMI Realty will start construction late this year on a hotel project on Lady Bird Lake. The hotel, which will have 307 rooms, will be operated by San Francisco-based Kimpton Hotels.
Start Construction: November 2008
http://www.hotelvanzandt.com/
Austin Hotel Van Zandt

Gables Park Plaza
Construction has started on this primarily residential project (294 apartments and 185 condominiums), along with 22,000 s.f. of retail and 11,000 s.f. of office and a 5,000 s.f. restaurant.
Completion: Early 2010
http://www.gables.com/

Gables Park Plaza Austin

La Vista on Lavaca
Construction started in 2007 on this mixed-use building which will have a first floor restaurant, a 3-floor Executive Business Center, and 31 condos (700 s.f. to 2,000 s.f.) on the top floors. Construction, however, has recently stalled without explanation.
Completion: April 2009
http://www.lavistaonlavaca.com/

La Vista On Lavaca Austin Condos

The Ashton
MetLife Inc.'s Dallas office has teamed with The Hanover Company of Houston to build a 36-story tower on the half block lot just west of the 100 Congress. The project (formerly named Altavida) will include 258 rental units and a 5-level parking garage and ground floor lobby, visitor parking and retail space. Five levels of below-grade parking will connect to the existing 100 Congress garage.
Completion: Spring 2009
http://www.altavidaaustin.com/

The Ashton Austin Altavida Downtown Rental

Crescent
The project is a apartment development consisting of 169 multifamily units near Congress and Riverside in the South Congress area.
Completion: Late 2008
http://www.crescentaustin.com/home.html

Crescent Austin Rental

300 Lamar Boulevard South
Phoenix Property is building a 5-story, 137-unit apartment project with ground floor retail and restaurants, on the site formerly occupied by Binswanger Glass Co.
Completion: Early 2009

The Presidio at Judges Hill
Dallas-based Stonehill-PRM Realty is developing a 45-unit condo on the southwest corner of Martin Luther King Blvd. and West Avenue. Pricing starts at $235,000 with 45 units ranging from 689 to 1915 square feet.* Expected completion date of the model is mid-September with an expected completion date of November 2008. The project is being designed by Allan Nutt Architects, who also designed Piazza Navona in West Campus.
Completion: December 2008
http://www.presidioatjudgeshill.com/

Presidio at Judges Hill Austin

Legacy @ Town Lake
Legacy Partners is constructing a 31-story luxury high-rise residential building, with 187 apartments and 9 live / work lofts at ground level. The site is across the street from the Milago condominium project, at the corner of Rainey and Cummings Streets, adjacent to the Town Lake Hike and Bike Trail.
Completion: October 2008 (first units), complete Feb. ‘09
http://www.legacyonthelake.com/

Legacy on Town Lake Austin Rental

La Vista de Guadalupe
La Vista de Guadalupe, a 22-unit multifamily development, is going up at 813 E. Eighth St., just east of downtown. The development will have apartments from one to three bedrooms in two buildings, with rents from $300 to $725 per month, targeting a mix of incomes. Each unit will have nine-foot ceilings and full appliances, with designs that maximize energy efficiency. The development aims to provide
housing for residents who are finding it difficult to stay in the East Austin area because of dramatic increases in rents, aiming at families below the median income. La Vista de Guadalupe is owned by Guadalupe Family Community LP. Guadalupe Neighborhood Development Corp., a nonprofit that focuses on neighborhood revitalization and preservation, will serve as the developer and
property manager.

Super COOP
Alan Robison This is a 7-story, 178 unit multifamily / co-op development.

21 Rio
This is a 16-story, 117 unit private UT housing project with some first floor retail.

21_Rio__UT_private_dorm

The Quarters
John McKinnerney This is a 100-unit multifamily project with ground floor retail.
http://www.quartersoncampus.com/

In addition, AustinTowers continues to report on the following downtown condo projects, all of which are actively under construction or recently completed:

360
Austonian
Barton Place
Bridges on the Park
Four Seasons Residences
The Shore
Spring
W Hotel & Residences

The Future of the Austin Condo Market: AustinTowers.net Featured on News 8 Austin

AustinTowers.net editor Paul D’Arcy was featured on a News 8 Austin Story on the state of the downtown Austin Condo market. In the interview, D’Arcy pointed out that many Austinites want to live downtown and that well-conceived projects in prime locations at reasonable prices continue to thrive despite the many challenges facing buyers and developers.

Paul D'Arcy Austintowers.net

Here is the transcript of the News 8 Austin story (Original story and video can be found here):

Living in a condominium has its perks.

Lou Talamo lives at The Shores on Davis Street in Downtown Austin.

"I'm close to everything," he said.

Talamo is one of a growing number of condo owners in Downtown Austin, and more are on the way.

According to the Sales and Marketing Director for The Shores and Four Seasons, Brandon Miller, demand is high.

"Of the 1,000 condos under construction, at least half have already been sold," he said.

According to Austintowers.net Editor Paul D'Arcy, four downtown condos have been cancelled and seven are pending.

"Certainly, when I started this a year and a half ago it was boom time for condo projects. It seemed like every week another one was being announced. Since then, many of the projects have disappeared," he said.

Plans for Aqua Terra Condos on Barton Springs are on hold as are plans for Sungari Pearl Lofts on East Fifth Street.

JMI Realty President and CEO John Kratzer said they've decided not to build condo units on top of the hotel they plan to build on Davis Street.

Kratzer said it all boils down to money.

"As you know, we had the meltdown in the sub-prime mortgage market last fall," he said.

That's why many lenders aren't willing to invest in these major projects anymore.

"I would say you could count them on one hand across the whole country," Kratzer said.

Those wanting to buy into the condo projects are finding it equally difficult, according to Melanie Taliaferro, Fairway Independent Mortgage Company loan officer.

"The big banks are starting to take a closer look and say, 'Now before we lend anybody money to buy into these projects, we want to see that they are at least 50 percent pre-sold," she said.

Miller said the stalling condo market could be good news.

"That means what is being built and what's under construction today is all that's going to be under construction. You're not going to see any new building start up which means we are not bringing a lot of supply to Austin," Miller said.

But D'Arcy said developers shouldn't throw in the towel just yet.

"There still seems to be enough demand for those projects to be successful," he said.

Condo Prices by City: How Does Austin Compare?

The National Association of Realtors has released their mid-year analysis of condo values in markets across the U.S. The report shows that Austin has performed well compared to most of the markets around the country. With one year price appreciation of 1.9% and 30-month appreciation of an amazing 27.4%, Austin values have managed to remain strong.

Since the report looks at average values of sold condo units listed in the MLS, it does not take changes in housing mix (expensive new projects raise the average) or changes in buying trends (the market for low end units evaporating would raise the average). So, as usual, the numbers may not represent the increase in value of a typical unit over the time period. That said, the data is clear: the broad Austin condo market continues to perform well.

Here is the raw data on Austin:

Austin-Round Rock, TX Condo Market Values
2005 Avg Value ($ ‘000): $137.6
2006 Avg Value ($ ‘000): $150.4
2007 Avg Value ($ ‘000): $172.3
2007 June Avg Value ($ ‘000): $172.1
2008 June Avg Value ($ ‘000): $175.3
1 Year % Change: 1.9%

Here are some of the key observations:

(1) Austin remains relatively inexpensive. Of the top 60 markets, Austin is the 29th most expensive condo market:


Rank
Market

$ ('000)

1

San Francisco-Oakland-Fremont, CA

$524

2

Honolulu, HI

$330

3

Los Angeles-Long Beach-Santa Ana, CA

$328

4

New York-Wayne-White Plains, NY-NJ

$320

5

Sarasota-Bradenton-Venice, FL

$312

29

Austin-Round Rock, TX

$175



(2) While condos in the worst performing markets have lost 20% - 30% of their value in the last year, Austin is one of a few markets where condo values have appreciated. Of the top 60 markets, Austin is the 11th fastest appreciating condo market and one of only 19 that gained value between mid-2007 and mid-2008:

Rank

Market

$ ('000)

1

Syracuse, NY

17.8%

2

New Orleans-Metairie-Kenner, LA

15.9%

3

Houston-Baytown-Sugar Land, TX

9.9%

4

Norwich-New London, CT

6.4%

5

Chicago-Naperville-Joliet, IL

5.1%

11

Austin-Round Rock, TX

1.9%

56

Jacksonville, FL

-21.6%

57

Miami-Fort Lauderdale-Miami Beach, FL

-25.0%

58

Las Vegas-Paradise, NV

-25.9%

59

Reno-Sparks, NV

-26.9%

60

Sacramento--Arden-Arcade--Roseville, CA

-34.0%



(3) Over the last three years, Austin has been one of the best performing condo markets in the country. When we look at the Austin condo market between 2005 and the second half of 2008, it ranks 2nd of 60 markets in total appreciation:


Rank

Market

$ ('000)

1

Salt Lake City, UT

27.8%

2

Austin-Round Rock, TX

27.4%

3

Bismarck, ND

25.4%

4

Portland-Vancouver-Beaverton, OR-WA

25.1%

5

Honolulu, HI

22.7%

56

Los Angeles-Long Beach-Santa Ana, CA

-15.6%

57

Reno-Sparks, NV

-16.0%

58

Las Vegas-Paradise, NV

-24.7%

59

Cape Coral-Fort Myers, FL

-27.9%

60

Sacramento--Arden-Arcade--Roseville, CA

-38.2%


All-in-all, the market news is uniformly positive and confirms what many other market reports have shown: the national real estate crisis has effected volumes but not prices in the broad Austin condo market.

The full NAR report can be found here.

The Definitive Downtown Condo Map

As the old adage goes, the three rules of real estate are location, location, location. And for this reason, Austin Towers has licensed the best mapping technology that we could find to make it easy for readers to find and navigate projects by location.

While a sample map is shown below, the top-of-the-line fancy interactive map can be found on the new Austin Towers map page located here. In addition to showing all new and completed projects with images and their own color-coded pins, the full map includes a comprehensive project table that lists all current projects with their key statistics.

CommunityWalk Map - Downtown Austin Condo Map

The full map can be found here!

Listings Now Available for Star Riverside

We've once again updated the listings page -- adding MLS Listings for Star Riverside. Whenever units are listed in the MLS, they will appear immediately on the Austin Towers listings page. You'll find the Star Riverside listings here:

Star Riverside Listings

Today, there are 6 units listed ranging from a 670 square foot 1/1 for $345K to a 935 square foot 2/2 for $517K to a large 2,315 square foot 3/2 for $1.37M. The smallest unit comes with one parking space and the largest with 2 spots. These units are expected to be ready for move-in in 2009.



Austin Towers is the only source for current building-by-building listings. In addition to the standard Multiple Listing Service (MLS) listings provided by realtors on completed projects, the listing guide also provides direct links to developer listings which are not included in the MLS.

Brazos Place Opens to Residents, Units Still Available

Despite all of the media’s discussion of the so-called downtown Austin “condo glut,” it remains very difficult to get a new unit in a downtown highrise condo project. With 360 and the Shore essentially sold out, the market remains tight for buyers who are ready to move.

This week, however, comes good news for buyers with the opening of Brazos Place on 8th street between Brazos and Congress. Brazos Place houses 72 units in the redeveloped shell of the former Commore Perry hotel. With fewer than 12 units still available (Brazos Place Listings) ranging from a 623 SF 1/1 for a very reasonble $259,000 to a 1,399 SF 2/2 for $464,900 to a 2,745 SF 3/3 penthouse for $1.575M, Brazos Place is nearly 85% sold out and is available for immediate occupancy.

In addition, the developers have announced that they are providing incentives on some of the remaining units:

- $15,000 to $25,000 off for any contracts signed on 2-bedroom units by August 31, 2008.

- Onee year of free association dues on any one bedroom units put under contract by August 31, 2008.

Finally, the project has annonced new retail tenants. Anthony Nak and
Ana's Market are currently open. Baby Green's (salads & wraps) and
Launchpad Coworking (an internet cafe/bar) will be open by October 08.

Here are current images of the project:






100,000 AustinTowers Visits!

Today, AustinTowers.net passed a major milestone with our 100,000th visit! Thank you to everyone who has visited the site and helped us get to this great milestone. If you haven’t completed our survey and registered -- please do. We love to know as much as we can about our many thousands of readers!

New Apartment Tower to be Built in Warehouse District

As other rental projects reduce rents to lure downtown residents, Gables Residential has announced plans to build a new 20-story apartment tower at the edge of the warehouse district. The site, on the corner at Fourth and Guadalupe, is the current location of the Gingerman pub and the former location of teh Fox and Hound Smokehouse & Tavern. The project would be adjacent to Republic Square Park and down the block from the Plaza Lofts.

The project is expected to contain 220 units and 15,000 square feet of retail on the 1/2 acre site. The project is scheduled to begin construction next year and to open to residents in late 2010 or early 2011.

Gables, a large national apartment developer with 63 communities and more than 50,000 units under management, is also working on a new 168 unit project on 5th street near Mopac which will rent for $1,300 to $1,800 per month. Gables also developed the Gables West Avenue Apartments, their first downtown project, at 3rd & West Avenue near Whole Foods.

Gables West Avenue Apartments at 3rd & West


Here is a summary from the Austin Business Journal:

A high-rise apartment tower is being planned for downtown's Warehouse District in an area teeming with new residential activity.Gables Residential plans to build a roughly 200-foot tower with about 220 units and 15,000 square feet of retail and commercial space at Fourth and Guadalupe streets. Gables bought the nearly half-acre site of former Fox & Hound Smokehouse and Tavern, east of Republic Square Park, from a group of local investors last year. The 15-year-old Gingerman Pub, also on the site, will move, general manager Kristin Jacobson says.The pub's original facade will be preserved as a historical feature of the new building, says Jennifer Wiebrand, spokeswoman for Gables Residential. The project will be able to support up to 70,000 square feet of parking.Construction is expected to begin in late 2009 and be completed in 18 to 24 months.


Surprising Results From New Downtown Living Survey

The Austin Business Journal is running a survey on its website that asks online readers the following question: “Assuming you're not one of the thousands moving downtown, why don't you want to make downtown your home?”

While it is not a scientific survey -- to say the least -- the current results do provide some small insights into the obstacles that developers face in luring residents downtown.

As of the time of this posting, the survey had the following results as to why people choose not to live downtown (see the current results here). Survey says:

44% -- Too expensive
19% -- I need a yard
16% -- Other (no additional details)
7% -- Units are too small
6% -- Lack of neighborhood services
5% -- Traffic
4% -- Schools


Here is what is most interesting: the data suggests that 51% of people who don’t want to live downtown (44% who find units too expensive and 7% who find units too small which really means too expensive) would like to live downtown if it was more affordable. Even though just 1% of Austin’s population lives downtown, the idea of downtown living is appealling to a broad segment of the population -- at least the population of Austinites that reads the Austin Business Journal online!

The survey suggests that there are few intractable, structural barriors to downtown population growth. While, the 19% of people who need a yard will likely never move into a condo, they key driver for most people in the survey is affordability. As new projects continue to hit the market, it’s good news that lots of people do want to live downtown!

Hotel Van Zandt Cancels Condo Project


The developer of the 290 room Hotel Van Zandt and the 55 luxury Residences at the Hotel Van Zandt have announced that they are abandoning plans for the condo portion ofthe project. Instead of a 29-story tower with hotel and condos, the developers will proceed with a scaled-back 16-story hotel on the site near the Shore in the southeast corner of downtown.

The Residences at the Hotel Van Zandt were to feature 55 units ranging in size from 1,400 to 5,200 square feet and ranging in cost from $500,000 to $2 million. As we have mentioned before, it’s a tough time to get financing for large condo projects and many of the projects that have been conceptualized but not yet broken ground may face cancellation. For buildings that are already under construction -- the Austonian, Spring, W Hotel & Residences, Four Seasons Residences, BartonPlace -- are all expected to be completed as planned.

THE ORIGINAL PLAN FOR THE HOTEL VAN ZANDT:


THE NEW PLAN FOR THE HOTEL VAN ZANDT:

Austonian Proceeds: To be Tallest Residential Building West of Mississippi

If you a have unlimited resources, downtown living doesn’t get much nicer than the top of the Austonian. With a top-of-the-line 8,000 square foot penthouse priced at more than $8 million in what will be the tallest residential building west of the Mississippi, few projects are as ambitious as the Austonian.

At a press conference today, media were taken on a tour of the 10th floor of The Austonian, which, when finished, will serve as an urban garden complete with a 75-foot pool, fountains, private cabanas, two outdoor kitchens, two outdoor fireplaces, a secured dog park and wireless Internet.

austonian austin condo press conference

At the event, the developers confirmed that construction of The Austonian, Austin’s tallest building and Texas’ tallest residential high rise building, is on schedule and will be completed at the pace of one floor per week. Under construction at 200 Congress in downtown Austin, the 56-story luxury high-rise condominium project is expected to be complete by early 2010. During construction of the tower, an estimated 500 cubic yards of concrete (about 55 truckloads) and 50 tons of structural steel will go into each level

Here are additional facts on the Austonian:

Height of Building: 683 feet; 56 stories

Gross Area Square Feet: 850,000

Total Residential Area Square Feet: 600,000

Total Number of Units: 188

Unit Size: 1,221 to 8,379 square feet

Shared Amenities: Over 40,000 square feet

Price Range: $559,000 to $8M+

Amenities: 24-hour concierge and security services, 24-hour valet service, housekeeping, dry cleaning and laundry services, Lobby-level retail, Secure climate controlled wine storage, Billiard room, 4 Guest suites, Private spa treatment rooms, Screening room with seating for 12, Conference room, Swimming pool, fitness center.

austonian amenities deck

Austonian Tallest Austin Building Rendering

AustinTowers Featured on Fox News


AustinTowers.net was featured tonight on Fox News 7 during a piece about the Austonian. Our Editor, Paul D’Arcy, shared his opinion that it is a difficult time to sell expensive condos with the stock market in decline, the economy struggling, mortgage rates rising, and gas prices at a record high. Still, he shared with the reporter, the Austin condo market has been remarkably stable with all units being delivered in 2009 essentially sold out.

Construction Costs Continue to Rise

As everyone knows, the price of a downtown Austin condo has increased over the last few years. While supply and demand play their usual role, one of the major factors in rising condo prices has been the rising cost of construction.

For new condo projects, building costs have increased substantially since 2006. As the cost of concrete, steel, and rebar increase, the total cost of downtown construction increases accordingly. With so much simultaneous building, labor costs and crane costs are also on the rise. Finally, with demand for downtown land still very strong, escalating lot prices can add significant costs to new projects.

One reason that this is important is that newly developed condo units play an important role in setting market pricing for all downtown condo units. If new units are nicer, cheaper, and better located than existing inventory, prices can move down across the board as owners of existing units lower prices to remain competitive with buyers. When construction costs rise -- and new units are more expensive -- two things happen. First, fewer new project get built tighting supply. Second, new units hit the market at a higher price, subsequently pushing prices upward or, if insufficient demand exists, failing to sell.

Here is additional analysis from the Austin Business Journal:

The U.S. Bureau of Labor Statistics added more bad news this week for contractors and developers trying to get buildings out of the ground.Construction material costs increased 10.4 percent during the past year, the agency reported on Tuesday. The bureau's producer price index measures materials used in construction, including diesel fuel. Meanwhile, highway construction materials increased 18.9 percent during the past 12 months.Ken Simonson, economist for the Associated General Contractors of America, says in a statement "surging prices for diesel fuel, asphalt, steel and other materials are clobbering construction budgets."He says asphalt prices during the first two weeks in July have increased by 40 percent. Rebar has increased $200 per ton.And Simonson says the situation could get worse.


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Austin Downtown Rental Glut?

During the last decade, the Austin apartment rental market has been the jewel of Texas. With rapid population growth and an affluent market, rents continued to rise year after year as new units hit the market. This is quickly changing.

Over the last couple of months, the AMLI apartments downtown have been offering tenants who renew an unprecedented 30% discount. This is strong evidence that the downtown rental market -- with many new units arriving this year -- is going to see a new level of competition for tenants. This is good news for anyone who wants to live downtown as lower rents make units accessible to a broader population. It’s bad news for investors and developers who will see rental incomes decline.

Here is what is happening:

- June rental occupancy in the broad Austin market has declined 1.5 points to 93.4%.

- There are 1,000 fewer untits being occupied today than at the beginning of the year

- Nearly 13,000 new units are being completed in greater Austin in 2009

- The new AMLI tower, the Monarch, and Legacy on Town Lake will add a signigicant number of downtown units in 2009

- The Monarch -- one of the first downtown rental projects to open this year -- is 45% leased and 25% occupied today. That leaves a lot of units looking for tenants.

Here is an excellent analysis from the Statesman:

"The market remains in decent shape for the moment, but it's concerning that the loss of momentum is so pronounced," Willett said. "Plus, with so much additional product now under construction, it's pretty easy to see the headlights of that train bearing down on you."

Austin is on track to add 12,810 apartment units through the end of 2009, according to M/PF. That's the third biggest block of new supply on the way anywhere in the country, trailing only the 19,217 units under construction in Dallas/Fort Worth and the 18,848 units under way in Houston, M/PF reports.

Willett said the Austin area needs about half as many units as are now under construction based on current demand, which he says has been sluggish. He said there are 1,070 fewer occupied apartments now than at the start of this year. He predicts it will take two years for Austin to burn off its excess supply "if you stop building right now."

Willett says his forecast of a glut applies citywide, from downtown to the suburbs.

But Spencer Stuart, an executive with the developer building the 31-story Legacy on the Lake apartment tower on downtown's eastern edge, said leasing activity is strong in and near downtown, as well as areas closer in.

"We're seeing strong demand in the urban cores of all the markets we're in," said Stuart, senior managing director of Legacy Partners Residential Development Inc., a Foster City, Calif., firm with upscale apartments in states including California, Arizona, Colorado and Washington.

Legacy entered the Austin market in 2006 with it and Capmark Financial Inc.'s acquisition of the 2,044-unit Riata apartment community in Northwest Austin.

Riata was 97.1 percent occupied by the end of June, up from 89.8 percent as of Jan. 1, Stuart said.

Stuart predicts properties like Riata and the upscale apartments at the Domain in North Austin and in the downtown market are "going to do very well."

Also, rising gas prices "bode very well for the downtown market and for properties that are clustered in around a lot of the jobs, like the Arboretum," Stuart said. "If you can walk to your job, you can pay more for rent, and your lifestyle got better because you're spending less time commuting and more time working or playing."

But Willett stands by his forecast, contending that the Austin metro area, which "ranked as the star apartment market performer in Texas over the past few years ... is losing its luster."

He thinks the market will bottom out by the end of 2009 before occupancy begins ticking back up.

"As more and more of this product gets completed, you're going to start seeing the rent discounts kick in, and we're going to be in an incredibly competitive leasing environment in Austin," Willett said.

Rent growth already is slowing. Rents rose 3.6 percent from June 2007 to June 2008, compared to a pace as high as 6.1 percent during 2007, according to M/PF. The average monthly rent is now $839, up from $787 in June 2007, M/PF said.

Willett expects rents to be flat this year, as occupancy dips another 1.5 percentage points during the next 12 to 18 months. By year's end, he said, close to half of the apartment communities will be offering anywhere from a month to a month and a half of free rent.

"The leasing environment looks like it will be especially competitive at the top end of the market," Willett said. "Discounting probably will be rampant at the new communities in initial lease-up, and that seems apt to preclude any rent growth for the market as a whole."

Stuart thinks Willett will be proved wrong about the Austin market. He said he isn't worried about leasing up the 187-unit Legacy on the Lake, formerly Legacy@Town Lake. And the company is looking for a site for a second project, perhaps four stories tall, "as close to downtown as possible."

"We know there's a strong demand for the downtown lifestyle," Stuart said, adding that demand has been well-

established in the Rainey Street area, where the Legacy project is rising, with the selling out of nearby condominium projects like Milago and the newly built Shore.

Rents at Legacy on the Lake will range from $1,331 a month for a 659-square-foot unit to $6,931 a month for the four penthouses with 2,876 square feet, Stuart said. Leasing is expected to begin in August, with the first tenants moving in in October.

Stuart said Legacy could command — and get — higher rents for its downtown project but is sticking with the ones it initially projected in order to lease the building quickly.

At the new 29-story Monarch apartment tower on downtown's west side, 25 percent of the 305 units are occupied, and the building is 45 percent leased, representatives say.

Units rent from $1,333 a month for a 681-square-foot unit to $12,935 for the largest penthouse, with 3,530 square feet.

Monthly rents average $2,100 to $2,300 for the most popular one-bedroom, with about 1,100 square feet, and rents start at $2,630 for the most popular two-bedroom, with about 1,400 square feet.

Tenants include young professionals, entrepreneurs, executives, professors, a state senator, and transplants from New York and the West Coast, as well as people who plan to buy units in condominium projects now under construction downtown, representatives said.

$50 Million Downtown Condo Project Cancelled

First, AquaTerra was cancelled. Then the Monarch converted from condos to rental units. 1155 Barton Springs was indefinitely postponed. Now, the Metropolitan has decided to throw in the towel and shut down prior to construction.

The Metropolitan was conceptualized as a $50m 8 floor condo project on 11th Street near the Capital. With units priced from $250k to $1 million, the 84 unit project was expected to be completed in 2010. Like many real estate developers, the team behind the Metropolitan was facing tough times and a tough market. In fact, the developer -- Mote Group Real Estate Partners LLC -- filed for Chapter 11 bankruptcy June 30. As a result, the land for the project will be point up for sale soon.



As the credit crunch continues, there is less margin of error for poorly conceived projects. While Austin has seen some big recent successes - tthe Shore and 360, both of which sold out before completion -- other projects have struggled. As with other project cancellations -- the market worked quite well: the project was unable to get enough interested buyers to secure funding, leading to cancellation prior to ground-breaking. Outside of collapsing markets like Miami and Las Vegas, it is very uncommon for projects to be cancelled once ground has been broken. With more than a dozen planned condo projects and an uncertain market, the Metropolitan won’t be the last cancellation. That said, the success of recent projects likely means that new buildings will continue to be announced.

Hasta La Vista: La Vista on Lavaca?


La Vista on Lavaca, an eight-story residential mixed-use tower consisting of 19 condominiums on the top four floors, a three-floor Executive Business Center, and first floor restaurant, seems to have halted construction mid-way throught the process. The project was being developed by Guerrero-McDonald.

While outside of the downtown focus of this site, La Vista on Lavaca may be an unusual mid-project catatrastrophe. Typically, projects do not break ground until they have lined-up enough sales to receive financing to support the entire construction process. The developers of La Vista on Lavaca -- which billed the project as “Downtown Living for Grown-up Texans” -- began construction after receiving a building permit and a street closure permit last April. They renewed the street closure permit once in November but failed to renew it at it’s recent anniversary.

While it is unknown why the project halted construction and whether it will resume, it appears that construction has actually been frozen for months. The developers claim that the project will be completed and that construction was to resume soon. They have not explained why it stopped for many months this winter and spring. There is also no word on how many units were actually sold and whether the buyer will receive credits or their money back for the severe construction delays.

With the interest raccumulating quickly and contracts that typically require developers to meet tight deadlines, mid-construction stoppages are extremely rare. Typically, stoppages only occur when projects run out of money or when the developer and key contractors win-up in a legal dispute.





Here is a summary from the Statesman:

Jeffee Palmer had gotten used to the inconvenience caused by construction on Lavaca Street between 17th and 18th streets, and then she started wondering what happened to it.

For almost a year, Palmer has taken a circuitous route around a part of West 17th Street that is closed at Lavaca to get to a parking garage a block from the William P. Clements State Office Building, where she works as an assistant attorney general. That part of 17th Street is a major eastbound link for several thousand state employees who work in the Stephen F. Austin, the William B. Travis, the Lyndon B. Johnson and other state buildings just to the east.

In addition to the 17th Street closure, a block of the right lane of Lavaca Street has been closed for almost a year.

The developers of La Vista on Lavaca, a luxury condominium and office project, took out a permit with the City of Austin on April 20, 2007, to close the block of 17th Street between Lavaca and Colorado streets during construction, said Jason Redfern, manager of the Right of Way Management Division in the city’s Watershed Protection and Development Review Department.

The developers paid $99,900 to the city to keep the street closed for six months, Redfern said. The permit was to have been renewed for the same fee every six months until construction was completed.

The developers renewed their street permit in November 2007 but failed to renew it in April, Redfern said.

No one in Redfern’s department knew when construction stopped, but Palmer said she has not seen anyone working at the site for months.

Martin Luther King Jr. Boulevard to the north and West 15th Street to the south are strained during rush hour, Palmer said. Impatient motorists often drive into parking garages through the exit ramps to avoid traffic, she said.

As she stood in front of the construction site Tuesday, two Department of Public Safety squad cars drove into the garage from the exit-only side.

Palmer said she began searching the Internet about three weeks ago for a phone number to call to get an answer about why the street remained closed.

An e-mail inquiry to the Public Works’ Street and Bridge Division yielded a telephone number that provided an automated message offering Palmer several options for having building permit questions answered.

“I was trying to find out what kind of animal is this that the city can close down public access indefinitely,” Palmer said. “I realized that it was going to take me too much work to find out. That’s when I got in touch with Statesman Watch.”

Until Tuesday, Redfern said, the city was not aware that the developers owed $99,900 to renew the street closure permit and didn’t know why construction had stopped.

Redfern said that he began making inquiries and that he was told that construction would resume soon. “This one is very unusual,” Redfern said. “You normally don’t see construction starting and stopping like this.”

Mary Guerrero-McDonald, one of the principals in the La Vista on Lavaca development, disputed the city’s contention that its street permits were not current.

Updated: Building-by-Building Monthly Condo Fees

One of the most common questions asked by first time condo buyers -- especially in Austin where the popularity of condos is rapidly on the rise -- 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. On average, our research shows, condo unit owners can expect to pay $0.42 / SF / per month or $420 in monthly condo fees for a 1,000 SF unit. For more information on total condo costs, check out our detailed posting on condo cost of ownership.

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 remains constant on all units throughout each building. So, 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 Spring with monthly condos fees of $0.38 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
Five Fifty Five Condos.......$0.40
W Hotel & Residences
.........$0.61
Four Seasons Residences
......$0.61
Austonian
.... . . . . . . . .$0.64
Average......................$0.42

Four Seasons Residences: Austin's Most Over-the-top Rendering


When buying a condo in a project that is little more than an idea on paper, a hole in the ground, or a stubby concrete shell -- it takes some imagination to put real money down. These days, this is the major challenge facing many of the downtown Austin condo sales centers as they try to sell units to prospective buyers.

To solve this problem, the Four Seasons Residences has created an unusually over-the-top video rendering of ttheir future building. Since thd buidling is little more than a 20 foot tall concrete shell supported by wood planks, the video does an amazing job of capturing the experience of the new buidling.

Here it is:



For reference, here is what the Four Seasons Residences looks like today:


Four Seasons Condo Residences Austin 2008

Look! Is that a kid in a downtown condo?

With the opening of Milago, the Shore, and 360 over the last year or two, a few more kids have moved into downtown condos with their parents. This is great news for downtown diversity, given that -- amazingly enough -- almost no kids lived downtown prior to the recent wave of development.

In fact, the 2000 Census numbers are shocking in this regard. According to the government, 3,713 of 3,855 downtown residents (zip code 78701)in 2000 were adults 18 or over. That means that only 142 children representing 3.7% of the population lived downtown. Of this group, 46 were under 5 and the remaining 96 were between 6 and 17.

With only 3.7% of the population under 18, downtown Austin looks very different than the rest of the city where 22.5% of the population is under 18 and also very different from the U.S. at large where 25.7% of the population is under 18.

Why so few kids? There are a few reasons:

- Obviously, families with kids are avoiding living downtown. Downtown demographics show that a very large percentage of the downtown population is under 30 or over 50, and the average household size is an unusually low 1.49 -- significantly below the average family size of 2.59 in New York City. There are many singles downtown, and not that many married couples.

- Large apartments and condos are very expensive. For families who want 3 or more bedrooms, prices start well over $500k.

- The downtown schools are not as good as the top Austin suburban schools - especially in areas of the city with home prices as high as those downtown.

- There are limited amenities for children. Other than the Dell Children’s Museum and a playground at Whole Foods, the lack of kids downtown has meant a lack of parks and playgrounds for kids. For families who want other kids on the block, the lack of kids downtown discourages other families with kids from moving downtown.

As downtown evolves and the population grows, hopefully downtown will become more inclusive of families and children. Otherwise, the downtown population will inevitably be transatory, as young single marry and move back to the suburbs.


Betting on a Project: The Pre-Construction Purchase Process

If you are interested in living in a downtown condo, the best buying opportunities are often during the “Pre-Construction” process. Before a project has funding, the developer must fill at least 50% of the proposed units with prospective buyers. To do this, they often offer discounts and other incentives to draw in buyers.

Those that are willing to take the risk, and wait the longest time -- often 2-3 years -- may get the biggest reward. They get the most choice units, and often at slightly reduced prices. The risk, however, is real: If the project is never built, the buyer will get their money back but must start anew in their search for a condo. For buyers in projects like 360, the best units went quickly and at reasonable prices. Today, the project opens with no available units and a waiting list of more than 200 potential buyers whose only option will be to wait for units to hit the secondary market.

Perry Henderson published a great summary of the pre-constructions sales process in his blog which we have reprinted here:

Pre-Construction Condos: How the Process Works in downtown Austin


When you buy a home that's not built yet, there can be setbacks before you move in. Here are steps to buying a pre-construction condo

Pre-construction condos are units that have been proposed by a developer, but have not yet been built. When you purchase a pre-construction unit, you are putting money down before construction begins. Buying a pre-construction condominium can be a great opportunity, but you should proceed with caution. Because you are buying into something that does not yet exist, there is greater potential for unforeseen problems and setbacks before you move into your home. By understanding the risks and planning carefully, you can avoid complications and come out a winner.

Advantages
The main advantage to buying into a condominium development before construction starts is that you often get a lower price than if you buy when construction is complete. The reason for this is that developers typically need pre-construction sales of 50 percent to 90 percent of the units in a development before they can borrow funds to begin construction. Pre-construction condos can also get you in on the ground floor of an investment that will appreciate. The market value of pre-construction units generally increases during the one to three years it takes to build a development, so your unit may be worth more than you’ve paid for it before you set foot in the place. In addition, you can often choose from a variety of finishes and flooring options, allowing you to customize your home.

How the process works
There are several steps to buying a pre-construction condo. They can vary from developer to developer, but the basic components are:

1. Reservation agreement You give a deposit (usually between $5,000 and $10,000) to reserve the unit and set the price (although the builder can reserve the right to change the price in the contract). The deposit is held in escrow and you can cancel the agreement at any time with a full refund.

2. Condominium documents When a development is approved for construction, the developer submits condominium documents (including budgets, association rules, unit descriptions, materials and other important information) for approval by the state. Once the documents are approved, they are sent to you for review. Read them carefully to make sure that you will be comfortable living by the association rules.

3. Right of rescission Once you receive the condominium documents, you have a 15-day period to decide whether you would like to proceed into a binding contract. If you don’t, you can exercise your right of rescission and withdraw with a full refund.

4. Hard contract If you don’t withdraw, you’ll provide the balance of the required down payment, usually 15 to 20 percent of the purchase price, and sign a binding contract agreeing to purchase the condominium. You generally have seven days after that to cancel. This is your last chance to walk away with no penalty.

5. Closing When construction is nearly finished, the developer will issue you a Certificate of Occupancy. A closing date is set when you will hand over the balance of the purchase price and sign the final documents. If all goes according to plan, your closing will coincide with your move-in date, and you will be ready to enjoy your new home.

The original article can be found here.

Inside 360: The Amenities Deck

When it comes to downtown Austin condos, the biggest news of 2008 is the recent opening of 360. With the opening, residents have begun to occupy the 430 sold-out units in the 44-story condo tower.

In many ways, the heart do the 360 project is the 9th floor amenity deck: the social center of 360 where residents go to swim, exercise, watch movies, play pool, socialize, or simply lunge among the palm trees near the outdoor fireplace. Located above the garage and below the residences, the Amenity Deck provides both indoor and outdoor entertainment for 360’s residents.

The images below provide an inside look at life in the 360 tower:















It's Back: 800 West Applies for Height Variance

Last September, Fortis Development proposed a 250-foot, 200-unit, 25-story tower on 8th street and West Avenue near downtown. Since the area is currently zoned for buildings no taller than 60 feet, the project required a zoning variance or zoning change.

This week, the developers continued to press their case to the ciry for the zoning change, proving that the project is very much alive. As part of the process, the architects have presented four design options for the city to evaluate. all design have public parks in the back facing shoal creek. In the future, a trail will run alongside the creek connecting the building directly to the hike and bike trails and Ladybird Lake.

As we have reported, this decision may be a tough one for the city council: they need to decide on the boundaries of Austin's high-rise downtown. In the projects favor, it is within two blocks of the Nokonah at 9th and Lamar, CLB's proposed 33-story super tower on 7th and Rio Grande, and another project on 6th and West. As the developer points out, it is one of very few downtown blocks free of capital view corridor restrictions.



Here are the details on the proposed project:

- 200 condos in a single 25-story tower
- Lot size is 1.2 Acres
- Proposed building size is 25 stories totalling 130,605 square feet
- The project would include 143 parking spaces
- Planned amenities include a sun deck, gardens, and public trails connecting the building to the Shpal Creek greenbelt

Here are additional details from the Austin Chronicle:

Another test of council will concerning building heights in western Downtown: The zoning case for 800 West Ave., a 1.2-acre Shoal Creek-front site at the corner of Eighth Street, returned to council for a final vote at press time. Last fall, Cypress Real Estate Advisors sought an upgrade to Central Business District zoning to build a 250-foot condo tower, to be designed by Muñoz + Albin Architec­ture and Planning. (The contested 33-story 7Rio condo tower, at nearby Seventh and Rio Grande – now on hold – won CBD from council last year.) When 800 West Ave. came before council in November, members instead approved, on first reading, Downtown Mixed Use Condi­tional Over­lay zoning, which limits height to 120 feet. But according to unhappy project neighbor Ben Procter, retiring Council Member Betty Dunkerley then encouraged a developer-friendly "pass" on height-limiting compatibility standards triggered by nearby residences – a perk of CBD, not DMU. Definitive development guidelines for this peri­pheral urban district, rich in historic homes, are due later this year in the Downtown Austin Plan.


Trammell Crow to Develop 6 Acre Downtown Site

Today, the City of Austin offically selected Trammell Crow, Constructive Ventures, and USAA toredevelop the six acre Green Water Treatment Plant site into a dense multi-use extention of downtown. As part of the deal, the development team will pay the city $57.9 million for the right to develeop the prime site.

With the developer selected -- Trammell Crow proposed the most dense and ambitious plan for the site -- downtown Austin is now set for it’s most radical transformation in decades. With the redevelopment of the Green Site, as many as five high-rise buildings - some as tall as 40-stories -- will be added to the Austin skyline. In addition, a new retail district will connect the 2nd street district to the Seaholm development, creating a vibrant new downtown region which will draw many more residents, workers, and visitor downtown for shopping, dining, and entertainment.



As previously reported, the Trammell Crow proposal includes the following components:

- A 350,000-square-foot hotel and a 250-unit senior assisted living facility in addition to condos, apartments, offices and retail space.

- Five public squares could accommodate as many as 2,700 people.

- 5,200 new parking spaces

- The proposal includes an Austin Car Share program, bicycle bays, and electric refueling stations

- Restoration of the downtown street grid which will ease congestion and streamlie the flow of traffic into downtown

- The proposal offers to make 25 percent of its rental units affordable--defined at 80 percent of the city's median family income--and offered to make a donation to the city's affordable housing fund for every condo it sells, estimating that total donations could reach $2.5 million.

Here is a summary from the Statesman:

The Austin City Council on Wednesday unanimously chose Trammell Crow and its partners Constructive Ventures and USAA for the single biggest development project ever to take place downtown.The group beat four other development teams to win the right to negotiate with the city to buy and transform five isolated blocks of city-owned land bounded loosely by the Seaholm Power Plant and San Antonio, Fourth and Cesar Chavez streets into a residential, commercial and cultural hub.But a city official familiar with the proposals said the Trammell Crow team offered to pay $57.9 million for the six acres appraised at $55.5 million. The official requested anonymity because the official is not authorized to speak about the unsigned deal.Of the five teams, Trammell Crow proposed the biggest and tallest buildings, the most uses and the most parking for the current sites of the Green Water Treatment Plant and Austin Energy Control Center.Two weeks ago, members of the city staff announced that they had determined that the Trammell Crow plan was the best deal for the city.Their decision was based largely on financial information the city has refused to release, including: the proposed sales price for the land, sales and property tax projections, the financial backing of the developers, and the amount of public money needed to achieve the developers' plans. City officials say the information won't be released until the city has signed a deal with the selected developer, a process that could take more than a year.

Star Riverside Begins Construction

Star Riverside, a four building condo complex on Riverside Drive just east of I-35, has officially commenced construction on the first 2 buildings. In this first phase, two 6-story lake front buildings will contain 64 large mostly 3/3 units ranging from 1,500 to more than 2,500 square feet with prices starting at $600k. The first two buildings are expected to be completed by Summer, 2009. A second phase will add 9 and 12-story towers with units as small as 600SF and starting around $350K.

Star Riverside Austin Condo Rendering CPG

Star Riversideis being developed by Constellation Property Group on the 4 acre former site of the Wellesley Inn & Suites just East of I-35. Constellation, an Australian firm which has developed some very cool modern projects (examples), has targeted a small number of cities in the U.S. for new projects. Austin is one of their targets, and Star Riverside is the first new project to break ground.

The first phase of the project features a relatively small number (64) of large units (1,500 - 2,500) in two buildings that sit as close as the rules allow to the lake. With prices starting at $600K, or about $400 / SF, the projects are mid-priced for downtown condo units. While the architecture is interesting and the projects looks to be modern, tasteful, and well-conceived, it remain to be seen whether this price point will succeed East of I-35 and South of the lake. Pluses include direct access to the hike and bike trails, a private dock (non-motorized water craft only on Lady Bird lake) and a planned swimming pool for residents.

In addition, Star Riverside is one of the first projects to transform the shores of Riverside drive on the south side of Ladybird lake. Constellation, and four other developers, are planning to build more than 2,000 luxury condo and apartment units near the shores of Ladybird lake. With close access to downtown, the South Congress entertainment district, the lake, and the hike and bike trails, the location is highly desirable yet less expensive (theoretically) than the city core. As part of thee projects, the Hike and Bike trail is likely to be expanded to fill long missing gaps between Congress Avenue and I-35 and with Star Riverside, the trail will be extended East of I-35.

Star Riverside was scaled back from 364 units to 201 units after the City planning commission denied the developers request for an impervious cover variance. Constellation had attempted to get a variance by building green roofs that were fully landscaped. The planning commission, however, has been very strict when it comes to variances for new buildings on the shores of Lady Bird lake.

The full and updated Star Riverside Profile can be found here. And below, here are additional images and renderings of the Star Riverside project:








City Staff Recommends Trammell Crow Proposal for Green Water Treatment Site


This week the city staff recommended Trammell Crow's proposal for redevelopment of the Green Water Treatment plant tract in downtown Austin. Trammell Crow and it's partner Constructive Ventures, which has been involved in the development of Spring and BartonPlace, proposed the most ambitious plan for the site with the tallest buildings, the most parking, and the biggest diversity of uses.

While the staff’s recommendation is not biding, it is a strong endorsement for the project and makes Trammwll Crow the clear front runner for this important project. Here are some details of their proposal:

- The Trammell Crow proposal calls for a 350,000-square-foot hotel and a 250-unit senior assisted living facility in addition to condos, apartments, offices and retail space.

- Five public squares could accommodate as many as 2,700 people.

- The proposal includes 5,200 parking spaces

- The proposal includes an Austin Car Share program, bicycle bays, and electric refueling stations

- The proposal offers to make 25 percent of its rental units affordable--defined at 80 percent of the city's median family income--and offered to make a donation to the city's affordable housing fund for every condo it sells, estimating that total donations could reach $2.5 million.

Here are renderings from the Trammell Crow Proposal:









Nestled between Whole Foods, Ladybird Lake, Seaholm, Austin Music Hall, and the 2nd Street District is the City's oldest sewage treatment plant - the Thomas C. Green Water Treatment Plant - which began purifying water from Ladybird lake in 1925. The plant covers 6 acres across 4 city blocks. In addition to using a key tract of land to process water using 1920's technology, the plant also serves to disrupt the natural grid of the city -- it stops second street at its west end and blocks Nueces and Rio Grande from reaching Cesar Chavez.

The Green site offers an incredible development opportunity. With four downtown blocks, it is a huge chunk of land. The location is perfect -- it is on the lake and adjacent to both the hot second street district and the future Seaholm multi-use development. The site is free of Capital View Corridor restrictions, although portions of the site close to the lake are limited to 45 feet in height.

Here is a summary from the Statesman:

After sorting through five partnerships' proposals for developing the Green Water Treatment Plant site, city staff members on Thursday recommended Austin go with Trammell Crow, which proposed the biggest and tallest buildings with the most uses.Staff members ranked Stratus Properties second, followed by Forest City, Catellus and Simmons Vedder.The site is five city-owned blocks roughly bounded by the Seaholm Power Plant and San Antonio, Fourth and Cesar Chavez streets.The recommendation is based largely on financial information the city has declined to release. The information won't be released until the city has signed a deal with the selected developer, a process that could take more than a year after the City Council makes a choice June 18.The staff recommendation is not binding."We now have a couple weeks as a council to continue to get a bit of public feedback while, more importantly, drilling down through the staff analysis, asking questions of staff and ultimately coming up with our decision in two weeks," Mayor Will Wynn said.


New: W Austin Residences Listings

Earlier this month, the developers of the W Hotel & Residences announced successful funding of the project and immediately broke ground on the 165 condo unit and luxury hotel project. Once the W Hotel is completed in 2010 and the Condos completed in 2011, the project will also contain the 2,480-capacity venue for "Austin City Limits" as well as other restaurants, bars, and retail.

For the first time, actual listings are now available on the MLS, and as always, we have added the W to our Condo Listing Page.

As of the beginning of the month, just more than half, 85 of the 165 units, are under contract with nonrefundable 10% deposits. Amazingly, the average price of sold units is an amazingly high $1.1 million with prices ranging from the high $400,000s to more than $3 million. The three listings on the market today (many more are being sold directly) range in price from $617,500 for a large 1,149 square foot 1 bedroom / 1 bath unit to $2.875 million for a 3,932 SF 3 bedroom / 3 bath unit.

Owners of W Austin Residences will have full use of all the hotel's facilities as well as access to 24-hour room service, daily housekeeping service and concierge services, and a spa in the building. Whatever, Whenever service provides the closets thing to a personal butler: call them to shop for groceries, take a dog for a walk, fix a flat tire, of pick-up take out on your behalf.

Here are renderings of the planned interiors:

W Austin Condo Interior Rendering





The W Residences Listings can be found here.

360 Retail, Lance Armstrong Bike Store to Open

According to the Statesman, four new businesses will move into retail spaces on the ground floor of the nearly complete 360 project on 4th and Nueces:

* Blue Café Bar Lounge will open in an 1,100-square-foot space in June. The European-influenced shop will feature coffee drinks, lunch items, desserts and wine among other items.

* Lora Reynolds Gallery will move from its current space on West Avenue to an 1,800-square-foot space at 360 in the fall. The gallery, which opened in 2004, features nationally and internationally recognized artists. It organizes six to eight shows annually, and has promoted gallery artists through a number of platforms including published catalogs and placement in public and private collections.

* Mulberry is the brainchild of local entrepreneur Michael Polombo and designer Michael Hsu. The shop slated to open in July will feature a variety of light cuisine in a neighborhood restaurant and wine bar format.

* Royal Blue Grocery will open its second location at 360. The compact urban market's first location is in Austin's Second Street District. The 1,900-square-foot store -- a hybrid of sorts between a convenience store and gourmet grocery -- will welcome its first customers in August.

With these tenants, 7,909 square feet remain unrented, the highlight of which is a 3,300-square-foot restaurant space overlooking Shoal Creek.

Just a block away - on Nueces between 4th and 5th-- Lance Armstrong's new bike store / coffee house / commuter hub is also opening. The store, named Mellow Johnny's, is certain to be a major downtown destination. According to Austin 360:

Besides road bikes, Mellow Johnny's will sell commuter bikes, mountain bikes, triathlon bikes, fixed-gear bikes, low-riders, cruiser-style bikes and even hand-made "art bikes" that look as good hanging on a wall as they do rolling down the street. Stock will also include gear by Giro, Nike and Oakley.Showers and a locker room will allow commuters who don't have facilities at their offices to ride downtown, store their bikes at the shop, bathe and catch a ride on a pedicab or walk the rest of the way to work.The building covers 18,000 square feet on a main floor and basement level and will have garage doors that roll open at one end. The site has served as a distribution center for Pearl beer, a paint company, a steel manufacturing facility and a resource center for the homeless. Demolition work began in June, and construction inside the shop started two weeks ago. Armstrong and his partners are leasing the property from an undisclosed owner.




Lance Armstong's Mellow Johnny's Store is one block north of 360

The Big Roundup: Our Austin Condo Market Update

Tonight, as the lucky future owners of 430 condo units at the 360 celebrate, the building has come alive with a 44-story vertical line culminating in a lit tower that is now the tallest structure in downtown Austin.

With a waiting list of 215 units, a list equal to 50% of the actual units in the building, the 360 has been an amazing success. Novare, the developer, hit the perfect combination of early timing, a great location, and an affordably-priced units.

With a major project completed, and a long list of people waiting for affordable downtown housing, it's a good time to take stock of other activity downtown:

- With their success with 360, Novare Group is on track for their next two towers -- Block 51 & 52 -- on the site of the downtown post office and an adjacent block on 5th street just North of Republic Square. These projects will add an amazing 900 condo units in 37 and 40 floor towers which should be completed by 2012. In fact construction will begin on the 37-floor tower in as little as 60 days. Novare is looking to repeat the model for 360 with a large number of affordably-priced units. However, with increases in downtown construction costs, the new Novare projects will inevitably be more expensive than the units in 360.

- The W Hotel & Residences, Four Seasons Residences, and Austonian -- all luxury projects -- are all proceeding quite well with construction as is the upscale Spring tower next to Whole Foods.

- The 34-story 7Rio Tower (AKA "CLB Unnamed" and "7th & Rio Grande" -- this is the first time we've heard this name) has bee so quiet that we had assumed it was dead (we moved it to "Pending" many months ago). According to the developers, they are still hoping to move forward and are aiming for a ground-breaking in Fall of 2009.

- 1115 Barton Springs, which have also labeled pending, is 30% slowed and slowly moving towards the 50% mark at which point they hope to begin construction. A smaller project with very expensive units, this project may have a difficult time getting built.

- Work has been suspended at La Vista on Lavaca at 1701 Lavaca St. for unknown reasons but is supposedly set to resume soon.

- According to the Statesman, groundbreaking on The Park, an office/condominium project at 801 Barton Springs Road, has been postponed to late 2009 for zoning reasons.

- The city is moving forward with the development of Seaholm and the Green Water Treament Plant - projects which will add a large number of affordable downtown units.

Shore, 360 Open to Residents

Over the last five years, Austin has experienced an unprecedented condo building boom. With many projects underway, the first two in the current wave are nearing completion.

This week, the 44-story 360 is throwing a massive party to celebrate the building's opening. Soon after the party, the first units will open. Over the next few months, the sold out project will be fully completed and all 430 units will be occupied. In addition to selling all units, the project's waiting list remains long. Like most projects, 360 is being completed sequentially starting from the bottom and working towards the top. As the building grows taller, work begins on the interiors of the lower floors. With it's opening, 360 becomes the tallest building in Austin - surpassing the height of the Frost Bank Tower by 50 feet.

In addition, The 23-floor Shore on Davis Street in the southeast quadrant is also nearing completion. Over the last few weeks, residents have begun to move in.

With the completion of 360 and the Shore, there will be as many as 1,000 new residents living in 622 new downtown condo units. While many additional condo projects are planned -- both of these projects are essentially sold out. If you are looking for a new downtown condo unit, at this point you will likely have to wait until the next round of units hits the market in 2009. That said, there are at least 2 listings on MLS for units in the Shore and likely a few more that will hit the market soon.

The Next Big Downtown Change: 5 Proposals for Green Water Treatment Site Revealed

This week, five proposals were released for the redevelopment of the sweeping Green Water Treatment Plant site between Seaholm and the Second Street District.

Nestled between Whole Foods, Ladybird Lake, Seaholm, Austin Music Hall, and the 2nd Street District is the City's oldest sewage treatment plant - the Thomas C. Green Water Treatment Plant - which began purifying water from Ladybird lake in 1925. The plant covers 6 acres across 4 city blocks. In addition to using a key tract of land to process water using 1920's technology, the plant also serves to disrupt the natural grid of the city -- it stops second street at its west end and blocks Nueces and Rio Grande from reaching Cesar Chavez.

The Green site offers an incredible development opportunity. With four downtown blocks, it is a huge chunk of land. The location is perfect -- it is on the lake and adjacent to both the hot second street district and the future Seaholm multi-use development. The site is free of Capital View Corridor restrictions, although portions of the site close to the lake are limited to 45 feet in height.

The plant, which is located between Cesar Chavez and Third streets between Seaholm and San Antonio is about to be decommissioned to make way for a new development. This week, the city released basic details on five proposals for redevelopment of the site. Once complete, the new development will likely add retail, housing, and office space while filling in the missing streets on the city grid.

Here are sample renderings from each of the proposals. It's an amazing set, they provide a vision of an important new urban district near the center of downtown Austin:


Larry Speck/PIRATE DESIGN


MITHUN


CATELLUS DEVELOPMENT GRO


BOSSE AND TURNER ARCHITECTS


COTERA AND REED ARCHITECTS

No matter who wins, here are some of the changes that are likely in store for the site when construction begins in 2010 or 2011:

- About 1,000 new apartments and condominiums including many affordably-priced units. While there are many condo and apartment projects currently under construction - and a few that have been cancelled -- demand remains very strong for central, affordable units. All proposals would include more than 100 units priced to be affordable for a family earning approximately $57,000.

- Multiple high-rise towers with downtown retail and restaurant space which will expand the thriving 2nd Street District.

- Lots of office space -- an important part of the downtown mix that has been largely ignored by the current building boom.

- The various proposals include many interesting elements such as a large downtown H-E-B., a movie theater, a major bookstore, a senior assisted-living center, a waterfront park, large hotels


Here is a summary of the individual proposals from the Statesman:

The proposals made by Catellus Development, Forest City, Simmons Vedder Partners, Stratus Properties, Trammell Crow and their respective partners have some things in common. But each also has elements unique to its plan. "Each one of the five has something that is different from the others, that's distinct to that proposal," Council Member Brewster McCracken said. "It's really amazing."

Trammell Crow and partners Constructive Ventures and USAA Real Estate Co. propose the biggest and tallest buildings with the most parking. Their plan also includes the most diverse uses, with space for a 350,000-square-foot hotel and a 250-unit senior assisted living facility in addition to condos, apartments, offices and retail businesses. Five public gathering spaces could accommodate as many as 2,700 people.

Stratus Properties' proposal includes a two-story H-E-B grocery store, with H.E. Butt Grocery Co. serving as a limited partner in the project.

"We think H-E-B being a full-service grocery store is something everybody can afford, it helps every one of those retailers in the area and it makes residential more viable," said the team's attorney, Steve Drenner.

A movie theater and bookstore would also help drive more traffic to the Second Street retail district.

Stratus and partner AMLI Residential are proposing the largest number of rental units, which they say would let them offer housing in a greater range of prices, and they plan to offer medical office space not found downtown. Canyon-Johnson Urban Fund, a partnership of Canyon Capital Realty Advisors and Magic Johnson Enterprises, is also a part of this team.

Simmons Vedder proposes a waterfront art park and four bridges over Shoal Creek, including two for pedestrians only.

This team, which includes Cotera + Reed Architects and Bury + Partners Engineering Solutions, also proposes to essentially turn the buildings into power plants by installing solar panels in the skins of its towers. It plans to use water collected from the condensation of air conditioners to flush the toilets.

Catellus Development has proposed a primarily residential project with 500,000 square feet of office space and nearly 200,000 square feet of retail. But the company is also offering to collaborate with city leaders and the community to develop a final master plan for the property that could differ significantly from its initial proposal.

"We're going to present something we think is really neat, dynamic, progressive and all of that, but with that said, if we are selected we're going to say, 'Let's go out and spend time and hear from the city what they really want and hear from stakeholders what they really want,' " Catellus President Greg Weaver said.

Forest City, which is partnering with Novare Group and Andrews Urban, emphasizes public spaces with a grand plaza at Second and Nueces streets complete with a fountain and transplanted moon tower. A grand staircase inspired by the Spanish Steps in Rome would connect the plaza to the trail along Shoal Creek, which would run from the Austin Energy site north of Third Street to Lady Bird Lake.

Financing in Hand, W Austin Hotel & Condos to Begin Construction on Monday

Stratus Properties announced that it closed financing for the massive $295 million Block 21 hotel-retail-condo project behind City Hall on Friday. Not wasting anytime, they plan to begin construction on the 36-story project on Monday.

No project has been subject to more speculation than the W Hotel & Residences. Over the last few months, rumors have swarmed that the project might not materialize. Despite strong pre-sales, it seemed that the large project might not be able to raise the financing required to break ground.

However, the developers have pulled it off. With groundbreaking in site, the Block 21 project will likely become the heart of downtown. Located on 2nd street directly behind City Hall, Block 21 fills an important street-front retail gap between the two AMLI projects. As Seaholm and the redeveloped Green Water Plant grow to become a vibrant corridor between Congress and Lamar just North of Ladybird Lake, the 2nd street district and Block 21 will be in the center of the action.



Once the W Hotel is completed in 2010 and the Condos completed in 2011, the project will also contain the 2,480-capacity venue for "Austin City Limits" as well as other restaurants, bars, and retail.

Owners of W Austin Residences will have full use of all the hotel's facilities as well as access to 24-hour room service, daily housekeeping service and concierge services, and a spa in the building. Whatever, Whenever service provides the closets thing to a personal butler: call them to shop for groceries, take a dog for a walk, fix a flat tire, of pick-up take out on your behalf.

With today's announcement, additional project details were revealed:

- The project will include 165 units, down from the originally planned 196 units. The change is reported to be the result of the combination of some units into larger condos.

- Just more than half, 85 of the 165 units, are under contract with nonrefundable 10% deposits.

- The average price of sold units is an amazingly high $1.1 million with prices ranging from the high $400,000s to more than $3 million.

- The project will have a significant economic impact, creating more than 1,000 jobs during construction and hundreds of new jobs when the project opens. The project is expected to provide the City with approximately $35 million in incremental taxes once it opens.

- It will take 30 months to build the hotel, for an expected fall 2010 completion, and 36 months for the last condominium to be finished, by about May 2011.

Here is a summary from the Statesman:

With financing in place, construction is finally ready to begin Monday on a high-profile downtown development with a 36-story W hotel, condominiums and a new "Austin City Limits" venue.Joint-venture partner Stratus Properties Inc. closed Friday on financing for its Block 21 project, which will cost $295 million, up from an earlier estimate of $260 million.The higher costs are related to 70,000 square feet being added to the original project and a "modest increase" in building costs, Stratus chairman and CEO Beau Armstrong said.The financing paves the way for crews to arrive Monday to start excavation work for three levels of underground parking, Armstrong said. The entire project is expected to be completed in three years. . .But Armstrong said the "sheer magnitude of the project" and a highly challenging lending market altered the timetable. The city had the right to repurchase the property if Stratus didn't start construction by April 15 but gave Stratus an extension, he said."It's a tough time to borrow money now, no matter who you are," Armstrong said. And though, typically, construction loans aren't the hardest part of a deal to land, "because of the turmoil in the credit markets, it became a more difficult proposition," he said.Armstrong said that it also took time to get the necessary building and other permits from the city but that those are now in hand.

With Strong Sales, BartonPlace Construction Begins

Amid continuing market uncertainty, BartonPlace today announced that they have officially broken ground. With more than $45 million in earnest money on non-refundable contracts, BartonPlace is the latest project to confirm the strong market for well-conceived and affordable downtown housing.

BartonPlace, a 270 unit condo project on Barton Springs Road, includes one, two, and three bedroom units starting at $263,000 for 683 feet. With a prime location close to downtown and next to Barton Springs pool and park, the project will is in a great location and well priced. As we have seen with many of the downtown projects, the lower the price, the higher the demand. Projects like 360 with many units under $400K have sold very quickly. With construction underway, the project is expected to be ready for occupancy in late 2009.

Bartonplace Austin Condo Peojwct Barton Springs

Here is a summary from the Austin Business Journal:

A ceremonial groundbreaking was held today for the 270-unit BartonPlace condo project on Barton Springs Road.Constructive Ventures, the Austin-based group behind such developments as The Pedernales, 2124 and Saltillo Lofts, is developing BartonPlace in conjunction with local restaurateur Rick Engel. The project is going up near Engel's Austin Java restaurant on Barton Springs.Construction on the project designed by Dallas-based Boka Powell is expected to take 18 to 22 months.Perry Lorenz, one of the partners of Constructive Ventures, says the company has already collected $45 million in non-refundable earnest money contracts for units in the development."Our robust pre-construction sales show clearly that the condominium market in Austin remains very strong," says Lorenz. "The bottom line is that this is a great location in a solid market, and our team has the proven ability to deliver a unique, high-quality product here. BartonPlace will be a distinctively cool new Austin address."

2008 Downtown Condo Property Assessments: Shockingly Modest Growth

This week, Travis County posted 2008 property tax assessments. Across the City of Austin, the assessed value of the average single-family house increased by a significant 12.82%. This is a big jump during a period during where actual property values seem to have increased only modestly.

With the new assessment data available online, AustinTowers analyzed Hundreds of downtown condo units in projects such as the Nokonah, Plaza Lofts, and Milago to better understand the current downtown valuation trend. Because units are easy to compare and some sell each year, city assessments for condo units in large projects tend to be relatively accurate.

With the new assessments, we found that values increased by an average of 3% for most of the established projects lie the Nokonah and Plaza Lofts. For newer projects such as the Milago, values increased by a higher rate -- closer to the City average of 13%. In the newer projects, it was the least expensive units -- those that were valued under $300,000 last year - that showed the greatest increase this year with some units increasing in value by as much as 40%. Conversely, some of the most expensive units in the Milago -- which is not a high luxury property -- saw values remain flat or even dip slightly.

None of these trends are unexpected, here is the summary analysis of this year's downtown Austin condo assessments:

- Demand remains strong for affordable units. As construction costs rise, very few affordable condo units are coming on the market. As a result, the value of the least expensive units is rising quickly. Condo units priced under $250K should continue to see appreciation.

- As new high-end projects such as the Austonian, the Four Seasons, the W, and 21c capture the imagination of buyers, prices for the old generation of luxury units have remained relatively flat. Prices for high-end units in non-luxury buildings have declined.

- The broad downtown Austin condo market lagged the City as a whole with small increases of around 3% as supply and demand became more balanced during the year.

- This is the second consecutive year of modest increases in downtown Austin condo values after a sharp rise between 2003 and 2006. During this peak period, for example, values in the Nokanah increased by an average of nearly 70%. Last year, Nokonah values increased by a much smaller 5%.

Surprise Compromise Saves Riverside Condo Project

While the city continues to approve many variances to large downtown projects, there has remained one downtown Austin zoning request request that seems truly sacred: building in the protected zone around Lady Bird Lake. While long-standing rules prohibit construction within 200 feet of the former Town Lake, a new project may soon be built 50 feet closer to the lake than current rules allow.

CWS Riverside Austin Condo Project Rendering

In a new compromise with community groups, CWS Partners intends to build a scaled-down 8-story project 150 feet from the lake instead of the three 17-story apartment and condo towers with more than 800 units that had previously been proposed. With the support of community groups and a commitment to extend the popular hike and bike trails through the site, the new proposal should fare well as it works it's way through the standard zoning approval process. This is a productive compromise for both sides and a positive sign for the condo market. With the national housing market in such a weakened state, it is a strong endorsement of the market to see developers work so hard to bring a new project to market.

The proposed CWS project is to built on land currently occupied by long-standing apartments built much closer to the lake. Prior to the release of the current rules in the 1980s (they were revised in 1999), buildings could legally be built much much closer to the shore (as close as 25 feet). CWS prior position was that without their requested variance, they would build two 17-story towers within the legal setbacks and simply remodeling the existing apartments into town homes -- a legitimate exception to the setback requirements.

Here is a summary from the Statesman:

In a precedent-setting compromise, developers have agreed to reduce the size of a controversial high-rise residential project on the south shore of Lady Bird Lake and donate land to extend the hike-and-bike trail across the site.In exchange, neighborhood and community groups that had mobilized against the project have made concessions that will allow the project to go forward.The deal reached this week ends a nearly two-year standoff between CWS Capital Partners LLC and the South River City Citizens and Save Town Lake, which had fought to block the project on East Riverside Drive, saying it would violate limits on waterfront development.Austin-based CWS had proposed to build three towers up to 200 feet high and to build within 80 feet of the lake.Under the compromise, the buildings will be no more than 96 feet high, and the project would be set back a minimum of 150 feet from the lakeshore. . . CWS will bring the revised project back before city officials for approvals. With the new agreement, the company will donate 1.5 acres for parkland and extend the hike-and-bike trail, which now stops at the western edge of the site.Miller said it will take four to six months to work through the city approval process and that construction could begin in 2009.

Austin Real Estate: The State of the Market

With today's release of March real estate statistics, the Austin market posted its ninth consecutive monthly decline. While the news is mixed, the Austin market -- and Texas in general -- have fared better than most any other market in the U.S.

Still, it's not like it used to be. While the average sale price last month was up 5% over last March, sales were down 21% from the same period last year. Today, nearly 40% of houses put on the market are removed before they sell. Price per square foot has dropped by 4%, and the average discount from listing price for completed transactions has increased from 1.9% to 3.5%. It's worse everywhere else, but Austin is still feeling the pain.

A big question is whether there is a bubble in Austin. The consensus is no, although some price decreases are likely this year. The common wisdom is that the economy is strong, net migration is high, and Austin never experienced the boom that inflated values across the rest of the country. These three reasons are compelling, and they are often recited as the fundamental reasons why Austin is different.

Interestingly enough, Austin may be more exposed to a downturn than many experts recognize. The local economy is dependent on technology. This was made very clear during the dot com bust when migration patterns reversed, jobs were lost, and the housing market stalled. Months ago, Austin and San Francisco were named the strongest economies in the country based on the strength of the technology sector at the time. Since then, much has changed. Today, technology employers are beginning layoffs as the sector weakens. While nobody expects this downturn to be as bad as the last one, a tech downturn will effect the Austin market.

As for the second factor, this remains positive as Austin will continue to grow. Austin's buzz has never been hotter -- the Austin brand will draw people to town under almost any scenario. This migration will be an important buffer over the next couple of years. If this pattern changes, it is time to get worried.

The final "fact" about the Austin market -- that it skipped the boom -- is simply not true. While the broad Austin market experienced only modest growth over the last five years, prices in central Austin have soared. Between early 2005 and late 2007- just a little over two years -- prices for single family homes increased by 41% in Area 4 (Hyde Park), 43% in Area 2 (Allandale & north central Austin), 55% in Bouldin (near Zilker Park), and an incomprehensible 2-year gain of 83% in Area 3 which covers East Austin close to downtown. During this short period the typical central East Austin house increased in value from a median price of $168K to more than $255K. In Bouldin, price per square foot for the median house peaked at more than $300 / square foot in the second half of 2007 -- prices that make downtown condo projects look affordable.

Like any other market, it is difficult to believe that prices can nearly double during a couple of good years and then not retreat when the economy slides, mortgage rates rise, loan underwriting guidelines strengthen, and the national market implodes. While Austin remains stronger than almost any other market, central Austin prices may be at risk over the next year. While new condo prices are unlikely to go down -- they are too linked to costs -- any negative market change will certainly add pressure on developers as they try to complete the sales process for new projects.

Here is a summary from the Statesman:

Central Texas home sales continued to slide in March, falling 21 percent from a year ago, the Austin Board of Realtors reported today.March, which had 1,832 sales of existing homes, was the ninth consecutive month that home sales numbers dropped. And pending sales — sales expected to close in April — show that the slowdown could continue. Those sales fell 54 percent, the highest percentage on record, the report shows, to 1,349.Even with the slowdown, real estate experts assert that the Central Texas housing market is faring much better than most areas around the country. But the national housing crisis has jaded consumer confidence, and Austin has not been immune to the slowdown.The area’s median price of a single-family home for March increased by 5 percent year-over-year to $186,680. However, homes are taking longer to sell, with an average of 73 days on the market, an increase of 14 percent. With homes taking longer to sell, more homes are on the market, up 24 percent to 9,638.

Seaholm Plan Approved: New Downtown Neighborhood to Emerge in 2011

Last week, 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, will result in a 22-story hotel, 60 condo units, and 180,000 square feet of retail and commercial space. Between the initial proposal and final draft, the condo portion of the project was reduced from 80 units to 60 units.

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The 150,000-square-foot decommissioned power plant will be the centerpiece of the 7.8-acre property across Cesar Chavez Street from Lady Bird Lake. With offices, extensive retail, and more than 3 acres of open space, Seaholm will further shift the heart of downtown to the west. 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 exciting part of the project is the redevelopment of the Seaholm facility itself. When complete, the art deco structure will include nearly 100,000 square feet of retail and restaurants. Construction will 2009, with the final project completed in 2011.





Here is a summary from the Statesman:

The Austin City Council approved the master development agreement for the $117.2 million Seaholm mixed-use redevelopment project today.The agreement says the development group Seaholm Power LLP, led by Southwest Strategies Inc., will pay $98.6 million or 84 percent of the cost of the project, while the city will pay $18.6 million. The redevelopment plan calls for a 22-story hotel, 60 condo units, 130,000 square feet of office space and 50,000 square feet of retail and commercial space. The 150,000-square-foot decommissioned power plant will be the centerpiece of the 7.8-acre property across Cesar Chavez Street from Lady Bird Lake.The city's contribution to the project, which will be raised through property and sales tax revenues, would pay for street and utility improvements, public parks and a parking garage. The city will continue to own the renovated Seaholm Power Plant.


Austin Foreclosures and Loan Delinquencies

These days, the national mortgage crisis is big news. As home prices drop, delinquencies rise, and foreclosures continue to grow, the national picture remains bleak.

In Austin, however, the mortgage crisis is causing much less pain. According to the Wall Street Journal, Austin loan delinquencies are virtually unchanged from the national market peak in the fourth quarter of 2005. During this period, loan delinquencies in Austin have increased by a trivial 0.03 percentage points to 2.97% of loans. This net increase is just 1/60th of the national average increase of 1.84 percentage points. In the worst markets in Florida, California, and Michigan, delinquency rates have risen 5 percentage points or more. In Merced, California, for example, 9.78% of home loans are currently delinquent and home prices have plunged by more than 25%. This is an increase of 7.76 percentage points over the delinquency rate in Q4 of 2005.

During this same period, Austin real estate prices have increased by more than 10%. This compares quite favorably to the average U.S. home which has decreased in value by more than 8%. As a result of the changes, Austin has passed Dallas to become the most expensive housing market in the state of Texas. While Austin home prices are only 90% of the national average, they are moving up the charts quickly as other markets continue to weaken.

There are a few reasons why Austin has fared well:
- Austin skipped the real estate boom which inflated values in the rest of the country
- The Austin economy remains one of the strongest in the country
- Austin continues to attract many migrants from other states, pushing up local real estate prices
- Austin housing remains affordable compared to most major U.S. cities

While Austin has fared well, all is not perfect. The national credit crunch has caused local mortgage rates for jumbo loans to soar and has left many first-time buyers unable to get financing for a new home. The deterioration of the mortgage market has stunted housing demand causing prices to remain flat. While the economy has remain strong, the expected weakening of the technology sector over the next year will have a disproportionate effect on the Austin economy. While Austin fundamentals remain strong -- especially over the long term -- price may dip over the next year.

The good news, however, is that Austin real estate will almost certainly outperform the vast majority of country over the next two years. While growth may be flat, Austin housing remains in high demand.

Patagonia to Lead Congress Avenue Comeback

Congress Avenue was always meant to be the heart of Austin. Over the last 40 years, it's destiny as a retail center seems to have slowly slipped away. When the new Marriott replaces Tesoros Trading Company, very little retail will remain.

Today, however, Patagonia -- the upscale outdoor clothing company -- announced that it will open it's first store in Texas in a historic downtown building located between 3rd and 4th street on Congress Avenue. This is a bold move for the company and it is great news for Austin. With the opening of a new destination store, the Patagonia announcement should lead more businesses to follow with a Congress Avenue presence.

Prior to 1960, Congress avenue was the center of retail and commerce for the City of Austin. Over the last 5 decades, Congress Avenue has been in a steady state of decline as city residents increasingly looked to suburbs for shopping and commerce. Today, there are only 13 retail business on the prime central stretch between the Capital and the lake. While a handful of restaurants continue to survive, Congress avenue storefronts are more likely to be vacant or filled with offices than utilized for retail or cultural purposes. With the opening of the Austonoan, the Patagonia Store, the new Arthouse and the redevelopment the historic Yaring's department store on Congress between 5th and 6th into retail and commercial space, there is once again hope that the former glory of our most prominent thoroughfare may be restored.

Here is a summary from the Statesman:

Patagonia, the Ventura, Calif. active clothing and equipment retailer, plans to open its first Texas store at 316 Congress this fall. The 7,000-square-foot store will be the company's 25th location and will carry outdoor sports and lifestyle products tailored to Austin outdoor activities like trail running, bouldering, paddling and hiking/trekking.The store will open in the historic W.B. Smith Building. The company says it chose Austin as the location for its first foray into the Lonestar State because of the city's reputation among the healthiest and greenest communities in the country.

Who is Buying Downtown: 5 Statistics that Summarize Downtown Condo Demographics

Who is buying all of the new downtown condos? A recent survey commissioned by the Downtown Austin Alliance and conducted by Charles Heimsath, president of Capitol Market Research, sheds new light on this very important question. The survey reveals five interesting facts about downtown Austin Condo buyers:

1. Only 13% of buyers are buying for investment reasons. While most new buildings are capping the number of investors at 25 percent, the vast majority of buyers are owner-occupants.

2. For the high price range, buyers tend to be young: 27 percent are younger than 30; 35 percent are ages 30 to 44; 26 percent are 45 to 60; and 12 percent are older than 60.

3. Out of town buyers are flocking downtown. While 68% of downtown buyers are from Austin, an amazing 32% are out-of-town buyers.

4. Of the 32% of buyers from out of town, 13% come from other cities in Texas and the remaining 19% come from outside the state. Based on AustinTowers data, the largest number of out-of-town buyers comes from California.

5. A survey of a subset of projects concluded that 70 percent of condo buyers work someplace other than downtown.

Here is the summary from the Statesman:

Most downtown condo dwellers are young people.Many downtown dwellers work downtown.Many people buying downtown condos are investors from outside of Austin.Wrong, wrong and wrong, according to a survey of Austin's downtown condo market to be released today.The Downtown Austin Alliance, an organization of downtown property and business owners, commissioned the study by Charles Heimsath, president of Capitol Market Research, an Austin-based real estate consulting firm.Heimsath said the group sought to dispel some myths about the local condo market.Heimsath will present his findings to the group's Economic Development Committee today. He obtained sales data and buyer-demographic information from six condo projects: the 360 and Spring towers, Bridges on the Park, the Four Seasons Residences under construction, the condos planned for the W Hotel downtown and Sabine on Fifth .Heimsath said he was surprised by the broad age range of buyers: 27 percent are younger than 30; 35 percent are ages 30 to 44; 26 percent are 45 to 60; and 12 percent are older than 60.Heimsath also found that downtown condos are selling well.About 818 condo units will be finished this year, and 90 percent (736 units) are under contract or sold. Tighter credit stemming from the subprime fallout "absolutely" will cause some pending contracts not to close, Heimsath said, "But I don't think that it's going to be a serious problem."Heimsath gave the example of the 44-story tower called 360, where 430 units are spoken for, with a waiting list of 140, its developers say.

21c Condo Project Magically Relocated to Waller Creek

In a highly unusual move, developers of the 44-story 21c hotel and condo development have 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, will first include a 16-story hotel with 243 rooms which will be followed by a 49-story condo tower. The hotel will break ground in 2009 and the condo tower is expected to break ground by 2010. The hotel will also double as a contemporary art museum.

The original 21c project was late to the game, announced just 2 months before the summer meltdown of U.S. credit markets. Although 21c had been actively marketing condo units through a sales office on 6th and Congress, the developers will essentially start from scratch with their condo marketing efforts for the newly planned 295 unit condo tower. At this point, prices have not even been announced.

While the Austin hotel market remains strong, 21c's unlucky timing likely made condo marketing difficult. With the new plans, the developers separate the hotel, residential, and a newly announced commercial tower into three separate projects. This allows them to begin quickly with the economically viable and modestly-scaled hotel project while testing the waters on the other two fronts. When (and if) sales and leasing goals have been met, 21c will be able to embark on the other two towers. One clear sign of the developers preference for hotel rooms over condo and commercial projects is the simultaneous announcement that the existing 21c site on Third and Brazos will also be developed into a new hotel. If all projects are completed on the new site, the project will cost $350 million, a significant jump from the originally planned $200 million hotel-condo tower.

21c Condo Project Downtown Austin

With the move, the new 21c buildings will anchor a high-potential development district on the East end of downtown just north of Lady Bird Lake. The project will be located on a large 3.5 acre site surrounded by park and close to the much-loved downtown hike and bike trails. In the new location, the project will anchor a potential Austin "riverwalk" along Waller creek. 21c is the first major project to take advantage of a city-sponsored $125 million tunnel designed to remove the creek from the floodplain.

Here are some additional details on the new project:

-The new site will be home to the project’s 243-room hotel, 295 residential units, retail, spa, pools, museum, restaurants and other amenities.

- The project, including an underground parking garage, currently totals over 1 million square feet. The development team plans to develop another 425,000 square feet on the site as either a future office/retail or residential/retail tower. The entire project represents a $350 million investment.

- The new location allows the project to be enhanced with park space, a sculpture garden, signature spa, retail, indoor/outdoor meeting space and additional parking.

- The project will include an innovative and accessible restaurant that will emphasize local and sustainable agriculture and feature contemporary American cuisine. Michael Bonadies, CEO of ACE, was previously a founding partner of the New York-based Myriad Restaurant Group, which owns and operates such well-known restaurants as Tribeca Grill, Nobu and Rubicon.

- According to the developers, some of 21c’s most innovative aspects will be its artist lofts and new contemporary art museum, open free to the public 365 days per year. Twelve artist lofts will be made available at favorable rental rates for living and studio space. The museum will provide a new venue for contemporary visual and performing arts.

- The team of architects for the project includes Deborah Berke & Partners, a well-respected New York firm, Goody Clancy Architecture of Boston, and Susman Tisdale Gayle, and Austin firm that is often selected to participate in major downtown projects.

We'll update the 21c profile as soon as full details become available.

2008 State of the Market: Updated Condo Sales Statistics

There is much speculation about the state of the Austin condo market. With lots of new projects, a national housing crisis, and no precedent for high-rise development in downtown Austin, the common wisdom is that all the new projects will fail.

With the revitalization of downtown, the rapid growth of the city, the strong local economy, and the lack of other downtown housing options, the common wisdom so far has been dead wrong. While some ill-conceived projects will likely never break-ground, those that capture the imagination of Austinites--and that are priced appropriately--will thrive.

Take the 360 project, for example. At 44-stories and 430 individual units, it is one of the most ambitious downtown projects. Today, with the skeleton complete, it is the tallest building in the Austin skyline. Set for completion this year, it is at the point where it needs to have sold 70-80% of units to be viable. Not only is the project now sold out with significant deposits, but there is waiting list with enough buyers for an additional 140 units. While some sales may fall through -- the fact of the matter is that demand has been extraordinary for 360. With great views, a great location, and competitive pricing, 360 shows how strong the downtown Austin condo market is for the right project. With this much demand, 360 buyers should expect to see strong appreciation on their units over the next few years.

A report this week from Residential Strategies provides additional details on the state of the downtown Austin condo market. The report, and other sources, provides the following snapshot of several projects' sales/reservations through the end of first quarter 2008:

* 360: 430 units total; 430 committed. 140 unit waiting list.
* The Shore: 192 units; 189 committed.
* W Austin: 196 units; 140 committed.
* Four Seasons Residences: 166 units total; 60 units committed.
* The Austonian: 188 units; 45 committed.
* SoCo Lofts: 69 units; 41 committed.
* Zilker Place: 74 units; 29 committed.

While different projects have different standards for reservations, the data clearly illustrates a few key market forces. First, near-term projects such as 360 and The Shore are doing great. Second, the most affordable projects are selling well, even if they are outside the downtown core. Finally, the ultra-luxury projects--many of which are still a couple of years out--remain the most at risk. While the Austonian, Four Seasons, and W have broken ground--many of the most expensive units may be the hardest to sell.

All-in-all, the news is good. With clear market data, there is no doubt that thousands of people are willing to live downtown. While some of the projects that have broken ground still have work to do, the projects that do break ground in this environment are likely to be successfully completed. While the local real estate market is far from perfect (though much better than the rest of the country), the state of the downtown Austin condo market remains strong.

Austin Hike & Bike Trail to be Extended

The Austin City Council took a first step today to extend the much-loved Hike and Bike Trail surrounding Lady Bird lake to close the gap between Congress Avenue and I-35 on the south side of the lake. Currently, hikers, bikers, runners, walkers, and other trail-goers must brave the shoulders of riverside drive for more than a mile to complete this part of the loop. With the extension, the hike and bike trail will now run uninterrupted from I-35 to Mopac on both the North and South shores of Lady Bird Lake.

The Hike and Bike trail is a key downtown asset and one of the biggest selling points of downtown living. Extending the trail has been challenging as much of the land is owned and occupied by various commercial and residential projects -- some built as close as 20 feet from the lake.

With today's action, the City council has hired a firm to design a 1.1 mile boardwalk over the water to extend the trail without requiring redevelopment of existing properties. The full project is expected to cost $10 - $15 million to complete.

Development around Lady Bird Lake has stirred significant controversy over the last few decades, staring with the development of the Hyatt many years ago and continuing with a number of recent condo projects proposed for the South side of the lake. In today's meeting the city also took action to review current waterfront development guidelines.

According to the Statesman:

A 15-member task force will soon begin evaluating the city's development regulations for properties along Lady Bird Lake in an effort to eliminate inconsistent and vague rules that have frustrated developers and citizens opposing their projects.Members soon to be appointed will include a representative from the Parks and Recreation Board, the Planning Commission, the Design Commission, the Downtown Commission, the Environmental Board, Save Town Lake, the Town Lake Trails Foundation and the Real Estate Council of Austin.The City Council also will select representatives from registered neighborhood organizations with boundaries abutting Lady Bird Lake and owners of property within the affected areas.The group is scheduled to submit a public report with recommended changes by early fall, and the City Council probably will hold public hearings and vote on the recommended changes in January.

Great News: Austin Home Prices up 0.33%!

If you've owned a house in Austin over the last year, I am pleased to announce that you are 0.33% richer based on the new value of your home. Between February, 2007 and February, 2008, the average single family house in Austin is up 1/3 of a percent to $233,015.

While this may not seem like good news at first, it makes Austin one of the strongest real estate markets in the country. During a period when national home prices fell 10.7% and housing in markets such as Miami, Phoenix, and Las Vegas fell by 19.3%, 18.2%, and 19.3% respectively, Austin is practically in a class of its own. Of the top twenty markets, of which Austin is not included, only Charlotte, North Carolina showed a positive return.

While the data is not apple to apples -- the Austin market looks at the average sale over the period and the national statistics look at repeat sales of the same houses -- Austin's positive growth is a sign of strength in difficult times. While most of the country is struggling with unprecedented market declines, record foreclosures, and skittish buyers waiting on the sidelines for the market to bottom out, the Austin market has held steady. In parts of the city -- especially central Austin and Westlake -- values continue to grow at enviable rates.

While Austin isn't immune to the effects of the national market, the city's strong job growth, economy, and migration patterns have provided a buffer against weak credit markets and rising jumbo mortgage rates.

While Austin has remained flat, CNN reports that the national data released today is the worst on record:

"Residential real estate has posted another record decline.The S&P Case/Shiller Home Price index of 20 key markets, released Tuesday, shows that home prices plunged 10.7% in the 12 months ending January. That marks their lowest level since the index launched in 2000.Of those 20 metro areas, 16 reported record annual declines. Ten of those cities posted double digit declines through the 12 months that ended in January.The survey's 10-city index fell 11.4% year-over-year, its steepest decline since its inception in 1987. "



National Condo Market Continues to Implode

Outside of Austin, the health of the U.S. condo market continues to deteriorate. It's well known that many formerly hot condo markets have come upon tough times. In markets such as Fort Lauderdale and Miami where flippers would by and sell units many times before projects were completed, the meltdown has caused investors to flee, leaving the remaining owner-occupants with an oversupply of units and very few buyers.

The condo markets in Florida, Las Vegas, and other markets are very different from the market in Austin, Texas. After huge run-ups in prices, the trend has reversed, According to the Wall Street Journal, "the median condo sales price in the Cape Coral-Fort Myers area of Florida fell 26% to $202,300 in the fourth quarter of 2007 from $273,400 a year earlier. . . Prices dropped nearly 20% in Tucson, Ariz., and 12% in the Atlanta area during that time, according to National Association of Realtors data. Inside the newly minted Quantum on the Bay in Miami, prices for two-bedroom units have fallen from the high $700,000s to around $500,000."

When prices drop this quickly at the same time as new projects are nearing completion, it creates a very painful market dynamic. When a buyer puts a 10% down payment on a future unit and then sees the value of the unit fall by 20% during construction, they walk away at closing to avoid future losses. The projects, in this situation, wind-up in a very precarious situation with as many as 40% of pre-sold units failing to close. If the developers are unable to pay back the construction loans, they subsequently lose all of their capital, default on the loans, and the projects often go bankrupt.

Will this happen in Austin? The answer seems to be "no." The markets where condo prices have imploded have featured a combination of three critical factors. The first is that all home prices -- condos and single family residences -- have dropped dramatically in value. This has not happened in Austin. In fact, in 2007, prime central areas increased in value. In area 8e which covers much of Westlake, for example, prices increased by nearly 15%. The second factor is that condo projects were massively overbuilt. While many projects are planned in Austin, not all will be constructed. The ones that do make it to the market -- while adding lots of downtown units by historical standards -- represent a miniscule percentage of Austin housing units. In fact, the 700+ downtown units that will be completed in 2008 are essentially sold out at this point.

The third major factor in the national meltdown is the current credit crunch. Today, there are few good options for people with poor credit, first-time home buyers who want to make small down payments, and anybody who needs a jumbo or interest-only loan. These trends effect us here in Austin in the same way they effect the national market. This is the primary reason that the Austin market has slowed down and price appreciation has paused in spite of a strong local economy and string regional job growth.

According to the Wall Street Journal, one of the big problems has been that developers in other cities started too many projects before the bust and failed to cancel or convert projects under construction to another use -- as rental units, for example. In Austin, virtually every project that started constrcution before the summer credit crisis is now sold out. Every project started after the crisis has been required to meet a very stringent bar for pre-sales. While no market is 100% safe -- Austin seems to be in excellent shape in comparison to many other major condo markets.



Hear is a summary from the Wall Street Journal (see the article here - subscription required):

It may seem surprising that anyone would want to add supply to a market whose troubles have been well-publicized for many months. But the economics of condo building encourage developers to bring half-finished projects to completion, even when prices and demand are plunging.Developers usually put up their own money for a project first, then spend borrowed funds. Once developers have spent their money and have commitments from lenders, they have a strong incentive to keep building to finish the project."These developers had millions of dollars tied up and they had them financed so they just moved forward," says J. Ronald Terwilliger, chief executive of Trammell Crow Residential, which builds many rental apartment buildings and also a few condos. "What they hope is that by the time the project is finished the market comes back."However, developers and lenders can more easily shelve projects that are still in the early stages. Many developments nationwide are being canceled, suggesting that by next year or 2010, the number of new condos coming onto the market may slow to a trickle.

Arthouse Announces Striking Downtown Expansion Plan

Arthouse, a downtown contemporary art museum located on Congress and 7th, today announced plans to remodel and expand their downtown galleries and educational facilities. According to Arthouse, "The plans -- developed by Lewis.Tsurumaki.Lewis, New York-based architects, the Board’s Building Committee and Staff -- will triple total space from 7,000 sq. ft. to 20,830 sq.ft."

Arthouse (formerly the Texas Fine Arts Association) was founded in 1911, and for more than ninety years it has advocated for the support of contemporary art in Texas, organizing exhibitions and presenting them in Austin and statewide. From its home, the Jones Center in downtown Austin, Arthouse pursues its mission: to promote the growth and appreciation of contemporary art and artists in Texas. The museum is well respected for its innovative exhibits and programs.

With the $6.6 million renovation and expansion, the project will “recycle” the current building which in the 1920’s was the Queen Theater, a key part of the Queen/Paramount/State theater “block,” and in the 1950’s became a Lerner Shops department store. Three new galleries, two artists’ studios, a 90-seat community/screening room, and a 5,500 sq. ft. rooftop space with a 33 foot x 17 foot movie screen will be added.

The highlight of the Arthouse project is the innovative architecture of the renovated structure. The striking building features randomly placed green translucent bricks, a modern awning reminiscent of the building's department store past, large glass windows including live projections on the upper floor, and a dramatic rooftop deck with an open air movie theater. The main space on the second floor also doubles as a large screening room.

Arthouse Museum Renovation Rendering Remodel Downtown New Building Lewis Tsurumaki Lewis

New Arthouse Building Austin Museum

Arthouse Movie Screening New Building

The Arthouse project follows Austin Museum of Arts recent announcement of a new free-standing 40,000 square foot museum and a separate 425,000 square foot 30-story office tower on the current lot at West Fourth & Guadalupe. Together, these projects mark an exciting expansion of downtown arts options. With regular events, gallery openings, and now rooftop movies, these venues will continue to thrive as cornerstones of the emerging downtown cultural scene.

The Central Austin Condo Conversion Boom

Last year, 824 Austin apartments were converted to condos. This year, that number is expected to grow to 1,167. As downtown condo prices have skyrocketed to $400 / SF or more (sometimes much more), a wave of Central Austin rental properties are being converted into more-affordable central condo buildings.

Many of these new projects offer upscale central living for much less than the price of the major high-rise projects. As downtown condo prices have rapidly increased while rents have grown at a slower pace, downtown condo conversion provide a quick return for developers. While the price is lower -- often $200 - $250 / SF -- the product is also very different. Unlike the new glass, concrete, and steel downtown towers with panoramic views and high-quality build-outs, most of the current crop of conversions are low-rise renovations of older wood-framed buildings without views and with limited amenities. The main attraction is the price of entry, with units starting under $100K -- they are the most reasonable yet chic living options within miles of downtown.

Representative projects are being completed in Clarksville, East Austin, and South Austin.

Here is a summary from the Statesman:

Ryan Robinson, demographer for the City of Austin, said that with demand for downtown area housing skyrocketing, "market pressure pushes prices up, and property owners can realize a larger margin from selling units as condos."Most of the converted units have emerged from apartments built in the 1960s and 1970s in "prime locations" in Central and Southeast Austin that command higher-than-average prices, Davis said.Often they appeal to buyers because they offer "upscale living in a mixed-use development" with boutique-style retail, restaurants, coffee bars and the like, "all in one new urbanism-type community in the heart of the city," Davis said.Barbara Ditlow, a real estate agent with Capital City Sotheby's International Realty, knows of four condo conversions in South Austin, all with updated wiring, plumbing and walkways, plus granite counters, stainless steel appliances and wood floors. . . But Ditlow said buyers need to do their homework before purchasing converted condos."Some (developers) buy these apartments at high price points and have to skimp on the finish-out to meet the bottom line," she said, adding that it's important to research the developers and their track records. "Don't get stuck with sow's ear when you thought you were buying a silk purse."


2020 Congress Downtown Austin Condo Conversion
The $13.5M 2020 Congress Project in South Austin includes units priced from $97K for 425SF to $200K for 943 SF

41 Waller Downtown Austin Condo Conversion Project
The 30-unit 41 Waller conversion project in East Austin has units starting at $215K for a 936SF 2-bedroom condo

Economist: Downtown Condo Market To Remain Strong

In a new report on the Austin housing market, Texas economist Ray Perryman analyzes the future of the downtown Austin condo market. With 40,000 new people moving to Austin each year and fewer than 4,000 downtown units planned over the next 5 years, Perryman believes that the market for downtown condos will remain strong.

Perryman's analysis includes two key points. First, downtown is becoming an increasingly attractive place to live as the urban core redevelops. As traffic and sprawl worsen throughout the rest of the city, the more demand will increase for downtown units. The second point is that net migration into Austin is incredibly high with more than 40,000 new residents pouring into the city each year. If just 2% of new Austinites decide to live downtown, all planned downtown units will likely sell out.

Here is a summary from the Austin Business Journal:

The steel and glass residential towers set to reshape the downtown Austin skyline aren't a pipedream. They're coming--and they're going to be filled, a new study shows.The analysis from Texas economist Ray Perryman suggests that while the nation battles a housing correction, Austin's residential market remains relatively healthy. Moreover, says Perryman, there is clear demand among Austinites to live in the city's vibrant downtown.There are currently about 6,000 people living downtown. And with about 4,000 residential units under construction or planned around downtown, that population is expected to double over the next two years. Perryman says with the Austin area adding more than 40,000 new residents annually, the local housing market will continue to fair well, and rising energy costs and traffic woes will drive a growing interest in urban living."This housing market will fundamentally support the type of housing being developed downtown," Perryman said at a morning press conference at City Hall organized to discuss the report. "There is an amble population to absorb these units."Asked whether those who desire to live downtown could actually afford to purchase units, most of which are over $500,000, Perryman says the market is there, particularly among young professionals coming to the area making good money in expanding fields like technology. He pointed out that if less than 1 percent of the entire area population chose to live downtown, they would fill up all of the existing units as well as those being planned downtown.

New Downtown Affordable Housing Initiative

As the downtown development boom has driven downtown land and housing prices upwards, the calls have been strengthening for the City to take definitive action on affordable housing o ensure that downtown remains diverse and affordable to as a broad a segment of the population as possible. With the opportunity to control development of a huge swath of downtown land, the City is using its leverage to ensure that the project include affordable housing units.

As part of the initiative, the City is building a comprehensive affordable housing program around the large-scale development of the Green Water Treatment Plant between Seaholm and the second street district. The program has two primary components. First, to ensure that at least 10% of units are affordable to households earning less than $42,000 for a 1-2 person family (80% of the area median income), the City is reducing land prices and requiring developers that developers who want to participate in the project include affordable housing units. Second, the city will dedicate 40% of property taxes generated by the project to a housing fund which will provide subsidies to make additional units affordable.

The City plans to choose a developer in June.

Here is a summary from the Statesman:

City leaders have urged developers to build more affordable housing downtown with little success. Now, Austin plans to put its money where its mouth is with the upcoming sale and redevelopment of the Green Water Treatment Plant and nearby Austin Energy property.Blunting the developers' argument that land and building costs downtown are just too high, city officials plan to give them no choice but to include low- to moderate-priced housing in the redevelopment of the nearly four city blocks and as a result almost certainly will make less on the land sale."We're not in the business of making money," Council Member Brewster McCracken said. "We're in business to achieve public values and goals."The city also plans to directly subsidize additional units for even lower-income families and dedicate 40 percent of the property taxes generated by the redevelopment project to its affordable housing fund."I just think it's an opportunity to have much of both worlds: a lot of tax base delivered, hopefully a significant measurable one-time capital gains in the land sale and then a series of other community goals," Mayor Will Wynn said.

BartonPlace Approved by City, To Begin Construction

BartonPlace, a planned 270-unit condo project behind Austin Java on Barton Springs Road, received final city council approval yesterday.

According to the developers, the project has taken deposits on approximately 80 of their units with a combined value of $40 million. With decent pre-sales, the project has been able to secure financing for the project from IBC Bank in Austin -- clearing the biggest hurdle to a new project and setting them up to begin construction in the next 30 days. The project is being developed behind Austin Java on Barton Springs road.

BartonPlace Barton Place Condo Project Austin Barton Springs

The project includes one, two, and three bedroom units starting at $263,000 for 683 feet. With a prime location close to downtown and next to Barton Springs pool and park, the project will is in a great location and well priced. As we have seen with many of the downtown projects, the lower the price, the higher the demand. Projects like 360 with many units under $400K have sold very quickly.

The following story from the Austin Business Journal includes additional details:

Construction should begin within 30 days on BartonPlace, which has already generated $40 million in presales.The development team has signed a private agreement with the Zilker Neighborhood Association limiting the development of the portion of the property that fronts Barton Springs Road in order to preserve the local businesses that make up Austin's "Restaurant Row." The developers are also pledging a $500,000 cash contribution for a local nonprofit to provide affordable housing in the area, and will be aim to meet a 3-star green building standard.


Another Condo Project in Trouble

Last April, 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, are 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.

155 Barton Springs South Austin Condo Project

Today we learned that ground-breaking for 1155 Barton Springs has in fact been delayed. With tough times in the credit markets, it is getting tougher to sell even the best conceived projects, 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 this market. While the views are great, top dollar projects need to be perfect, which is not the case with 1155 Barton Springs. While the project is delayed and not canceled, it is clear that the developers have a tough road ahead.

Here are additional details from the Statesman:

Groundbreaking has been delayed for the condo project called 1155 Barton Springs, which is destined to replace the long-vacant Treehouse restaurant and nightclub at Dawson and Barton Springs Road.Developers Elisabeth and Steffen Waltz and their partners had hoped to start construction on the project by the end of 2007. But yesterday, Elisabeth Waltz wrote in an email:“These times seem to call for a measured approach. It may take us a few more months to start construction; we will start when we have 50% or more of the residences sold. (Personally, having been a real estate broker for many years, I would prefer all of them pre-sold).”In addition, she said all floor plans are “custom-designed to reflect the buyers’ input and lifestyle. The reservations currently in place are the result of close cooperation between buyers, our office and the architects. This takes a bit longer that selecting a pre-designed unit but seems to really please the owners.”And having happy owners is especially important when they’ll be shelling out anywhere from $1 million to $4.3 million for the 27 units, which will range in size from 1,670 square feet to 4,500 square feet.And although it’s located next to a railroad track, the Waltzes have said the building’s concrete and sound-proofing insulation will minimize noise from the railroad. Waltz said in her email that, although she originally wanted the Treehouse building demolished as soon as possible, it actually has “proven useful.”” It gives me the opportunity to show the view from the first floor and also listen to the trains go by. Everyone is amazed on how little impact the train will have, if any. It moves very, very slowly in anticipation of the upcoming 90-degree turn across the lake.”

New: Austonian Listings Added to AustinTowers.net

The Austonian is one of the most luxurious and desirable downtown projects currently under development. With an unusually secretive sales process, details on pricing and sales have been hard to come by.

Over the last few weeks, many new details have become public as the project has begun to list a small number of unsold units on the Austin Multiple Listing Service (MLS). Starting today, we have added these listings to the AustinTowers Listings page. The new Austonian Listings can be found here.

The 4 listied units (as well as a fifth on the Gottesman Residential site) show a broad range of prices for units, with the highest prices rightfully reserved for the units on the highest floors. The prices for listed units range from $559,000 to $1,855,000 for units ranging from 1,221 to 3,129 square feet. What the units have in common is that they are in an exclusive building with super-high-end finish out, appliances, and building amenities.

One of the most interesting details to emerge is the variance in pricing on a per square foot basis from unit to unit. For the five listed units, price per square foot varies from $458 / Square Foot to a whopping $830 / Square Foot for Unit 41Q, a 2,235 square foot 2 bedroom unit on the 41st floor.

The following new renderings provide an interesting glimpse into the the planned Austonian interiors:

Austonian Austin Condo Bathroom Rendering

Austonian Condo Media Room Rendering

Austonian Condo Kitchen Rendering

Austonian Dining Room Rendering

Austonian Condo Bedroom Rendering

Visit the new Austonian Listings and listings for more than a dozen other projects on the AustinTowers.net Listings page here.

New 70-story Condo Tower Planned for Brazos Street

T. Stacy & Associates, the developer of the bold 501 Congress multi-use project, announced a even bigger plan for the prime 5th and Congress site and a new lot that he now controls on Brazos and 5th.

The new project -- which will cover 1.5 prime downtown blocks - will include an 800 foot hotel and condo tower that will likely be 70 stories tall. By far the tallest building in Austin, the building would rise more than 120 feet taller than the 56-story Austonian, currently the tallest planned downtown building. As part of the project, a smaller office building will be built at 501 Congress. The proposed office tower would likely rise 30-stories above Congress avenue.

We'll publish renderings and additional details as they become available.

Here is the summary from the Austin Business Journal:

"More than three years after Austin developer Tom Stacy and a Chicago partner company purchased the building at 501 Congress Ave. and unveiled plans for a dramatic multiuse tower on the site, the deal has grown much larger, incorporating one-and-a-half city blocks, two soaring towers and an estimated $500 million investment.Stacy's company, T. Stacy & Associates Inc., and Walton Street Capital now plan a 500,000-square-foot office and retail tower at 501 Congress that would be slightly taller than the 26-story Bank of America Center building the partnership owns at 515 Congress next door. The group is also plotting a hotel and condo tower at the corner of Brazos and Fifth streets that would rise more than 800 feet, making it by far the tallest building in Austin and the sixth-tallest in Texas.Stacy and Walton Street had initially proposed a 700-foot-tall tower at 501 Congress -- with a hotel, condos, office and other uses -- that would have been the tallest in Austin. But when the group finalized the purchase late last year of the Littlefield Garage just east of 501 Congress fronting Fifth Street, plans were reworked."

New Renderings of AMOA Museum Tower

As we have reported, the Austin Museum of Art this week announced a new project which would combine an 40,000 square foot museum facility with an adjacent 425,000 feet of commercial office space in a new 465,000 square foot project on the AMOA-owned site

Today, AMOA unveiled a rendering and site plan of for their new multi-purpose development across from Republic Square Park. The rendering of the new tower and museum shows the project as envisioned by AMOA's world renown architecture firm, Pelli Clark Pelli:

AMOA Rendering Austin Museum of Art Tower Pelli Clarke Pelli
SOUCE: AMOA

The museum also released the following site plan:

AMOA Austin Museum of Art Building Site Plan
SOUCE: AMOA

The new museum and 30-story office tower will likely break ground in 2009 and open in 2011.

18-Story Westin to be Built in Warehouse District

Reviving long dormant plans, a San Antonio firm now plans a 300-room Westin Hotel on the site of the former Bitter End Restaurant and a parking lot at West Third and Colorado Streets.

The 18-Story hotel will be designed by Lake|Flato Architects, one of Texas' most unique and prominent architectural firms and the winner of the American Institute of Architect's (AIA) prestigious National Firm Award in 2004. Lake|Flato is based in San Antonio and has completed many central Texas projects including the Hotel San Jose on South Congress Avenue. Apparently, Lake|Flato won a national competition to design the new "3rd & Colorado" hotel and has committed to create an original Austin-focused hotel project.

The hotel will include a ground-floor lobby and street-front restaurant. There will be a bar and pool on the 3rd floor overlooking Third Street and the warehouse district. The project will seek green-building certification.

While downtown condo development has slowed, the downtown building boom has not. This is the second major project to be announced in the last week. With the momentum of the emerging second street district, it is likely that additional projects will continue to be announced to take advantage of his strong emerging downtown district.

While hotels may not be of much use to Austinites who actually live here, they play an important role in the downtown economy. Conventions and tourism are important economic engines for the city, and the number of downtown hotel rooms continues to limit the size of conventions that can be held in the City. In addition, hotel's dramatically increase the round-the-clock downtown population, providing a strong economic base for restaurants, nightlife, and bars.

Unlike the Marriott, which does not even seem to be designed by an architect, this project seems to be making a real effort to create a building that will add to downtown Austin environment.

Here are additional details from the Statesman:

A 300-room Westin Hotel is planned for downtown Austin’s Warehouse District, as a San Antonio development firm goes ahead with long-delayed plans.The 18-story hotel will replace the former Bitter End Restaurant and parking lot at West Third and Colorado streets, said John Beauchamp, vice president of acquisitions and development for Hixon Properties of San Antonio.Hixon, which bought the land several years ago, is teaming up with Hines, a Houston-based developer, on the project. Hines also is the developer of another new downtown project, a 30-story office tower to be built at West Fourth and Guadalupe streets. That project will include the new home of the Austin Museum of Arts.


Now Official, New AMOA Tower Details Emerge

As predicted, the Austin Museum of Art today announced new plans for their prime downtown lot. With the official announcement, additional details of the project emerged:

- Rather than building a single tower with a ground-floor museum, the project will include a free-standing 40,000 square foot museum and a separate 425,000 square foot 30-story office tower on the current lot at West Fourth & Guadalupe. The 40,000 museum project is much smaller than a previously planned 140,000 square foot facility but will more than double the museums current downtown space.

- Both projects will be designed by world-renowned architecture firm Pelli Clarke Pelli. The firm, known for projects such as the Petronas Towers, was started by Cesar Pelli who also served as the Dean of the Yale School of Architecture. Pelli Clarke Pelli was also the architect of record for the now dormant 5th & Congress multi-use project.

- The museum building will cost $23 million

- 14 developers submitted proposals to partner with AMOA on development of the site

- Both buildings will break ground in 2009 for completion in 2011

- The project will likely further extend the bustling 2nd-street district by providing additional ground-floor retail and cultural facilities adjacent to AMLI and diagonally across the street from Block 21. The Museum will likely face Republic Park.

Here is a summary from the Statesman:

Museum officials said the design of their new building is in a preliminary stage. However, they say they hope to include 10,000 square feet of galleries, 2,900 square feet of education and activity rooms, outdoor space for public sculpture and a front entrance opening to Republic Square. The design would also incorporate a possible future expansion, chiefly adding more stories to what is likely to be a two- or three-story museum.Ground is expected to be broken in 2009 with completion of both buildings projected for 2011.At 40,000 square feet, the proposed new museum would more than double the museum's existing space at 823 Congress Ave., where it rents the first floor of an office building. The museum, which has a $4.3 million annual budget, also has the historical 12-acre Laguna Gloria site in West Austin, which includes a restored 1916 villa that hosts small exhibitions and studio buildings for the museum's art school. The museum has a small permanent collection but mostly features traveling exhibitions of modern and contemporary art and photography.

New AMOA Tower Soon to be Announced

Between Republic Park on fourth street and the new AMLI tower on third street sits a run-down parking lot with a tumultuous history. For many years, the lot has been owned by the Austin Museum of Art (AMOA), a local art institution split between a storefront location on Congress Avenue and a mansion near 35th street and Mount Bonnell.

Over the years, AMOA has worked hard to build a permanent home on the downtown lot that has become one of the most choice central Austin parcels. First, they proposed a free-standing museum which was scratched after the technology bust of the late 1990's scuttled a $65 million capital campaign. In a second iteration, the museum partnered with local developer Tom Stacy in 2006 to build a museum & condo tower on the lot. The building was proposed as a 30-story condo tower to be designed by world-renowned Pelli Clarke Pelli architects. Sometime last year, likely after the summer credit crunch, that deal fell apart.

Now, in a third and hopefully final project, rumors suggest that AMOA is close to announcing a new project which would combine an 40,000 square foot museum facility with an adjacent 425,000 feet of commercial office space in a new 465,000 square foot project on the AMOA-owned site. This would be the first new downtown office project since the 33-story 525,000 square foot Frost Bank Tower was completed in 2004.

As Austin's downtown core develops, the best scenario is a natural balance of retail, residential, commercial, cultural institutions and hotels. With the condo boom of the last two years, the quantity of residential and retail space downtown has grown substantially. While the addition of downtown commercial capacity takes a bold investor, new downtown office space is a good thing for the city. When Cousins Properties announced plans for the speculative development of the Frost Bank Tower at the height of the tech bust, everyone thought they were crazy. Just a few years later, the sale of the project set a new texas record.

The best news about the AMOA tower is that it will finally create a major downtown art museum. With the adjacent Ballet and the new Austin City Limits venue on Block 21, there is new hope that this corner of downtown will also become a new cultural center for the city.

Here is the summary from today's Austin Business Journal:

Sources say AMOA is close to inking a deal with Hines Interests LP of Houston to develop the downtown block south of Republic Square Park owned by the museum.The towering project would likely feature about 400,000 square feet of office space, with about 80,000 square feet of that set aside for the museum's new digs. It's unclear whether or not the project would include a residential component as a previous incarnation did. But, if realized, it would be the first new office property in downtown Austin in four years since the opening of the Frost Bank Tower.AMOA, which has a total of 35 employees, has been housed on the ground floor of 823 Congress since 1995.

Statesman Article: Why Live Downtown?

The Statesman ran an interesting feature today on the downtown Austin condo market. It looked at many of the intangible benefits of downtown living. It makes the obvious point that downtown living is not for everyone, but that a vibrant urban core enhances the life of everyone.

The article summarizes the importance of the current wave of downtown development:

"As more people move downtown, the mushrooming rooftops will attract more retail, restaurants and amenities, and those in turn attract more people," Warshaw says. "This creates a feedback loop that will drive interest for many years, particularly when the city continues to invest in cultural and recreational amenities like Town Lake Park, a new central library and the new performing arts center."

With Austin noted for being a growing mecca for the so-called creative class, "the more options people have in terms of housing, the more successful you're going to be in attracting and retaining" top creative talent, Kelsey says. "It's a main component of what Austin's trying to do."

While the link lasts, the article can be found here

Forbes: Austin to Lead Nation in Economic Growth

There are a few factors that drive real estate prices higher in a normal market. At the top of the list are the performance of the local economy, job growth, and population growth.

While all of this is true in a normal market: today's real estate market is anything but normal. As many fewer people can now obtain loans -- some legitimately and some not -- and as borrowers with loans greater than $417K must now pay much higher interest rates due to market liquidity problems, the national real estate market remains highly stressed. Despite these problems, the Austin market seems to be performing quite well relative to just about everywhere else.

One reason for Austin's relative market strength is that the city skipped the boom that boosted many other national markets. As the national real estate market soared, Austin struggled to recover from the tech bust with its painful job losses and significant outbound migration. A recent report by Forbes points to another source of strength: in their opinion, Austin is expected to have strongest economic growth over the next few years of any of the top-100 metropolitan areas.

The bottom-line is that Austin's economy is expected to grow by 32% over the next five years. Not only is Austin booming, but it's growth rate is nearly 50% higher than #2 ranked Fort Myers, Florida. While economic growth is just one magic factor driving real estate prices, Austin's population is also expected to grow by an equally amazing 15%. While we all know that population growth is a double-edged sword: it's one of the strongest reasons to advocate development of a dense urban core. Over the long run, these factors provide a solid foundation for real estate price appreciation if and when the market does return to normal.

Here is a summary from the Forbes article:

To compile our list, we looked at all of the country's 363 metropolitan areas, defined by the U.S. Census Bureau has a geographic region with a "core urban area" of at least 50,000 people. Because many small metro areas are high growth--and because we wanted to show growth in large cities as well--we split the group into two classes: the largest 100 metro areas (with at least 528,000 people) and everyone else. We use projections run for us by Moody's Economy.com to show growth in GMP between 2007-2012.


Of course, if one looks at economic growth in the country's largest 100 metros, the usual suspects jump to the top of the list. With an estimated 32% GMP growth from 2007-2012, Austin, Texas, is the winner for big metros. Atlanta, Seattle, Orlando, Houston and San Jose, Calif., also appear high on the list. What do they all have in common? They're tech hubs with proximity to universities and a healthy increase in population. Austin's population, for example, is expected to increase by nearly 15% by 2012, according to Moody's Economy.com forecasts.



The full article and rankings can be found here.

Austin Four Seasons Residences Breaks Ground

After seven years of planning and multiple iterations, the Four Seasons Residences will break ground this week. As we have seen with many of the recent downtown Austin condo projects, they are not truly real until construction begins. Having reached that milestone, the 32-story Michael Graves-designed tower is now expected to open to residents in 2010.

With 166 condo units priced from $500 - $750 per square foot and monthly condo fees of $0.61 / square foot, the Four Seasons Residences represents an ambitious super-luxury project for Austin. It was not too long ago that the Four Hotel Seasons hotel itself was almost a strange site in such a down-to-earth town. But times have changes and demand is strong. The project reports that they have received 10% deposits for 40% of the planned units. Interestingly enough, half of the buyers so far hail from outside of Austin -- a new twist for the emerging local high-end condo market. However, with 60% of units to sell, much work still lies ahead.

When combined with the Austonian and W, the Four Seasons Residences represents an entirely new ultra-luxury urban high-rise experience that has never existed and that will not exist in Austin until the first of these projects hits the market.

Four Seasons Residences Austin Condos Michael Graves Rendering

Here is a summary from the Statesman:

The Four Seasons Residences, one of downtown Austin's highest profile luxury condominium towers, will break ground this week, seven years after initial plans were thwarted by the tech bust of 2001.The newly designed 32-story tower will rise in the parking lot next to the Four Seasons Hotel overlooking Lady Bird Lake. The building's 166 residences will be priced from $400,000 to $4 million, with units from 880 to 5,500 square feet. Four Seasons will manage the building, which is expected to open in the first quarter of 2010 and become a landmark on the evolving skyline.The $125 million project is a venture between local developers Ardent Residential and Atlanta-based Post Properties Inc, the financier. Michael Graves & Associates Inc. designed the tower, which will have a terra cotta-colored brick base that will blend with the hotel, developers say.The first major sign of construction will come later this week when crews begin demolishing the hotel's 123-space surface parking, which will be redirected to an underground garage. The new tower will include five levels of above-ground parking.The construction entrance and staging area will be on Trinity Street to minimize disruption for the hotel, said Art Carpenter, a principal with Ardent Residential.


New Businesses to Open on 2nd Street

The 2nd Street district is quickly becoming the heart of Austin. Even with just one real city-like block, the 2nd street district is full of life and energy --- both during the day and during the night.

One of the reasons for the success of the 2nd Street district is the centralized leasing strategy which groups all 44 retail locations in AMLI downtown, the CSC building, the Silicon Labs Building, and in City Hal under the control of a central leasing authority currently managed by AMLl. By centrally managing leasing, the district has been able to limit chain businesses while building a diverse collection of retail stores and restaurants that bring life to the neighborhood. As the district grows in size, it show only become stronger.

With the coming completion of the AMLI on 2nd rental tower between San Antonio & Guadalupe, a number of new businesses are soon to open on 2nd Street and in the surrounding blocks that form the district.

AMLI Downtown Austin Rental Tower 2nd Street
IMAGE: New AMLI on 2nd Tower Extends the 2nd Street District

The completion of the AMLI tower will bring 11 new retail businesses while bringing new life to the 7 businesses in the Silicon Labs building across the street. So far, 7 out of the 11 new retail locations in the AMLI Tower have been leased. They include the following new business which will soon appear on 2nd street. in fact, a couple—such as St. Bernard Sports—have already opened. The new 2nd Street businesses include:

- Z Pizza - An new downtown pizza restaurant
- Málaga - A Tapas restaurant which is moving from 4th street
- Minx
- La Condesa
- Kirk Furniture - A local vintage furniture store
- St. Bernard Sports - A Sporting Goods Store on 3rd street
- Dr Shane Matt -- Appears to be a dentist office

In addition, a few additional businesses are set to open soon throughout the district:

- Taste Select Wines
- Beyond Traditions Jewelry
- Mama Fu's - A local Asian Food Chain

With these additions, 42 of 55 of the retail stores in the 2nd Street District are now occupied. As new buildings such as the expansive Block 21 complex a W Hotel & Residences completed the street, the 2nd Street District will continue to shift Austin's center of gravity in its direction.

Austin Towers One Year Anniversary!

This week marks our One year anniversary! Thanks to all of our readers -- especially to those who have submitted news and ideas! In our first year, we are thrilled that more than 40,000 people visited Austin Towers including many out-of-state visitors. With more than 120 posts and countless profile updates, we've worked hard to make Austin Towers the leading site for downtown Austin condo shoppers and downtown residents alike.

As we plan for a great second year, I would like to encourage everyone to register and to provide any ideas, tips, and feedback you may have. Nothing makes the editors at Austin Towers happier than learning about our readers. If the site is useful, please register! Your information will never be disclosed to other parties and every message will include a way to opt out of future news updates and invitations. Thank you for reading Austin Towers!

As you know, Austin Towers posts news and analysis on the downtown condo market 2-3 times every week. 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 Austin Towers 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 Austin Towers feed or to revert to a basic search page.

As many of you know, you can also subscribe to the Austin Towers 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 your support! - Paul D'Arcy, Editor

New Downtown Project: Quorum Lofts

It's been a while since Austin Towers has had the privilege of announcing and profiling a new downtown Austin condo development. Today, we are pleased to announce that Quorum Lofts, a new capital-area loft conversion project, has been announced with a target completion date of late 2008 or early 2009.

The new project will convert a 1964 office complex on 13th & Guadalupe -- 2 blocks West of the Capital -- into a dramatic modern
26-unit condo project. With the Capital-area location, the project (and the name) are targeting legislators and other Capital district employees who might be the excited by the idea of walking just a few hundred feet to work. The project is aiming for a crazy fast development timeline with delivery before the end of 2008. Although the developers hope to beat the rush of projects arriving in 2009, the deadline will be hard to reach unless they receiving zoning approval and begin construction quickly.

Units in the Quorum Lofts will be big - ranging from 1,450 to 2,450 square feet with prices starting near $500,000. The project will include a rooftop infinity pool and lots of nice features such as high 10 foot ceilings, granite counter tops,and jetted soaking tubs. We have posted a full profile here.

quorum lofts austin downtown condo

Here is additional information from the Austin Business Journal:

Local developer John Graham knows there are plenty of condo projects on the horizon for downtown Austin.But with most of the next set of big towers not scheduled for delivery until 2009, Graham sees big potential in bringing a development to market quicker -- and in a location just steps away from the Capitol.Graham's company, AustinPartners.net, hopes to get approval on a building permit in the next month for redevelopment of the property at 1300 Guadalupe St. The $10 million Quorum project slated for completion late next year would turn a three-story office building constructed in 1964 into modern, loft-style condos.Work is set to begin in January on the project that will add a fourth floor to the building and create 26 condos ranging in size from 1,450 square feet to 2,450 square feet and priced from $350 a square foot to $450 a square foot.The fourth floor will feature a spa and negative-edge, or "infinity," pool overlooking the Capitol. A glass elevator fronting Guadalupe will feature views east toward the Capitol. A second phase that would add structured parking and more units is also being considered.

Three Downtown Projects Likely Postponed

For a while, 2007 seemed like the year of the downtown Austin condo project. Since last August, however, the market has changed. While most of the projects coming on the market in 2008 are sold out and many of the others are proceeding smoothly, at least three early stage projects for 2009 and beyond seem to have stalled.

As a result of slow progress, we have moved three projects into the pending stage until we receive clear confirmation that they are proceeding -- or if not -- that they have been postponed or cancelled. The delayed projects are:

5th & Congress
7th & Rio Grande
Residences at the Hotel Van Zandt

Now, with separate sections for active, pending, and cancelled projects on the Austin Towers home page, it will make it much easier for condo buyers to watch the projects that are most likely to be completed! In addition, we have adjusted the dates on a number of other projects to more accurately reflect current development timelines. If you know of any other delayed or pending projects, please drop us a note.

Another Option: Older Downtown Austin Condo Projects

With many of the new downtown Austin condo projects, it is not uncommon to see prices in excess of $500, $600, or even $700 per square foot. As the price of new projects has doubled or tripled from the days of the Nokonah, the prices for older downtown projects have not escalated at the same rate.

If you are interested in a 3 bedroom 2,000 square foot high-rise downtown condo unit for $425,000 or a 1,000 square foot condo with 2 bedrooms and 2 baths for under $250,000, many buyers would be surprised that they exist today. While the older buildings may not offer the same amenities and quality of build-out -- especially when it comes to kitchens and bathrooms -- the older building do offer a unique combination of location and space that can't be beat.

To help downtown Austin condo buyers evaluate all available options, we have further expanded our Listings page to include four older projects. Now, the expanded Listings include virtually every downtown Austin condo unit listed on MLS today. There is not better place to search for units or track the downtown condo market!

Here are links to the the new listings pages for older downtown Austin condo projects:

Cambridge Condos (18th & Lavaca) -- MLS Listings
Penthouse Condominiums (12th & Guadalupe) --
MLS Listings
Towers of Town Lake Condos (I35 & Town Lake) --
MLS Listings
Westgate Condos (11th & Colorado) --
MLS Listings

New Condo Listings: Spring, Barton Place, Bridges on the Park

We've once again updated the listings page -- adding MLS Listings for four upcoming projects. Whenever units are listed in the MLS, they will appear immediately on the Austin Towers listings page. You'll find new listings for the following projects:

Spring Condominiums Listings
Barton Place Listings
Bridges on the Park Listings
Presidio at Judges Hill

Austin Towers is the only source for current building-by-building listings. In addition to the standard Multiple Listing Service (MLS) listings provided by realtors on completed projects, the listing guide also provides direct links to developer listings which are not included in the MLS.

Balancing Music & Growth: Austin's Unique Downtown Challenge

Live music is an essential part of Austin's identity. The downtown music scene is a valuable Austin asset and one of the biggest downtown draws for tourists and locals alike.

Whenever a conference planner chooses Austin for an event, they typically need to sell the city to potential attendees as much as they need to sell the conference event. Time after time, they use the same hook: visit the Live Music Capital of the World.

Between SXSW. Austin City Limits, and the daily music shows throughout downtown, live music supposedly contributes $420 million in direct sales and $580 million in tourist revenue each year to the city economy. By the way, these numbers exclude all of the convention-goers drawn to the Live Music Capital of the World for a medical, education, technology or other non-music event -- but who sign-up partly to experience Austin's unique music scene.

The issue is that downtown land -- especially land that can support high-rise development -- is extremely limited. As a result, new retail, residential, and commercial buildings have been replacing older music venues. With scarce land, property values and property tax assessments have been skyrocketing, forcing landlords to raise rents on music venues. At the same time, musicians and the rest of the creative class have been increasingly pushed out of central Austin as rents have risen. As if that is not enough, some new downtown condo residents have been complaining about the noise created by music venues. The bottom-line, Austin's music scene is under siege.

The Austin music scene is a fragile ecosystem. SXSW requires 50+ venues to keep the event in downtown Austin. As venues are lost, musicians have fewer places to work, and the music community shrinks making it more difficult to support new venues. Today, believe it or not, 20,000 Austin resident make a living in the music industry. If music gets forced out of downtown, the whole city will suffer.

Redesigned Austin Music Hall
The New Austin Music Hall

Fortunately, the city is looking closely at this situation. As part of a new cultural arts master plan, the city is looking at creating a downtown entertainment district covering sixth street, the red river area, and the warehouse district. Some private developers are also helping out. Novare, for example, helped to fund the redevelopment of Austin Music Hall when it began construction of the adjacent 360 project.

The next few years represent a critical opportunity for the city to permanently protect it's status as the Live Music Capital. Otherwise, as downtown growth accelerates, one of the main draws for downtown living may itself be endangered.

The Most Controversial Project: Version 3.0

The Congress Avenue Marriott -- a 1,000 room hotel complex on 2nd and Congress avenue -- is the most controversial, and one of the least popular downtown projects. The project is best known for displacing Las Manitas and other local businesses. While the full details of the current plan are not known, 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.

New Downtown Austin Marriott on Congress Avenue
The Congress Avenue Marriott, V. 1.0

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, announced today, includes just one Marriott hotel with 1,000 rooms. With the changes and increases in downtown construction costs, the project budget has supposedly climbed from $185 million to more than $250 million.

The ironic thing is that the hotel is actually a good thing for Austin. A 1,000 room hotel will allow the city to book larger conferences and events -- bringing valuable tourism dollars and jobs to Austin. Their is a shortage of rooms downtown and a crazy large 1,000 room hotel can make a big difference. The problem is all in the developer's and Marriott's execution of the project: they seem to have no respect for downtown Austin and no interest in making it better place. If they hired an architect and surrounded the building with ground-floor retail, this would be a much more palatable.

Here is a summary from the Austin Business Journal:

Plans for a downtown hotel project at Second Street and Congress Avenue have changed yet again and will now feature a single, 1,000-room Marriott convention center hotel.White Lodging Services Corp. had originally planned to build three different hotels at the northeast corner of the intersection where Las Manitas café and other businesses currently stand. The proposed hotels included a 650-room Marriott convention center hotel, 200-room Renaissance Hotel and 150-room Springhill Suites hotel.Last summer the company switched course on the project saying it would build an 800-room convention center Marriott and 200-room upscale J.W. Marriott. The move was said to be due in part to greater demand for rooms dedicated to convention-goers and the growing market for upscale lodging downtown.This week White Lodging confirmed it will now build a single 1,000-room Marriott, but a spokesperson could not comment on why the group is altering course a third time. The most recent pricetag on the project puts the cost at about $250 million, though it's unclear if the new plan would alter that in any way.



We'll post new renderings as soon as they become available.

The Austin Parking Enterprise has Arrived

As expected, the Austin City Council has cleared the way for creation of a municipal parking authority that will build and operate for-profit parking structures in downtown and other high-density regions of the city. Proceeds from the garages will be used t support the hike and bike trails, bicycle lanes, and other alternative transportation projects. If parking is inexpensive, abundant, and well-integraed into new projects (underground!!!), than this decision will help the ity build a more vibrant downtown.

As we have written before, it is clear that parking is becoming a problem: the easier it is to park downtown, the more people will come downtown to shop, eat, live, work, and entertain themselves. High parking costs are already an obstacle to businesses thinking of moving into the city center. Many companies who can afford the rent are put off by the $150-$200 / month cost of providing parking for each and every employee. As parking costs continue to rise, it becomes a tax on every Austinite who wants to enjoy downtown, and it lowers the value of business and buildings who don't see as many visitors as they might if parking were cheap and plentiful.The result hurts the city by reducing sales tax and property tax revenues.

Here is a summary from the Austin Business Journal:

The Austin City Council approved a resolution to create a city agency that will build, finance and own structured parking garages in the city.The Austin Parking Enterprise will operate the parking garage planned as part of the Seaholm Power Plant redevelopment, and any publicly owned parking garage approved in the Green Water Treatment Plant redevelopment. The parking enterprise will consider expanding the supply of publicly-available parking in areas like downtown, the area around North Burnet/Gateway in the so-called "Second Downtown" area and in other transit-oriented developments near future commuter rail stops, and South Congress Avenue.The agency is intended to provide a dedicated long-term funding stream for planning and investing in pedestrian, bicycle and transit infrastructure, trails, and parking infrastructure after covering the costs of parking operations and maintenance. The agency would also make the city eligible for federal transit reimbursements and other state and federal grants.


As we have asserted, at $19,000 a space, parking is expensive to build. While the City clearly sees the parking shortage as a opportunity to add capacity and earn money for the city, this perspective may be short-sited. By focusing more on low cost parking and less on profits, the city could likely generate more revenue through sales and property taxes as well as hie prices for city owned land sold in the future.

Is That Really the View?

Many of the swanky downtown Austin condo projects present prospective buyers with images of the actual view from the units they are considering. This is an amazing feat considering that many of these buildings have not even broken ground.

For example, here are two "views" from future units in the Austonian -- a 50+ story luxury project on Congress which is currently just a hole in the ground. The first image shows the West view from the 11th floor:



The second images shows the same view from a unit on the 54th floor:



Sooooo . . . . .what is their trick? How can they capture accurate views from hundreds of units in different positions on different floors. Do they use airplanes? Helicopters? No! They, like many condo developers across the United States, depend on Austin-based "Blimp Photo Services" to get these special images.



Here is the summary from the Statesman:

In recent years, Lockhart's 16-year-old Austin-based Blimp Photo Services business has been buoyed locally and nationally by the boom in high-rise condominium construction. He has taken panoramic aerial views of planned residential and commercial buildings in major U.S. cities and Canada. . . In Austin, he has photographed the viewsheds — the technical name for the views from a particular vantage point — for most of the downtown condominium projects that are under construction or are being planned. They include the Shore, Spring, the Austonian, the W hotel/condominium project and the Four Seasons Residences, a project that is expected break ground soon next to the Four Seasons Hotel.Brett Denton, a partner with Ardent Residential, which is developing the luxury Four Seasons high-rise, said Lockhart's photography "has been invaluable in helping our buyers better visualize the views from the various unit locations on different floors of our building."



While I am not sure how one gets started in personal blimp photography, it does serve an important market niche. For anyone who is planning to lay down big bucks on a high-rise condo that has not been built, it makes all the difference in the world to get a blimps-eye perspective of your future view.

Welcome to Austin: The New Migration Boom

The more people that come to Austin, the stronger the downtown condo market. As Austin grows and expands, the value of central living only goes up. As one of the fastest growing cities in the country, this trend is one of the positive factors supporting long-term growth of the downtown population.

Today's news is good news for downtown residents and bad news for anyone that sits in Austin traffic: new statistics from the census bureau show a dramatic acceleration in migration into Travis county and the rest of the Austin metropolitan area. The latest statistics, covering the full year 2006 (Thanks Census Bureau for the quick turn around!), show that a net 9,405 migrated into Travis county in 2006. This tops the tech boom record of 8,575 set in 2000 and represents a strong turn-around from 2002, 2003, and 2004 when the county experienced a net outbound migration.

Here are the migration statistics from 2000 - 2006:

2000 | +8,575
2001 | +4,867
2002 | -11,402
2003 | -7,152
2004 | -1,787
2005 | +1,602
2006 | +9,405

In addition, total migration into central Texas from California more than doubled over the last two years. Californians represent a major portion of new Austin residents, many of whom come with large amounts of home equity. AustinTower's own survey and readership statistics show that Californians are the most active out-of-state shoppers for downtown Austin condos -- followed by residents of New York, Florida, and Illinois.