NPR: Austin Too Expensive for Musicians

It's a fact: Austin is getting more expensive. Especially for renters, the cost of living here is just going up and up. When the economics of urban living change, the social composition can change as well. Unfortunately for Austin, many musicians are being priced out of the Austin market.

According to NPR, "Austin is one of the fastest-growing cities in the country. Young people are moving there in search of its plentiful sunshine, freewheeling lifestyle, hi-tech jobs and vibrant music scene. However, more and more musicians find they cannot afford to live in the self-styled "Live Music Capital of the World."

In Austin, music seems to bubble up like an artesian spring. Yet many musicians cannot make a reasonable living wage in this town, which is why they need cheap rent. Hence the moment of silence last week when the Wilson Street Cottages were boarded shut.

"Everyone's moved out of town, out of state, across town. Yeah, this is the last place. South Austin just got uncool," says Jacob Rocha as he loads his belongings into a pickup truck.

Rocha plays in a grindcore punk-rock band called F'n A and was a resident of the colony. The Wilson Street Cottages were a rambling complex of shabby apartments in South Austin. Famous — and infamous — as a musician's colony, the community treasured its frequent song swaps, potlucks and bacchanals.

Bobby Lane — one half of the duo Weedhawks — was loading his worldly possessions into a van and preparing to go back and live on the road with his musical partner, Ruby Jean. According to him, lots of great musicians have passed through these cottages.

"Ronnie Lane from The Faces lived at the first cottage up there; Will Sexton lived next-door; and talk Stevie Ray Vaughan lived in my cottage. I'm not sure if that's true or not, but just a lot of great musicians in the neighborhood and a really good creative energy here," Lane said.

Despite the high cost of living, more than 170 new people move to Austin every day. Consequently, Austin has become the most expensive city in Texas to buy or rent a home in.

Michelle Ward is a sales associate at Barton Place, one of the trendy new condos springing up throughout Central Austin.

"Our amenities include things like a saltwater pool; there is a fitness center; also, there's four rooftop terraces," she recites, "and so price ranges for two-bedrooms in general range from the $350,000s to the $590,000s."

So here's the kill-the-golden-goose paradox: The music scene is one of the biggest reasons why people are flocking to Austin, and all those new people are crowding out the musicians who make the music."

7Rio Re-imagined as Rental Project

According to the Downtown Austin Blog, 7Rio may be back on the drawing board. The previously proposed 32-story condo project on 7th and Rio Grande -- on the site of Ranch 616 -- is now supposedly being redrawn as a 24-story rental tower adjacent to Ranch 616.

With the rapid rise in rental rates, developers are racing to bring new projects to market. New towers are already under development on the Whitley printing site and Lamar near second street. In the current market environment, rental units are being absorbed at a much quicker rate than comparable condo units. For this reason, rental projects are easier to fund and manage to profitability.

We will post additional details as they emerge.

The original condo proposal can be found here: 7Rio

Renderings of the Original 7Rio Tower
7Rio Tower CLB Austin Condo

New Gables Tower Breaks Ground

Gables Residential has commenced construction on a new 18-story apartment tower on Lamar just across from Cesar Chavez and Ladybird Lake. The new project is the second face of its Park Plaza development. It will have 222 units and will open in 2013. Fortunately, it's more attractive than it's larger, shorter Park Plaza neighbor.

The project will also feature 14,000 square feet of retail which may be the most accessible retail to the hike and bike trail. A new pedestrian bridge across Cesar Chavez makes the retail spaces very easy to access from the trail. Over the next few years, the area to the East of the new tower will also be developed as Seaholm and Green Water Treatment sites see new activity. In the end, the Park Plaza development will book end a new neighborhood that spans from the convention center to Lamar along 2nd street.

The new 18-story Park Plaza Tower
Screen Shot 2011-12-19 at 6.59.10 PM
Rendering by Ziegler Cooper Architects

2nd Street: 3 More Fancy Blocks Coming Soon

In many ways, Second Street has become the center of downtown Austin activity. With a dense mix of retail and restaurants, Austin City Limits, and the W Hotel, the 2nd street action continues to accelerate.

One of the ways that the City has made 2nd street social is by creating broad sidewalks with benches, rooms for outdoor cafe seating, and lots of trees and public artwork. Now, the City plans to add these fancy features to the 2nd Street sidewalks between Congress Avenue and the convention center. This will provide a foundation for an improved and more continuous 2nd street experience which will eventually extend from the convention center on Trinity street to Seaholm.

According to the Statesman, "Second Street east of Congress Avenue will be reduced from three lanes to two and lose about two dozen parking spaces under a $5.4 million "great streets" project approved unanimously Thursday by the Austin City Council.

Work is expected to start shortly after South by Southwest in March . Sidewalks along East Second between Congress Avenue and Trinity Street (currently 10 feet wide or less) will be broadened to 32 feet on the north side and 18 feet on the south. That will match the design of Second Street west of Congress where a similar makeover took place in two phases since 2004.

Currently, those three blocks east of Congress have two westbound lanes and one eastbound lane, with parallel parking on both sides of the street. When the 11-month project is done in early 2013, there will be one travel lane in each direction and parallel parking only on the north side."

Downtown Post Office Sold to 360 Developer

The downtown post office building may be the worst structure constructed downtown in the last century. It wastes a prime central block (Block 51) with an enormous elevated parking lot. It leaves all four sides devoid of retail, restaurants or cultural use. It places the structure in the middle of the block, far from the street and close to parked cars. It wastes a prime tall-building lot with a tiny 2 floor structure.

When Will Wynn was mayor, he led a campaign to rid the block of the dreaded post office. The post office won.

The Austin Downtown Post Office
Downtown Austin Post Office

This week, the U.S. Postal Service announced that it has come to agreement with Novare Group -- the developer of 360 -- to sell the site and to relocate the post office in early 2013. Novare will partner with Austin-based Andrews Urban.

Once the Post Office is gone, Novare will redevelop the block for much denser use. Apparently, all options are still on the table including condos, apartments, office, hotel and retail. 19 months ago, Novare announced preliminary plans for two new towers to rise one block west of the downtown post office. The new plans called for construction of a 250 unit 28-story condo tower and an adjacent 16-story office tower on the 1.2 acre site bounded by Fifth, Sixth, San Antonio and Nueces streets. That project, called Ovation, replaced earlier plans for a larger 400-unit condo development on the same site. Novare's 360 was one of the largest and most successful downtown projects, selling out 430 units with strong pre-sales and minimal discounting.

The Post Office represented what Will Wynn called a "staggering underutilization of land." While it remains to be seen what will follow, development of this prime downtown block will improve pedestrian flow through the area, will better frame Republic Square park, and will hopefully add new residents to downtown Austin.


Plaza Lofts: Once You Move In, You Don't Move Out

Plaza Lofts is something of a mystery. Built in 2002, the 60 unit 14-story condo tower has surprisingly low turnover. This year, only two units have sold. Over the last 6 months, no sales have been recorded in the MLS.

In comparison to other projects, the rate of turnover is very low. So far this year, just 3% of the building's units have been sold. At Austin City Lofts, a similarly sized downtown condo project, nearly 9% of the units have changed hands. At the Brown Building, 7% have changed hands. 10% of units have changed hands at Avenue Lofts.

So what explains the low rate of turnover? One issue may relate to owner resale pricing. While the building remains desirable, the two units that sold this year were on the market for an average of 319 days, a sign that they may have originally been priced above market. A number of other units have been removed from the MLS after failing to sell.

Plaza Lofts was one of the first downtown condo projects in the new era of development and many of its residents are the downtown pioneers who first jumped at the opportunity to live in a downtown condo. So maybe they are also the last to leave, satisfied with their downtown living and unlikely to move as quickly as newer downtown residents. In truth we don't know why turnover is so low --- and thus the Plaza Lofts mystery remains.


$350M Downtown Plan Approved

After a 4-year process, the City Council finally approved a comprehensive master plan for downtown Austin. The plan subdivides downtown -- defined as the area between the lake and MLK, I-35 and Lamar -- into 9 distinct areas with differentiated development and preservation plans. The plan will guide downtown development for the next 10 years.

The 200-page plan will cost an estimated $350 million to carry out, money that will need to be raised through bonds, fees, or partnerships with private developers. Now, City staffers will turn the plan into detailed land use rules which will also require Council approval.

According to KXAN, Highlights of the plan include:

• "Dramatically improve downtown parks, including those along Waller Creek and the three historic squares.
• Complete the first phase of urban rail as the hub of a regional, comprehensive public transportation plan.
• Re-make East Sixth Street into an attractive destination for everyone.
• Provide permanent supportive housing throughout Austin for those most in need.
• Continue to invest in infrastructure, advancing the Plan’s long-term vision for a dense and vibrant downtown."

In addition, the plan raises the maximum noise level for downtown businesses that serve food and requires new large development projects to offer or fund public benefits such as affordable housing, public space, or eco-friendly construction.


Uneasy Coexistance: Music & Residents

Downtown Austin is famous around the world for its live music. Music literally powers the downtown economy. It draws people out at night, conventions to town, and tourists to the City.

Not long ago, live music and downtown residences were naturally separated: their were almost no residents in the downtown core. Those who did live downtown -- in the Railyard apartments and a handful of other buildings -- were adventurous.

Today, the number of residents downtown has greatly expanded -- bringing new conflict between bars and downtown residents. But the live music scene has also shifted to formerly residential pockets of downtown. On Rainey Street and West 6th street near Lamar, a flood of new bars and venues is raising neighborhood tensions.

According to KXAN news, "Some residents who live at Posada Del Rey condominiums near West Sixth street are trying to block a music permit for a new bar opening next week called Rattle Inn, worried it will add to the increasing noise downtown.

"When I moved here, this was a historical quiet district with no bars. It was very quiet. Never dreaming it would be rezoned and changed the way it did," said Susan Sullivan, who has lived in the same spot for about 20 years. "The noise is outrageous. We have about 20 bars within this area. I can see four of them through my bedroom window."

Sullivan has already tried to fix the problem herself.

"I have spent about $10,000 dollars trying to sound proof my bedroom," she said.

She is one of around 40 nearby residents who have signed a petition trying to prevent another bar, The Rattle Inn, from getting an outdoor music permit and adding to the noise. The new bar is near West 6th and Nueces and has a large, open patio on the second level with about 18 speakers.  It is still being constructed."

To address these complaints, the City of Austin's music department is conducting sound tests within downtown units before approving new permits. In other cases, developers of new projects are funding projects to reduce the noise from neighboring bars. When 360 was constructed, for example, the developers funded significant enhancements to Austin Music Hall.

In the end, these problems will continue to grow as the downtown music scenes continues to expand, downtown Austin continues to thrive, and new residents flock to live downtown. Both music and downtown residents are essential parts of the downtown ecosystem. The result will need to be compromise, requirements for bars to make improvements to limit external noise, and investments from developers to allow residents to live comfortably near music.

New AustinTowers Home Page!

Tonight we released a major update to the site -- including a completely redesigned home page -- which will improve navigation and allow us to intorduce new features. The home page now features all of the projects (in height order) with pictures and roll-over links. The new design will make it easy to navigate between profile facts and listings for your favorite projects. We'll keep working on additional updates -- there is much more to come!

If you have ideas (or issues), send them to us via the link on the bottom of any page!

Thanks for reading AustinTowers!

Update: Hike & Bike Boardwalk to Close 1.1 Mile Gap on Trail

The Hike and Bike Trail that runs alongside Ladybird Lake in downtown Austin is one of the City's most-valued recreational areas. 3,000 - 15,000 people use the trails each day to run, walk, bike, or relax. Unfortunately, the trail loop is incomplete: a 1.1 mile gap on the south shore on either side of I-35 is a problematic hole in a much-loved 10-mile loop. Ttrail users who venture East of Congress Avenue on the south shore "must divert onto the narrow sidewalk and travel along busy Riverside Drive, crossing 35 busy business entrances and other points of conflict and crossing 6 lanes of I-35 access roads to travel east or west and use the south side of the Trail."

Early this year, the City passed $14.4 million in bonds to build a boardwalk in the lake to close the entire 1.1 mile gap. The bonds were contingent on a contribution of $3 million in private funds to be raised by the Trail Foundation. This week, the Trail foundation announced good news: they have quickly raised $2.4 million of the $3 million goal and are increasing the target to $5 million to fund additional trail improvements.

Proposed Hike and Bike Trail Boardwalk

According to KVUE, "the project would begin near the Austin American-Statesman on the south side of the lake. It would continue under I-35 and reconnect to the hike and bike trail at South Lake Shore Park.It would sit five to six feet above the water on galvanized steel and concrete piers. Part of the boardwalk would be on land. More than half will be over the water because land access is not available. The 1.1 mile project will connect the 10-mile loop of the newly-named Ann and Roy Butler Hike and Bike Trail."

Construction of the trail extension should begin in Spring of 2012 and will take up to two years to be fully completed.


Spring vs 360 Smackdown: Which square foot is worth more???

360 and Spring have so much in common: 40+ story projects that were designed to hit the sweet spot of the market in terms of price and size. Yes, 360 is a few years old and the units have appreciated from a lower original sales price. And yes, Spring hasn't sold out and some of the units are newly occupied. So they may not be perfect comparables, but with Spring sales finally hitting MLS, it seemed time to check out what Spring units were really selling for and - of course - to compare these prices to recent sales at 360!

As the data below shows, units in Spring are selling for $41 per square foot (11%) more than units in 360. Spring sales saw an average sales price of $424,643 and a surprisingly large average size of 1,000 square feet. The good news for 360 is that more units sold during the same 4 month period (7/1 - 10/31) and at a higher percentage of the asking price: units at Spring saw an average discount from list that was more than twice as high as the discount at 360: 5.8% vs. 2.7%

Spring vs 360: Comparable Sales (7/1 - 10/31)

Building

# MLS Sales

$ / SF
Avg Sale $
Avg SF
% Ask

360

9

$384
$349,633
911
97.3%

Spring

7

$425
$424,643
1,000
94.2%

Both are great projects and seem to be selling well -- it will be interesting to see how the comparison holds up over time -- especially as more resale Spring units hit the market.

Exclusive: October Condo Sales Set New Records

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for October, 2011, and once again, our seasonally neutral 12-month tracking index set three new records. With October sales included, the 12-month index set records for the most sales (16.7/month over the last year), the highest $/SF ($314), and the lowest average days on market (86.2).

With no high-end units in the W and Austonian MLS sales, the results suggest that downtown prices are creeping up. As we said last month: prices are improving, liquidity is increasing, and time on market is shrinking for mid-priced units in desirable buildings. More units are being sold for $300K to $1 million, and the supply of units on the market and priced at less than $200K is greatly reduced. In fact, only one unit sold for less than $200K downtown last month. It's the only unit to sell in the this price band in the last 60 days. And it was located on 17th street -- which probably shouldn't even count as downtown.

October 2011: Downtown Austin Condo Sales

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Oct-08

9

$456,839

$307
1,483
1991
94%
108

Oct-09

13

$444,173

$323
1,376
1988
94%
151

Oct-10

8

$570,625

$295
1,834
1995
96%
74

Oct-11

14

$410,464

$355
1,144
1993
95%
67

YoY Change

75%

-28%

21%
-38%
-2.00
-1%
-9%

During the month of October, condo sales increased 75% from the same month last year -- from 8 units in 2010 to 14 in 2011. In comparison with the three prior Octobers, units sold last month were newer and more expensive on a $/SF basis but generally smaller. For some reason, sales in October seem to favor bigger units. Maybe because it is a low point for student purchases. As we saw last month, units sold in October sold quicker than we have seen in a long time. Once again, October saw sales across multiple price bands: 1 unit sold for less than $200k, 5 units sold for $200k - $300K, 4 for $300K to $500K, 3 for $500K to $1 million, and 1 unit for more than $1 million. 9 of the 14 units were larger than 1,000 square feet.

October was a big month for Spring which led the market with 5 sales followed by Austin City Lofts with 2 sales. The remaining sales were spread across a long list of projects including 904 West, 360, Brazos Place, the Brown Building, Milago, Cambridge Condos, and 1700 Nueces.

As usual, additional private sales -- which are not reflected in the MLS data -- continued to close at Spring, Four Seasons, the W and Austonian.

See the full index here.

Look! Renderings of the New Super Central Library!

Downtown Austin's central library is too small and too outdated. After years of planning, the City is looking to build a new 200,000 square foot downtown library on the Seaholm site.

The building is designed by Lake Flato, an internationally known architecture firm based in central Texas. Unfortunately, the renderings shown below seem more designed to show off the roof than any other elements of the proposed facility.

Proposed Designs for the New Central Library
New Austin Central Library Lake Flato Rendering

Seaholm Redevelopment: Is it really happening?

We've been writing the same story about the dramatic redevelopment of Seaholm for nearly five years. Back in 2007, we were excited to see construction start but then stop once infrastructure enhancements were completed. So is it real this time? Having seen so many downtown projects discussed and dropped, it is hard to believe that this is the last time that we will be discussing plans to build on this very critical downtown site.

According to the Statesman, "After several years of delays due in part to a recession that dried up financing for development, construction is expected to start on redevelopment projects at the former Seaholm Power Plant and the site of the former Green Water Treatment Plant east of Seaholm, said Fred Evins, the city's project manager overseeing the public-private projects."

Here are the key things that we know:

- The major projects in and around Seaholm will cost $2 billion to complete
- Seaholm and Green represent 13 acres of prime land for development
- Development will link to the second street district and restore some north-south streets
- A new central library is proposed for the site with a design by Lake | Flato architects
- A controversial art wall is still proposed for the site: A design was selected through a public process and than quietly replaced by a different design through a not-so-public process
- Seaholm will now include apartments instead of condos in a 300 unit high-rise with ground floor retail
- The Green Water Treatment site -- now a giant green lawn at the end of second street -- will support an amazing 1.8 million square feet of development
- The Seaholm site will include 450,000 square feet of development on the 7.8 acre site
- The historic art deco Seaholm power plant building "will be renovated to house a special-events center, offices, shops and restaurants" which will likely become a prime downtown destination
- In addition, "just west of Seaholm, Gables Residential plans to start construction early next year on a second phase of apartments with 222 units, next to its existing 294-unit Gables Park Plaza apartment complex. Gables' second phase also will include about 14,000 square feet of retail space."

So, will it happen? For the project to work, there needs to be a strong market for the buildings that are being built. The condo market is not going to support another major development now. Hotels are needed but plans for two other 1,000 room hotels -- and the distance of the site from the convention center -- make hotels an unlikely core component. Fortunately, the apartment market is white hot in downtown Austin --- and that may be enough to drive development of the site.

As construction would begin on both sites next year at the earliest there will be plenty of time for additional details or delays to materialize.

The Historic Seaholm building will become a downtown gathering space with shops and restaurants
Seaholm Power Plant Interior

Plans for the adjacent Green Water Treatment Site include 1.8 million square feet of development. 360 is shown adjacent to the site.
Green Treatment Plant Austin Redevelopment Renderings


Downtown Austin Riverwalk to Become Reality

As Waller Creek winds it way through the East end of downtown from Waterloo Park to Ladybird Lake, it forms a sunken urban river walk very similar to the well-developed tourist attraction in San Antonio. For years, developers have dreamed of transforming the river walk into a similar (though smaller scale) downtown destination with retail, restaurants, bars, and maybe even a gondola or two. The problem is flooding: if it were to rain again in Austin, the water would wipe it all away.

And this is why the City is building a very ambitious tunnel wish will somehow catch floodwaters and send them 70 feet underground to emerge elsewhere without wiping the gondolas away. The project is starting with the closure of Waterloo Park through 2015 to allow for construction and the staging of equipment.

According to the Statesman, "Waterloo Park is being fenced off from the public while the city builds the Waller Creek Tunnel, a massive public works project intended to transform a moribund, flood-prone section of eastern downtown into a smaller version of San Antonio's popular River Walk"

The hope is to create an economic boom on the East end of downtown while creating a new draw for convention-goers and another reason for Austinites to spend time downtown.

Exclusive: Strong September Downtown Austin Condo Sales Break Drive New Annualized Records

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for September, 2011, and once again, our seasonally neutral 12-month tracking index set four new records. With September sales included, the 12--month index set records for the most sales (16.4/month), the highest $/SF ($310), the highest % ask (96.3%) and the second lowest average days on market (87.1).

With high-end new and resale units in the W and Austonian starting to hit the MLS, prices are likely to continue to increase. But the change is more than just a mix shift: prices are improving, liquidity is increasing, and time on market is shrinking for mid-priced units in desirable buildings. More units are being sold for $300K to $1 million, and the supply of units on the market and priced at less than $200K is greatly reduced.

The change in market dynamics is best exemplified by a small unit in the Railyard condominiums. The 749 square foot unit was on the market for 85 days and priced at $199,870 at the time of sale. Competitive bidding pushed the final sales price to $205,000. For the first time in a while, no downtown condos sold for less than $200,000.

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Sep-08

13

$342,915

$281
1,244
1986
94%
114

Sep-09

15

$258,993

$307
845
1986
91%
81

Sep-10

12

$221,745

$282
786
1993
96%
113

Sep-11

16

$390,632

$335
1,164
2000
97%
76

YoY Change

33%

76%

19%
48%
7.00
1%
-33%

During the month of September, condo sales increased 33% from the same month last year -- from 12 units in 2010 to 16 in 2011. In comparison with the three prior Septembers, units sold last month were newer and more expensive and generally larger. They sold quicker and for a greater percentage of the asking price. While the summer ended with a push to value: September saw sales across multiple price bands: 6 units sold for $200k - $300K, 6 for $300K to $500K, and 4 for $500K to $1 million. Unusually, 11 units were larger than 1,000 square feet.

The sales were in an unusually wide variety of projects. For the second month in a row, more units were sold in the Shore (6) than in any other project. Two units each were sold in The Railyard and 904 West. The remainder of sales were spread across six additional buildings including the W and Austonian. For the first month is a long time, no sales were recorded in 360 . The sales in the W and Austoniann both sold for more than $575 / square foot.

As usual, additional private sales -- which are not reflected in the MLS data -- continued to close at Spring, Four Seasons, the W and Austonian.

See the full index here.

W & Austonian Win "Best New Building"


The Austin Chronicle released it's "Best of Austin" awards with recognize a few downtown highlights:

The "Best New Building in the Past Five Years" was a tie between the W and the Austonian. The Chronicle wrote that, "Austin's Downtown skyline is ever-changing, but two new buildings have rightfully caught our readers' attention and imaginations this year. The Austonian, the tallest residential building in Texas, cuts a sleek profile just north of Lady Bird Lake and boasts ground-level dining and drinking establishments that have attracted national attention. The W Hotel has done the same, bearing a strikingly modern sensibility both inside and out that inevitably turns heads. Taken together, these two additions to our urban landscape certainly signal that a new Austin has arrived."

Other downtown winners include:

- Best Bathroom: W Hotel (so true!)
- Best Downtown View: Long Center for the Performing Arts
- Best Historic Site: State Capital
- Best Public Art: 'Play Me, I'm Yours'
- Best Statue: Stevie Ray Vaughan

See the endless list of winners here!

643 Tickets Issued on First Night of New Parking Rules

The City of Austin issued 643 parking tickets at meters on the first evening of extended meter hours. While the new meter hours went into effect in early September, the City began issuing $20 tickets for violations in early October.

The new rules are complicated:

- There are unique rules for the 3,000 downtown parking spaces between I-35 and Lamar and Lady Bird Lake and 10th street
- If you park downtown, you must now pay from 8 a.m. to 6 p.m. Mondays through Wednesdays , from 8 a.m. to midnight Thursdays and Fridays, and from 11 a.m. to midnight on Saturdays .
- Outside the downtown zone, meter charges apply from 8 a.m. to 6 p.m. Mondays through Saturdays .
- Sunday parking remains free citywide.

If you park downtown --- make sure to check the signs to make sure that you are paying at the appropriate time!

The rules were put in place to free up additional downtown parking for evening visitors. The City was concerned that downtown services workers were occupying most of the parking downtown parking spaces -- making it harder for businesses to lure customers downtown.


Austin Comprehensive Plan: The Future of Dowtown?

City officials have released a draft of the broad new 30-year plan for downtown Austin development. While just a draft, the new plan paints a picture of the Austin of the future as a more dense and livable City that evolves to include as many as 700,000 new residents over the next 3 decades. If the plan is well received, the draft will be subject to public comment and a City Council vote before becoming final by next spring. After that, the City will spend as long as a year putting the policies and ordinances in place to realize the plans objectives.

According to the Statesman, "the proposed, 197-page "comprehensive plan" would be the city's official philosophy for managing a booming population and the new housing, businesses, shops and restaurants that will come with it. The plan, dubbed Imagine Austin, envisions mixed-use development along corridors serviced by transit and new centers of housing and commerce miles north and south of downtown."

A few observations from the plan:

- Austin's historical growth has been poorly managed: a lack of density has meant high community costs for roads, water, and infrastructure, rapid consumption of natural open space, social segregation and isolation, and negative impacts on public health, air quality, and water quality.

- 700,000 people are predicted to move to Austin over the next 30-years which will cause all sorts of new problems

- The plan calls for more density in central neighborhoods despite the objections of single family home owners in these areas and fears of rising costs.

- According to the Statesman, the report says "Austin has among the nation's worst traffic congestion, an increasingly strained water supply, rising housing costs, a reliance on low-wage jobs that don't keep pace with the rising cost of living, and a sense of loss about a simpler Austin of the past."

- The report recommends that the City use zoning and taxation to shape Austin into a more densely-packed and walkable City

- The report does not assume that additional rail or transportation investments will be made.

It's hard to know what impact the plan will have. According to the Statesman, "The last such comprehensive plan, passed in phases in the 1970s and updated in the early 1980s, was promptly left on a shelf to gather dust. Instead, the city adopted numerous smaller-scale plans, from those charting the course of individual neighborhoods to one governing the city electric utility's 10-year environmental goals."

In general -- the plan is a strong vote in favor of the dense, lively, walkable downtown that most central residents seem to favor. At this point in the evolution of downtown, it's hard to imagine any other path forward. The big question, is how the rest of Austin -- especially close-in neighborhoods, will evolve in the future to support a thriving, growing downtown central core.

Hickory Street to be Replaced by 28-Story Tower

After 28 years in business, Hickory Street Bar and Grill at 8th and Congress will close on Saturday as developers move forward with plans to build a much larger building on the prime Congress Avenue Site

Hickory Street at 800 Congress
Hickory Street Bar Grill Austin Tower

According to the Statesman, "a developer announced plans in July to replace the restaurant with a 28-story tower that is expected to house offices, a 210-room boutique hotel, several restaurants and a coffee bar. Pending city approvals, the project could break ground next summer and take up to two years to build, the developer told the American-Statesman in July."

Hickory Street is one of three downtown restaurants and bars that have shut their doors in the last few days. In addition, the Belmont on fifth suddenly closed last week and Charlie's bar will shut its doors after this weekend. According to the Statesman, "A Taco Cabana at South Lamar Boulevard and West Riverside Drive could soon be gone, as well. California-based Post Investment Group has plans to build there after the restaurant's lease runs out in February. A boutique hotel was initially proposed in May, but Jason Post, Post's president, said this week that the company might opt to build apartments or condos instead."

16-Story Apartment Tower to Rise Near Convention Center

The Whitley printing site is one of the last remaining developable half-block sites in downtown Austin. The site is conveniently located in the heart of downtown, just blocks from Congress Ave., the Convention Center, and Lady Bird Lake. Years ago, it was slated to become the 21C Hotel & Condos before that project relocated and ultimately was cancelled. Now, it seems that demolition has actually begun.

The Whitley Printing Building
whitley1

According to the Statesman, "Demolition work has begun on the former Whitley Printing Co. building at East Third and Brazos streets in downtown Austin to make way for a 16-story tower with 277 luxury apartments planned by Austin-based Riverside Resources.

Riverside Resources' tower will take a year and a half to complete, with the building ready for tenants by spring 2013, said John Needham, a principal with the firm.

"We're moving forward," Needham said, adding that City of Austin officials have approved a site plan for the project. "We will be breaking ground within the next two weeks."

Needham said the Third and Brazos tower will be on half a city block that is bounded by Brazos and Third streets, San Jacinto Boulevard and an alley to the north that separates the site from the Railyard condominiums.

The project will include 10,000 square feet of commercial space, plus a 6,000-square-foot restaurant. Needham said the project has financing, but he declined to give additional details. Riverside Resources developed the Crescent apartment project on Riverside Drive just east of Congress Avenue."

A previously published image shows earlier plans for the site which seems to include a slightly taller building. It is not clear how the project may have been modified since the original image was published.

Early Rendering of Proposed Apartment Complex
3rd-Brazos-JacobDirr

With demand for apartments growing much fast than supply, rents are continuing to rapidly rise. Over the next 6 months, Austin's citywide apartment occupancy rate could hit an incredible 97% which means there is virtually no available units for new renters. With such tight supply predicted, new downtown capacity is sure to see strong demand.

Redeveloping the East 11th & 12th Street Corridor: A New Master Plan

There is an amazing transformation under way on the 11th and 12th street corridor just East of I-35. Over the last decade, the City has developed a destination gateway connecting East Austin to downtown and the Capital Area. With the development have come businesses such as Blue Dahlia and the legendary Franklin Barbecue which was recently ranked one of the best in the country (and which sells out every day soon after opening).

The City's vision for East 11th Street sees the area as a visitor-oriented destination consisting of three to five story buildings that provide entertainment, retail and office uses that attract people to this metropolitan area. On neighboring 12th street, the CIty is trying to accomplish similar goals through the historic preservation of culturally significant structures and several small businesses receiving façade improvement grants to dramatically improve the look of the corridor.

East 11th Street: Before and After Revitalization
1000e11th_before3 1000e11th_after3

The City of Austin’s Neighborhood Housing and Community Development Office is currently working on a master plan development strategy for the area. According to the office, "The East 11th and 12th Streets Development Strategy will provide a framework for the development of a mixture of commercial, retail and residential component in central east Austin. The assessment of both the current market demand and projections of future demand are critical to developing short-term and long-term strategies."

East 12th Street After Revitalization
jsnell_bldg primizie_ext

The development of East Austin is controversial. As a prime centrally located neighborhood, development has an opportunity to drive density downtown. Many current residents are concerned, however, that development will damage the historic character of the neighborhood while driving existing residents out of the area and by inflating local property values and taxes.

To solicit input from the neighborhood, the City has scheduled an open meeting for 4:00 p.m., Wednesday, September 21 at the Doubletree Hotel, 1617 IH-35 North. This informal open house is intended to introduce the process and consulting team and begin to solicit input from the community. There will be presentations from staff and consultants from 6:30 – 8:00 p.m. Over the next five months, additional meetings will be held to present interim findings and solicit further feedback. The dates and location of the meetings will be announced as determined.

Exclusive: Strong August Sales, But Value Prevails

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for August, 2011, and once again, our seasonally neutral 12-month tracking index set a record for the highest average monthly sales. This remains good news for condo owners: liquidity is clearly increasing for inexpensive and recently constructed units. With a monthly average of 16.1 units, average monthly volumes have doubled from the same period two years ago.

August 2011 MLS Downtown Condo Sales Statistics
Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Aug-08

13

$345,223

$308
1,127
1990
96%
66

Aug-09

14

$252,029

$255
986
1988
93%
57

Aug-10

16

$330,088

$298
1,056
2004
94%
57

Aug-11

21

$316,027

$292
1,129
1990
95%
86

YoY Change

31%

-4%

-2%
7%
-14.00
1%
51%

As you can see with this month's report, we're improving our monthly market updates to she com parables from the previous four years. As always, the year-on-year change (YoY) is calculated using the current period results in comparison to the same period during the prior year.

During the month of August, condo sales increased 31% from the same month last year -- from 16 units in 2010 to 21 in 2011. While volumes increased, the mix shifted to older, more affordable units. The average age of sold units, for example, was 14 years older than units sold last year. The theme for the month was value: 4 units sold for under $200K, another 8 for under $300K, and 20 out of the 21 for less than $500K.

Amazingly, price per square foot remained relatively stable with a 2% decline despite that fact that units were significantly older than the previous period. Looking at the mix shift, it does seem that real prices re continuing to creep up as the market strengthens. Average Days on Market spiked to 86 as sellers took advantage of the end of the summer buying season to discount and clear out units that had been sitting on the market.

The sales were in an unusually wide variety of projects. During the month, units were sold in 15 separate buildings with multiple sales in the Shore (3 units sold), Cambridge Condos (2), The Brown Building (2), The Railyard (2), and 360 (2). One 698 square foot unit sold in Spring for $479 / SF.

As usual, additional private sales -- which are not reflected in the MLS data -- continued to close at Spring, Four Seasons, the W, and the Austonian.

See the full index here.

Austin Rents Continue to Soar: No Relief in Sight

With strong inbound migration and a vibrant local economy, the Austin rental market continues to strengthen. With no new projects likely for the next year, downtown rents will continue to rapidly increase. According to Axiometrics, a national real estate analytics firm,

"Austin ranks as the best market in Texas. The 10.1% annual effective rent growth in July was the best we've ever reported for Austin in our 15+ years in business. In May 2009, Austin and Dallas had practically the same level of rent. Austin's rent growth over the past two years has made it the highest rent per unit market in Texas. Its average rent of $911 per unit is now $66 a door higher than Dallas. Austin's occupancy rate of 95.4% is its best in more than 10 years. 2012 Outlook: Strong rent growth, 7.1%, and absorption with occupancy increasing by 100 basis points to 95.9%. Deliveries in 2012 will remain well below the prior peak but planned projects, already numbering 50 projects, are accelerating."

With occupancy in the high 90s and predicted to be as high as 97% by the end of the year, there will not be enough supply to meet growing demand as tens of thousands of new residents move to Austin. According to the Statesman, "Out-of-state job seekers or employees being transferred also are beefing up the tenant pool, accounting for about 35 percent to 40 percent of the leasing traffic. At least half of those are employed, and the rest have been accommodated by flexible leasing policies, including allowing a renter to provide proof they can pay at least three to six months' rent."

Experts predict that rents will continue to rise for the next 12-18 months until new supply relieves some of the pressure. Downtown, however, is not expected to see any new rental units during this time period. As a result, rents are likely to continue to rise for the foreseeable future. If the economy continues to improve, the housing resale market strengthens, or migration increases, downtown rental rates could increase significantly.

Downtown Austin Secret: Run or Bike to a Sandy Beach

If you run or bike on the downtown hike and bike trails, you've likely already discovered the pretty but incomplete loop that circles alongside Ladybird Lake east of I-35 to Pleasant Valley rd and the Longhorn dam. But few people know that a spectacular landscape exists just beyond the dam.

Beyond the Longhorn Dam and the highly controlled downtown lake is the still-flowing Lower Colorado River and a well-protected wild landscape filled with beautiful views, deer, and wild birds. These sites -- all part of the undeveloped 362 acre Roy G. Guerrero Park -- are just a couple of miles East of I-35. They run adjacent to the Eastern most leg of the Hike and Bike trail.

Although untamed and tricky to enter (head through the softball fields and then turn towards the water), the park is filled with trails that are ideal for running, walking, or mountain biking. A new inland trail is well-manicured and easy to navigate. The spectacular river trails are much more wild and rewarding. They glide between valleys and bluffs with amazing views of the flowing river. With minimal development on the other side of the river, and a wildlife sanctuary when you get close to 183, it's roughly two mile of unspoiled and undeveloped beauty in the middle of Austin.

About a mile in from the dam is an amazing surprise: a stunning sandy beach on a bend in the river. A mildly popular site for families and picnicking couples, it is peaceful escape from the surrounding city.

While few people today stop to see the park as they circle the trail, new paths and facilities will likely increase the popularity of Roy G. Guerrero Park. While today the land remains mostly undeveloped, the Austin City Council initiated work to develop areas of the park in 2009 as part of a 1998 Bond referendum. The new development is underway and will include two multi-use sports fields, open areas, parking, driveways, lighting, a group picnic plaza and pavilion, a memorial to Roy G. Guerrero, trails, a playscape, restroom facilities, drainage improvements and public art. Fortunately, it appears that the plan will preserve hundreds of wild acres adjacent to the Lower Colorado.

Screen Shot 2011-08-28 at 9.25.09 PM

Roy Guerrero Park Downtown Austin Sandy Beach

Roy Guerrero Park Lower Colorado River Landscape

Roy Guerrero Park Downtown River Trail

Lower Colorado River Roy Guerrero Park

Wild Flowers in Roy Guerrero Park
Photos Copyright 2011 Paul J. D'Arcy

Downtown Condo Financing: An Interview with Kevin Burns

While downtown sales continue to gain strength, there are many people who would like to buy but who are renting instead. With record low interest rates and downtown bargains still to be found, it is surprising that more buyers aren't jumping into the market. For many buyers, the issue is the mortgage market and concerns that purchase requirements have become unreasonable. While the financing market isn't as easy as it used to be, it's much better than it was a year ago.

Few people understand downtown financing options like Kevin Burns, the founder of urbanspace Realtors. Kevin is a long-time downtown resident and an expert on the downtown Austin condo market. Kevin sat down with us for an interview on the current realities of the downtown Austin condo market:

How is the downtown Austin condo market right now? Is it a good time to buy?
KB: The Austin condo market is stable. Some projects such as the Shore, Milago, 360 and Austin City Lofts are selling quite well. We saw a bottom of the market in May of 2009. Since then we have seen pricing fluctuate, however their has been a subtle increase in values. With interest rates in the 2.75-4.5% range dependent upon term and product coupled with prices off of their highs as well as soaring rental rates, buying seems to be a wise option. One caveat is that I do not recommend buying unless you intend on staying in the same place for at least 2.5 years.

Many potential buyers are renting now. How is the downtown Austin rental market?
KB: The downtown rental market is on fire right now. We are experiencing double digit rent escalation and scarcity of available units. In many circumstances their will be several offers to lease the same residence.

What are the economics right now of buying vs renting?
KB: At this point buying is making more sense in many circumstances if you intend on being in the same place for more than 2.5 years.

What is the typical down payment that buyers need to be able to make to purchase a unit?
KB: 10%

Is it a good time to buy for investment?
KB: I am very conservative with my investments, with that said I do not recommend buying for an investment unless you are going to occupy the residence.

Is there a downtown market for vacation rentals?
KB: Most buildings downtown do not allow for short term vacation rentals.

How is the mortgage market – who will qualify for a mortgage right now?
KB: In order to qualify, you will need to be able to substantiate your income. The time of stated income loans has come and gone. Furthermore, if you are commission based or self employed, you will need at least 2 years of documented history. To be perfectly frank, loans are much more difficult to come by today compared to years past. This is one reason why the rental market has been so hot. At the same time it has created a real opportunity for those that can qualify.

What about jumbo loans and investor loans? Are they becoming easier to obtain?
KB: Jumbo loans are much more prevalent and have much lower interest rates today than in the recent past. However, they are difficult to qualify for. Same goes for investor loans.

How are resale values in major projects like 360, Milago, Shore, and the Nokonah holding up? Are people that Bought three years ago getting their money back?
KB: These projects are doing relatively well. People that bought 2-3 years ago are seeing a profit in many circumstances. Those that bought 4-5 years ago are at break even. It really depends on how well you did at buying your property. There are many variables to buying downtown. This is where I will shamelessly plug working with a professional, such as an urbanspace agent, to help you in finding the optimal residence to buy both for enjoyment and investment purposes.

How liquid are downtown condo units? Does it vary by building?
KB: If you buy right in the right building, you will see good liquidity. If you purchase a less desirable unit in a less desirable building, you might need to be a bit patient in selling.

What should people look for in a downtown condo unit if they are planning to sell again within 5 years?
KB: Location, quality of building, strength of HOA.

Strong July Condo Sales Drive New Full-Year Record

Despite mixed economic news dominating the headlines, the downtown Austin condo market continues to strengthen. We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for July, 2011 -- a very strong month. With July's results, our seasonally neutral 12-month tracking index set a record for the highest average monthly sales and the shortest average days on market. This is good news for condo owners: liquidity is clearly increasing for inexpensive and recently constructed units.

In July, condo sales increased 29% from the same month last year -- from 14 units in 2010 to 18 in 2011. While average selling price decreased slightly, the more important $/square foot increased 6% from $298 to $317. In general, units were slightly smaller and older than during the prior year period. Average days on market dropped 7% from 74 to 69.

July 2011 MLS Downtown Condo Sales Statistics
Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Jul-10

14

$338,192

$298
1,121
1999
96%
74

Jul-11

18

$320,417

$317
1,004
1994
96%
69

Change

29%

-5%

6%
-10%
-5.00
0%
-7%

The July data shows a couple of interesting trends. First, 15 of the 18 units were priced under $400,000, again demonstrating that value buyers are driving most of the transactions. However, there was only one unit sold for less than $200,000 -- showing that the supply of very low price units is dwindling as the market heats up.

The sales were in a variety of projects. As usual, the biggest seller was one of the biggest projects: six units were sold in 360 during the month. Shore was next with 3 sales and Nokonah with 2. The remaining seven sales were in seven different buildings. The most expensive unit sold during the month was in Spring: a giant 1,700+ square foot 3/3 which sold for $730,000 ($428/SF).

As usual, private sales -- which are not reflected in the MLS data -- continued to close at Spring, Four Seasons, the W, and the Austonian.

See the full index here.


Congress Avenue Marriott Marquis to Open in 2015


According to the Austin Business Journal, the controversial 1,000+ room Congress Avenue Marriott on the former site of Las Manitas will open in 2015 as scheduled. The hotel will carry the "Marriott Marquis" brand.

According to the Austin Business Journal, "The Austin Marriott Marquis, which will be owned and operated by White Lodging Services Corp., is scheduled to break ground mid-2012 and will offer 110,000 square feet of flexible meeting space. The hotel’s construction should generate more than 545 full-time construction jobs, and the hotel will employ 750 when it opens, Marriott said.

The hotel, at Congress Avenue and Second Street, will be two blocks from the Austin Convention Center. Plans call for multiple food and beverage venues, 374 underground parking spaces and a 4,500-square-foot fitness center."

The city desperately needs another large convention hotel to attract larger events and the valuable convention revenue that comes with them. Two additional hotel projects are in the works on Congress Avenue as well as a project on Rainey street and a 1,000 room hotel just East of the convention center.

Monarch Apartments Sold

The Monarch apartment complex on fifth street was sold to Windsor Communities this week for a price rumored to be just over $100 million.

The Monarch has an amazingly complex history for such young building. It was a rental building and then a condo project and then a rental building again. When it first hit the market, it took a long time to fill up. Eventually, the building did become fully occupied only to reportedly lose tenants after large rent increases -- as high as 30 - 50% -- for some units previously benefitting from concessions.

And now, the building belongs to Windsor which also acquired Legacy on the Lake this spring. The downtown Austin rental market is very, very strong right now, so additional transactions may occur as sellers take advantage of higher valuations and buyers acquire property to quickly enter the attractive Austin market.

The Monarch
The Monarch Condo Austin Downtown

New 28-Story Hotel Planned for 8th & Congress


According to the Austin Business Journal and the Downtown Austin Blog, a new 28-story hotel is planned for 8th and Congress Avenue. With multiple Congress avenue towers in various stages of planning, this newly-proposed tower is the latest sign that Congress Avenue will likely be dramatically transformed over the next decade.

According to the Austin Business Journal, "Austin developer David Kahn has applied for a zoning change to construct a 28-story structure that would house a boutique hotel, offices, three restaurants and a coffee bar.

The plan calls for a 210-room hotel and 100,000 square feet in office space on the land now occupied by the historical Bosch-Hogg Building. Kahn, managing partner for Colina West Ltd., needs a zoning change to allow for a larger building than is currently permitted for that site."

While no formal plans have been filed, more details will certain emerge as the project proceeds through the formal zoning and planning process.






The Downtown Parking Controversy Continues


It's been an ongoing debate: when should downtown street parking be free and when should the City require payment?

For a long time, the City has operated meters from 8:30am - 5:30pm Monday - Friday. In March, the City Council voted to extend these hours to midnight downtown. One of the reasons for the change was a theory that downtown service workers were taking all of the evening parking and thus displacing paying customers. In reality, there is a ton of paid parking downtown so nobody is being turned away for a lack of a spot. even when an estimated 200,000 people were downtown for the peak day of SXSW, very few of the garages were full.

With paid parking, there is no new capacity created, just additional paid spots and fewer free spots. Eliminating free parking may help short-term evening parkers save some money, but it doesn't really help many people looking to park downtown. It does, however, generate lots of money for the City as well as additional ticket revenue.

Now, the Austin Chronicle is reporting that Kathie Tovo "and ally Laura Morrison – the only member to dissent on the admittedly unpopular change – will push to delay the pay parking expansion." Since the changes haven't yet taken effect, momentum is now building to stop the extension from becoming effective.

According to the Chronicle, "News that the change might be revisited came to the Hustle's attention via Austinites Against Metered Parking Extension Downtown, a new group opposing the change. In a press release, the group announced it "has secured the promises of Council Member Laura Morrison and newly elected Council Member Kathie Tovo, to cosponsor an agenda item to repeal, modify, or delay the meter extension ordinance."

Tovo tells us AAMPED has it right, mostly. "Laura Morrison and I are exploring the possibility of bringing forward a resolution to delay implementation of the parking changes until we can have a fuller public discussion, with Downtown workers and others we feel will be negatively impacted by the extension of parking hours," she says. "I believe that earlier decision was made without a full public discussion." The item's since been posted on council's July 28 draft agenda."

We'll see how the parking debate unfolds. Given that very few people benefit from the change, it is likely that opposition will continue to build.

Exclusive: June Condo Sales Set New Record

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for June, 2011. While prices remained flat during the month of June, an amazing 29 downtown Austin Condo sales crossed the MLS. This is a new one month record for our market index. The June results are very interesting, they show renewed market strength at the low end of the market but include almost no units from the projects completed during the last year.

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Jun-10

18

$387,241

$324
1,160
1999
95%
100

Jun-11

29

$319,051

$324
984
2000
97%
55

Change

61%

-18%

0%
-15%
1.00
2%
-45%

When compared with last year, volumes were higher, units were smaller, and average days on market was significantly shorter. With 29 sales during the month, volumes were up 61% over the prior year period. While prices were down 18%, the price drop is entirely the result of mix and not an absolute price decline resulting from buyers selecting smaller, less expensive units. Price per square foot remained constant year-over-year at $324.

Our 12-month rolling sales index also showed new records. The rolling index looks at 12-months of sales to adjust for seasonality. With June sales factored in, the index set a record for average monthly sales (more sales), age of units (newer units), % ask (higher), and average days on market (lower). Together, these records show that the Austin condo market is gaining strength on the low end. On the high end, most of the sales remain private off-mls transactions through the W, Austonian, and Four Seasons. As a result, it is hard to know if those sales are gaining momentum.

June sales were led by 360 with 7 sales, Milago with 5 sales, the Shore, Railyard, and 555 each had 3 sales during the month. In addition, one 840 square foot unit was sold in the W for $642 / square foot. Interestingly enough, the median price during the month was $342K. On the high end, 3 units sold for more than $500K but none for more than $1 million. On the low end, 5 units were sold for less than $200K with the least expensive unit selling for just $139,000.

See the full index here.

Forbes Names Austin #1 Boom Town for the Next 10 years

A Forbes Article ranking "the Next Big Boom Towns In The U.S." ranked Austin as the #1 best positioned city in the U.S. to "grow and prosper in the coming decade?"

"To determine the next boom towns in the U.S., Forbes, with the help of Mark Schill at the Praxis Strategy Group, took the 52 largest metro areas in the country (those with populations exceeding 1 million) and ranked them based on various data indicating past, present and future vitality.

We started with job growth, not only looking at performance over the past decade but also focusing on growth in the past two years, to account for the possible long-term effects of the Great Recession. That accounted for roughly one-third of the score.  The other two-thirds were made up of a a broad range of demographic factors, all weighted equally. These included rates of family formation (percentage growth in children 5-17), growth in educated migration, population growth and, finally, a broad measurement of attractiveness to immigrants — as places to settle, make money and start businesses.

We focused on these demographic factors because college-educated migrants (who also tend to be under 30), new families and immigrants will be critical in shaping the future.  Areas that are rapidly losing young families and low rates of migration among educated migrants are the American equivalents of rapidly aging countries like Japan; those with more sprightly demographics are akin to up and coming countries such as Vietnam.

Many of our top performers are not surprising. No. 1 Austin, Texas, and No. 2 Raleigh, N.C., have it all demographically: high rates of immigration and migration of educated workers and healthy increases in population and number of children. They are also economic superstars, with job-creation records among the best in the nation."

Forbes confirms what many studies have shown: Austin's demographics are as good as they get. With strong population growth, a strong economy, job growth, a well educated population, and a stable housing market, the city is expected to experience a very strong decade of growth.

New: 2011 Urban Lifestyle and Residential Guide (Free)

I just received my free copy of urbanspace's most recent Urban Lifestyle and Residential Guide (Get it here for free). The 2011 edition was just released and includes profiles on more than 100 condo and rental projects near Austin's urban core. It is the most comprehensive list of cool places to live that we have seen. In addition, it includes hundreds of great urban spots across downtown and adjacent neighborhoods.

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

2011_Urbanspace_book

You can get your free copy of the Guide here.

W Opens Again


The W Austin Hotel has officially reopened its doors. According to a media statement, all guest rooms, the AWAY Spa, and TRACE are now open.

Over the last week, 12 two-man repair crews have been working to remove more than 1,000 glass balcony panels and replace them with newly fabricated wood panels. 

The hotel was closed after glass balcony panels shattered in place and fell, breaking two panels directly below, and sending glass into the pool area, which was closed.

Workers removing panels at the W in Austin
w_window_replacement

W Condo Owners Exempted from Evacuation

Yesterday, W Austin hotel guests were abruptly evacuated and the hotel was indefinitely closed as balcony glass fell to street for the third time in three weeks.

While hotel guests were forced to evacuate and relocate to another hotel, some condo owners still remain in the building. As owners, the residents have the choice as to whether they stay in the building or relocate until the issue is resolved. Owners who choose to stay in the building during the repair period will not have access to their balconies.

W Austin Media Statement on Buiding Closure

W Austin Media Statement by Beau Armstrong, CEO Stratus Properties:

Today as you know, another glass balcony panel at the W Austin building shattered in place and fell, breaking two panels directly below, and sending glass into the pool area, which was closed. The entire team here at the W couldn’t be more devastated that this has occurred, but unfortunately after consulting with numerous experts we still do not know why this has happened.

So here’s what we’re doing. We are replacing every piece of balcony glass on the building. To do this safely we are working with the City to:

1.     Shut down several lanes of traffic around 3 sides of the building. This will mean some delays on Lavaca, Third and Guadalupe until the panels on those sides of the building can be removed. We apologize for any inconvenience but our first priority is public safety.

2.     Close the sidewalks entirely around the building until protective pedestrian walkways are installed.
We are also working to relocate current and future hotel guests, and closing the hotel until further notice. We’d like to thank our local hotel partners in advance for welcoming our guests and helping us during this difficult time.

We have experts and the City of Austin on site to ensure this work is done safely and as expeditiously as possible. Safety is our top priority.

Again, the entire team is devastated by these incidents, and we apologize to our hotel guests, our residents, our neighbors, and to the City. We will make this right.

W Austin Evacuated and Closed After Glass Falls to Street

The W Austin was abruptly evacuated and closed today as glass fell to street for the third time in three weeks.

The glass fell from the South side of the building just one day after three panels dropped to the street. Two weeks ago a pair of panels feel to the pool area while guests were present.

Luckily, nobody has been injured in the incident. The developers have already announced plans to replace almost 1,000 glass panels on the building's balconies.

Now, the sidewalk is closed and guarded as crews clean shards of glass from the perimeter of the building. The developer has not yet announced plans and timeline to fully address the issue and to reopen the hotel.

New 50-Story Modern Hotel Proposed for downtown, Battle with Marriott Begins

Last week, we reported that 1,000+ room Congress Avenue Marriott was back on-track. The project has been highly unpopular: the architecture is bad, the building lacks clear plans for ground floor retail, and the initial project resulted in the demolition of popular business such as Las Manitas. The building risks draining the life from a key downtown block connecting the 2nd street district to the convention district and 6th street on the East side of Congress. The developers caused additional controversy last week by requesting the waiver of more than $4 million in city fees to build the project.

The city needs a big new hotel to lure convention business and this has given the Marriott developers leverage as the only big budget project on the blocks. That is -- until now. This week, a San Diego development firm announced plans to build a 50-story 1,000 room hotel on the other side of the convention center.

The newly proposed project on Waller Creek provides a great alternative for the City: the architecture is interesting, the block is the ideal site for a large hotel between the convention center and I35. The developers are not aggressively pushing for fee relief from the City. The hotel would be the second tallest building in Austin after the Austonian.

New Waller Creek Hotel Rendering

Here is a summary from the Statesman:

"A San Diego hotel developer plans to build a $350 million hotel with more than 50 stories and 1,035 rooms east of the Austin Convention Center. The hotel would be built on land now used for parking at the northeast corner of Red River and Cesar Chavez streets, near Waller Creek.

Manchester Texas Financial Group could find itself in competition with White Lodging Services Corp., which plans a 1,003-room Marriott Marquis hotel on Congress Avenue between Second and Third streets.

It's unclear whether Austin could support two more convention-size hotels, in addition to the 800-room Hilton Austin, so the developers could be in a race to see who can break ground first.

Manchester Texas would develop the hotel. Its parent, San Diego-based Manchester Financial Group, built the Manchester Grand Hyatt and the Marriott Hotel and Marina in San Diego, high-rise hotels on San Diego Bay.

The Austin project would include 115,000 square feet of meeting and exhibit space, along with two restaurants and retail space.

Douglas Manchester, founder and chairman of Manchester Financial Group, said Friday that the project has been going "at a pretty fast speed" and that he anticipates starting construction in the next 12 months. The project would take at least 18 to 24 months to build, he said. He said Manchester Financial can put the required equity into the project and attract the loans to complete it."

Uh oh: The Dreaded 1,003 Room Downtown Marriott Might be Built

Almost a year ago to the day, the Austin City Council enacted a zoning change and turned over a public alley in the most effort to lure a major convention hotel to Block 18 -- the Congress Avenue block that used to house Las Manitas and which was at one point going to be taken over by a very large Marriott hotel. A year ago it seemed the unpopular project was dead forever, now it is reported that the 30-story hotel project across from the Austonian is likely to start construction next year.

The Congress Avenue Marriott -- a 1,003 room hotel complex on 2nd and Congress avenue -- was one of the most controversial, and one of the least popular downtown projects when originally proposed. The project is best known for displacing Las Manitas and other local businesses. Before being cancelled, the last two versions of the project were criticized for bland institutional architecture and a lack of ground-floor retail on a key block connecting the convention center area to the second street district. The original plan for the project included 1,000 rooms across 3 separate Marriott-branded hotels in one convoluted multi-faceted building. The second version of the project included two hotels in one building. Version 3.0 included just one Marriott hotel with 1,000 rooms. The budget at one point reached $250 million before the project was shelved.

Now the project is back. If the city agrees to waive $4.3 million in fees, White Lodging Services Corp. plans to begin the design and engineering process for the project almost immediately. Once completed, the 27-30 story block wide tower would be the largest hotel in Austin.

The Downtown Marriott as Originally Proposed
New Downtown Austin Marriott on Congress Avenue

The sad thing is that the city does badly need downtown hotel rooms and another large convention center hotel. The issue with the Marriott project as previously proposed is that -- unlike the highly popular W hotel -- the hotel is monolithic, architecturally uninteresting, lacks retail, fails to engage the surrounding streets, and brings no community venues or resources. It comes across as a pure profit play subsidized by tax payers and without regard for the advancement off the neighborhood.

Downtown "Startup District" Proposed

Technology startups have played an important role in driving the Austin economy. Home-grown companies like Tivoli, HomeAway, and Solarwinds have become major local employers.

In an effort to build a stronger community around startups with the hope of nurturing more entrepreneurs to success, the Statesman reports that "Austin may soon get a downtown startup district similar to those that have thrived in Silicon Valley and Boston."

According to the Statesman:

"The Greater Austin Chamber of Commerce is launching an effort to create Austin Live, a downtown work space that could serve as a home base for entrepreneurs and very early stage startups.

A search is under way for 10,000 square feet of space for the initiative, said Gene Austin , CEO of Convio Inc. and chairman of the chamber's Greater Austin Technology Partnership, which is overseeing the project.

Austin Live would feature an open floor plan and a coffeehouse environment, and it would provide a place for people to plug in their laptops and exchange ideas.

"The idea is to give entrepreneurs a better runway to get out of the tough stages of going from an idea to a real business," Austin said. "It's hard to make connections when you're working from your garage. We'd like this to become a magnet for funding. Hopefully, it will become a centerpiece for a much stronger tech ecosystem."

Chamber leaders are talking with other startup districts about playing a role in Austin Live. It's possible that instead of charging for space, service providers such as legal and accounting firms or venture capital firms could underwrite expenses, organizers said.

Many details are not yet decided, including who would operate the space and recruit tenants, and how it would be funded. The chamber's role now is helping find the location."

Wow! Strong April & May MLS Condo Sales & Price Appreciation

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for April and May, 2011and the results are very, very good. With 42 MLS sales during the two month period (and as many as 40 non-MLS sales in May alone), our twelve month tracking index showed it's highest average sales price ever: $368,929. The new record was the result of both price appreciation and a shift in mix to higher-priced units.

In April, 18 units sold for an average price of $387,508 -- a 29% increase in sales, 32% increase in average price, a 4% increase in $/SF and a 23% decrease in average days on market. While May sales volumes were level with last year, sales prices increases by 35%, $/SF by 15%, and average days on market dropped by 49% to 60-days. Overall, the units sold this year were newer, bigger, and more expensive than the units transacting a year ago.

April 2011 Condo Sales
Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Apr-10

14

$294,263

$273
1,061
1985
96%
128

Apr-11

18

$387,508

$284
1,302
1989
96%
98

Change

29%

32%

4%
23%
4.00
0%
-23%

May 2011 Condo Sales

Month

Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
May-10

24

$258,967

$285
934
1976
96%
118

May-11

24

$349,329

$327
1,041
2000
97%
60

Change

0%

35%

15%
11%
24.00
1%
-49%

During the two month period, sales prices ranged from $100K to $1.2M. 7 units sold for less than $200K, 31 sold for $200K - $500K, 2 from $500K to $1M, and 2 units for more than $1M. The two units that sold for more than $1M were both in the Nokonah. It is interesting to note that more than 90% of sales were for less than $500K and that the big dollar transactions are almost all happening off the MLS in new projects like the Austonian, W, and Four Seasons.

The most units sold were in 360 -- the largest downtown Austin condo project and one of the most desirable -- with 12 units selling for an average of $392 / square foot. After 360, five buildings each saw 3 sales during the two month period: Sabine, Nokonah, Greenwood, 904 West Ave, and Milago.

As usual, private sales -- which are not reflected in the MLS data -- continued to close at Spring, Four Seasons, the W, and the Austonian. April and May are the beginning of the peak selling months and, so far, the trend looks good. Year-to-date, sales are up to 75 units over 71 last year thanks to a strong April.

See the full index here.


DAB Reporting 40 New Building Closings in May

The Downtown Austin Blog is reporting that an amazing 40 units closed in May in the major new construction downtown projects.

Here are the reported May closings by building:

W Residences: 15 in May (Est. 51 now closed)
Barton Place: 12 in May (Est. 90 now closed)
Austonian: 4 in May (Est. 60 now closed)
Spring: 4 in May (Est. 208 now closed)
904 West Ave: 3 in May (Est. 6 now closed)
Four Seasons Residences: 2 in May (Est. 68 Closed)

This is an amazing pace of sales and shows renewed strength in the downtown market. Note that the total numbers are estimated --- it's very difficult to get accurate counts from some of the buildings -- especially the Austonian.


AISD to Sell Downtown Headquarters

AISD has announced that it is putting it's 5-building 128,000 square foot downtown headquarters on the market for $32M. The building could easily be converted to commercial and retail use.

The headquarters building has long created a void on sixth street where its retail-less ground floor occupies a critical block just west of Lamar. The building goes through the block to fifth street.

AISD has decided to sell the buildings to help close a large budget gap. The value of the building has appreciated significantly over the last decade and provides an opportunity for the district to use the gains to close the budget gap without having to cut educational programs. The district has stated that they will only sell the building at the right price.

AISDHQbuilding

Top Downtown Austin Condo Projects Report Slow Sales

New data from four of the top five newly constructed downtown condo projects (the Austonian won't release data) suggests that sales have been remarkably slow over the last six months at W Residences, Four Seasons, and BartonPlace and that many buyers who entered into contracts have failed to close. At BartonPlace, for example, 15 fewer units are reported sold or under contract than 6 months ago. Spring, in contrast, has seen a dramatic surge in sales with more than 201 units closed -- more than the other projects combined -- and 14 additional units under contract.

Here is the data:

Spring
Now: 215 / 248 units sold or under contract (201 sold & 14 under contract)
Last September: 158 / 248 units sold or under contract
Change: + 57 units sold or under contract

W Residences
Now: 86 / 159 units sold or under contract (40 sold & 46 under contract)
Last September: 84 / 159 units sold or under contract
Change: + 2 units sold or under contract

Four Seasons
Now: 79 / 148 units sold or under contract (68 sold & 11 under contract)
Last September: 77 / 148 units sold or under contract
Change: + 2 units sold or under contract

BartonPlace
Now: 139 / 270 units sold or under contract (85 sold & 54 under contract)
Last November: 154 / 270 units sold or under contract
Change: - 15 units sold or under contract

While there are many possible reasons for the weak sales trend, the most likely explanation is that many of the projects saw early contracts fall through. While anecdotal evidence suggests sales have been picking up, financing issues and skittish buyers are apparently continuing to walk from their original contracts.

At the W, the large number of residences under contract is likely due to the fact that not all of the units are ready for occupancy. At Spring and Four Seasons, there is only a small number of units under contract. At BartonPlace, a surprisingly large number of units remain unclosed despite the fact that the project has been completed for quite a while.

Spring continues to do well. With many reasonably priced units, a prime downtown location, and a tall & attractive design, the building has hit the same market sweet spot that led 360 to rapidly sell out. At the current pace, the remaining Spring units will be gone by the end of the year.

54% of Four Seasons Condos Sold

According to the Statesman, the Four Seasons Condominiums has 54% of it's 148 units sold or under contract.

The article reported that:

"In a securities filing, Post said that, as of April 29, 68 units had been sold and 11 more were under contract.

The 32-story Four Seasons is east of the Four Seasons Hotel on Lady Bird Lake.

The units range in price from the $400,000s to more than $4 million.

Post also has a new condominium project in Atlanta. The company said in the filing that once it sells out the Austin and Atlanta projects, it will not launch anymore condominiums but will focus on its core apartment business.

Post is building a $41.7 million apartment complex on South Lamar Boulevard, with 298 units and street-level retail."


Seaholm Becoming Essential Downtown Music, Art, Party Venue

Over the last three weeks, it seems that there has been a different party or event at Seaholm, the decommissioned art deco power plant in the heart of downtown, almost every night.

During the innovative Fusebox arts festival, Seaholm was busy as a music and post-event party venue into the early morning hours. With great lighting and pop-up bars inside and a line of food trailers outside, the large Seaholm main space was often filled with people.

Fusebox Performance at Seaholm (Photo by Paul J. D'Arcy)
photo

While future plans have not been released, the building is slated for use as a community or cultural space as part of the massive redevelopment of the blocks between Lamar and San Antonio just north of the lake. With tight commercial lending requirements, there is no current timeline for redevelopment of the Seaholm or adjacent Green Water Treatment Plan (now decommissioned and demolished) sites.

UrbanOutfitters to Open in Prime W Retail Space

While the W has been open a for a few months, the prime second street retail space under the ACL Moody Theater has remained boarded up. As the center of second street gravity shifts to the W, the large new retail spot is one of the most valuable in Austin.

Now, Urban Outfitters has signed a ten-year lease for the 9,931 square foot space with plans to open a new store soon. The presence of a large well-known retailer will likely increase shopping traffic to the 2nd street district, hopefully benefitting all of the neighborhood's stores.

Also opening is the new Violet Crown theater a block West of the W. The independent theater features 4 screens, reserved seating, a bar & cafe, and free parking.


Waller Creek Project to Make Downtown Austin 11% Larger

For many years, downtown Austin visionaries have talked about the potential of Waller Creek and the adjacent floodplain that runs north to south though the East end of downtown. Through a massive tunnel project, work is underway to control the creek and thus remove a contiguous 28 acres from the floodplain, essentially increasing the size of downtown Austin by 11% by allowing development for the first time ever. Now, there is talk of a San Antonio-esque river walk or a string of parks to fill this amazing new space.

To this end, a new not-for-profit, the Waller Creek Conservancy, was founded in 2010 to help steward Waller Creek by playing a vital role in the preservation, redevelopment and maintenance of the creek's surrounding parks, nearby businesses, adjoining neighborhoods and community at large. The Conservancy was founded by Tom Meredith, former chief financial officer of Dell, Inc., Melba Whatley, who runs MDW Interests, a private oil, gas and real estate investment firm, and Melanie Barnes, a philanthropist and lawyer. (www.wallercreek.org).

This week, the Waller Creek Conservancy and the City of Austin agreed to a unique public-private partnership with the goal of creating and implementing a master plan for downtown property that will be removed from the floodplain when the Waller Creek tunnel is complete.

The city and the Conservancy have each contributed $400,000 as seed funding for the effort, which is anticipated to be a 30-year project. The Waller Creek Conservancy anticipates raising about $60 million from private donors and foundations to fund the development and design of Waller Creek. The specific amount of funds raised will depend on the chosen design.

"Our purpose, simply put, is to serve as the steward of Waller Creek," Meredith, chairman of the Waller Creek Conservancy, said. "The only way to fulfill that goal is by playing a vital role in the preservation, maintenance and redevelopment of the creek and its surrounding parks, nearby businesses, adjoining neighborhoods and community at large."

Ground was broken on the Waller Creek tunnel in April. "The tunnel will finally provide what the area has needed—plumbing that will solve the flooding problems that have plagued landowners for years," Whatley, president of the Waller Creek Conservancy, said.
The 28-acre property to be master planned runs from about 15th Street down the Waller Creek watershed to Lady Bird Lake. It encompasses three existing parks—Palm, Waterloo, and Centennial—and can accommodate at least two additional parks. In addition, the property involves such diverse neighbors as: The University of Texas of Austin, the University Medical Center at Brackenridge, entertainment, housing, hospitality, business, retail, open space and recreational spaces. Much of the property is currently undeveloped because of the severe flooding issues.

"We have an opportunity to create a space for Austin that won't come along again in our lifetimes," Whatley said. Whatley said the Waller Creek Conservancy would work on and help fund such issues as financing, design and planning and implementation.
The Conservancy will work closely with the City of Austin to enact policies that support the implementation of a master plan while simultaneously launching an aggressive fundraising plan to finance the rehabilitation of the creek, three public parks and other public amenities.

"An important thing to note is while we're embarking on something Austin has yet to do on this scale, we're not reinventing the wheel," Barnes, secretary and treasurer of Waller Creek Conservancy, said. "We've carefully studied other conservancies that oversee places such as Central Park in New York, Millennium Park in Chicago and Discovery Green in Houston—and are using their success as a template for how we can accomplish similar objectives here in Austin."

The Conservancy will launch an international design competition in September to solicit concepts from teams of landscape architects, architects and artist. The competition, spearheaded by Portland, Oregon, architect Donald J. Stastny, FAIA FAICP FCIP, will assemble a jury of design professionals to narrow the field of entries to about eight contenders by November. The jury will then select approximately four finalists to be announced in December, and the winner will be announced in May 2012.

The Waller Creek tunnel is a $146.7-million project that has been 30 years in the planning. When it is completed in 2014, it will funnel floodwaters into Lady Bird Lake, freeing up about 11 percent of downtown Austin from the floodplain.

800 Foot 5th & Congress Super Tower to Return?

According to the Austin Business Journal, Tom Stacy (a veteran Austin developer) and Walton Street Capital (a $12B investment firm) are revitalizing plans for two dramatic downtown buildings on a key downtown block bound 5th and Congress.

According to the Report, "Developers are moving forward with plans for two new mixed-use towers and a parking garage downtown. . .The new towers are planned for the same block bound by Brazos and 5th Street, plus a half block across the street. Construction on the first phase — the parking garage — is slated for early 2012. Officials said in 2008 they would invest half a billion in the development. One building will be 500,000 square feet and slightly taller than the 26-story Bank of America building, they said at the time. The other was slated for a hotel and condo tower rising more than 800 feet, plus 1,000-car garage, previous reports said."

We reported extensively on the original project when it was first announced. Although the details are likely to change dramatically between the first proposal and anything built today, the original plans called for a 925,000 square feet mixed use building which would be the largest downtown Austin project at nearly twice the square feet of the Frost Bank Tower. The project (rendering below) was to be designed by the world-famous architecture firm of Pelli Clarke Pelli, who also designed the Petronas Towers, once the tallest buildings in the world, and the Museum of Modern Art and Museum Tower in New York City.

Original Rendering of 5th & Congress


The original plans called for the project to include 100,000 square feet of retail on the first three floors, 250 room luxury hotel and up to 350 "affordably priced" apartments and condominiums. While many of the details were still up in the air at the time the project was shelved, the project continued to grow in scale after its original proposal. The plans also included a 12-story parking garage one block away. The original building would have soared 110 feet above the Austonian to be the tallest building in Austin and was to include condos on the highest floors.

Will see what similarities exist between the original proposal and whatever new plans evolve for this very important downtown site.

Exclusive: March Condo Sales Fall, Prices Increase

After a super strong February, downtown Austin condo sales fell 28% in March from the prior year period. Last month, we asked whether strong February sales was a trend or an anomaly. With the data in, it seems that the market has not strengthened from last year. For the first quarter, 33 units were sold -- one more than during the same period in 2010.

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for March, 2011. During the month, sales decreased 28% fro the prior year period with 13 units recorded vs. 18 during March, 2010 and 14 in February of this year. Pricing was up 3% over 2010 with $/SF at $325 which is, however, $27 higher than the 12-month rolling average.

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Mar-10

18

$476,403

$316
1,469
1996
93%
115

Mar-11

13

$414,385

$325
1,234
1997
96%
114

Change

-28%

-13%

3%
-16%
1.00
4%
-1%


March was, however, a strong month for 360 sales. 5 of the 13 units sold were in 360 and they sold at an average of $359 / square foot. Two units sold in Brazos Place and Austin City Lofts. The remaining units were in the Shore, Plaza Lofts, Nokonah, and Milago. The most expensive unit transacted was a 2,747 square foot 2/2 in Austin City Lofts which sold for $1.08 million. Four units sold for more than $500K during the month and 2 units (both in Brazos Place) sold for less than $200K. For the first time in recent memory, all of the units sold were in buildings that were built or converted to condos in the last 10 years.

As usual, private sales -- which are not reflected in the MLS data -- continued to close at Spring, Four Seasons, the W, and the Austonian. January and February are typically slow months -- we'll watch closely as March results provide a clearer picture of the direction of the downtown Austin condo market -- and see if the acceleration is more than a one month trend.

See the full index here.


Exclusive: Building-by-Building Sales Analysis



We've received a few requests for detailed sales statistics by building. In response, we have re-run the 2010 MLS sales numbers to provide a more detailed picture of sales for all of the major condo projects -- at least all the projects that had at least two completed sales on MLS.

The statistics include the average price, price per square foot, size, sales price as a percentage of the asking price, and the average days on market. In addition, we've provided the sales statistics for the least expensive and most expensive unit sold in each project.

In 360, for example, 38 units sold on MLS in 2010 for an average price of $375,779 and an average $/SF of $378. Interestingly enough, the most expensive unit was a penthouse that sold for $1.45 million for 2,022 square feet or $717 / square foot. It's unusual to see such a high $/sf spread in a single project.

Here are the full building-by-building statistics for the top downtown Austin Condo projects:

360 Condominiums
38 units sold in 2010

Average Unit
Avg $: $375,779
$ / SF: $378
Avg SF: 960
% Ask: 96.9%
ADOM: 115

Least Expensive Unit
Min $ $240,000
SF 744
$/SF $323

Most Expensive Unit
Max $ $1,450,000
SF 2,022
$/SF $717


Austin City Lofts Amd
7 units sold in 2010

Average Unit
Avg $: $674,643
$ / SF: $373
Avg SF: 1,813
% Ask: 94.4%
ADOM: 100

Least Expensive Unit
Min $ $410,000
SF 1,482
$/SF $277

Most Expensive Unit
Max $ $1,050,000
SF 2,997
$/SF $350

Much more data after the jump!
Read More...

26-Story "Congress Sliver Hotel" Approved by City Council

According to the Austin Business Journal, "Austin City Council on Thursday approved special zoning to allow the transformation of a historic Congress Avenue building into a boutique hotel."

Under the new plans, developers will build a 26-story 130 room hotel and restaurant on top of a small 120-year-old Congress Avenue building. The project could begin construction as early as this summer and may take 18 months to complete. As the only hotel on Congress Avenue, the project will bring additional people and life to the most important downtown street.

Renderings of the new hotel tower proposed for 416 Congress Avenue
416_Congress.pdf_page_17_of_26-20110118-135014

As we have reported, the boutique hotel will integrate the 1893 Romanesque facade into a new 26-story tower designed by prominent Austin architect Dick Clark. The building is essentially a "sliver tower" -- an extremely small footprint tall building designed to fit over a tiny lot occupied b a small building. In this case, the average floor plate will be just 3,500 square feet or 50 by 70 feet. Other cities, such as New York City, prohibit the construction of these sorts of towers. For Austin, which is eager to expand downtown development, to add downtown hotel capacty, and to revitalize Congress Avenue, the project will likely be attractive.

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

The new hotel will be built on this site: 416 Congress Avenue
Congress Avenue Austin Boutique Hotel

Additional Schematics show how the new structure will integrate the existing facade
416_Congress.pdf_page_24_of_26-20110118-134932


Whitley Printing Site Under Contract for Possible Apartment Project

According to the Statesman, the former Whitley Printing Co. building site on third between Brazos and San Jacinto is under contract to Riverside Resources which is evaluating plans to build an apartment complex on the site.

Screen shot 2011-03-24 at 10.38.45 PM

The Whitely site is one of the last remaining prime downtown building sites. The lot is on a key downtown block and is free of capital view corridor restrictions. The lot had been previously optioned for the first iteration of 21c, a 44-story hotel and condo project that was later relocated and then put on hold.

While condo projects are currently very difficult to finance, the apartment market is Austin is very strong. Existing downtown projects are almost fully occupied and rents are rapidly rising.

Does Downtown Feel Crowded? SXSW = 13K People, F1 Racing = 300K People

St. Patrick's Day 2011 may have been the most crowded that I have ever seen downtown. With SXSW music in full force, a packed free concert for the Strokes at Auditorium Shores, and a steady stream of locals headed downtown to celebrate St. Patrick's Day, downtown was absolutely crazy.

This year's SXSW music festival packed downtown with 13,000 paid attendees. The interactive festival attracted just over 19,000 paid attendees. In 2012, it's expected the first Formula One race in Austin could attract as many as 300,000 attendees.

If you think downtown was crowded this week, what will happen when 20x the number of people appear at one place for the first race? While good for the economy, the traffic will likely set new Austin records.

Another issue remains hotel rooms. Today, the City has 29,378 hotel rooms in the City Limits. To hold SXSW attendees, the festival organizers contracted with 73 hotels. When they were full, they scrambled to find another 400+ rooms in the region.

While crazy, downtown was also the most alive that I have ever seen it. It provided a clear vision of the life that a few thousand more downtown residents could bring to downtown, and the inevitable restaurants, retails, bars, and offices that would follow to support the new crowds. As people continue to flock to the region and Austin events get bigger and bigger, there will inevitably be more busy nights downtown.

First W Austin Condo Sale Prices Hit MLS

As condos in the W Residences begin to close, the first two units have hit the MLS. For buyers looking at the W, this is one of the first public signals of the building's market value. The units were:

23rd Floor
1,169 Square Feet
1 Bedroom / 2.5 Baths
$570,984
$488 / SF

22nd Floor
3,498 Square Feet
3 Bedroom / 3.5 Baths
$2,035.000
$582 / SF

In addition, a second Austonian unit also appeared on the MLS list of February sales:

23rd Floors
1,609 Square Feet
2 Bedroom / 2.5 Baths
$950,000
$590 / SF

Exclusive: Condo Sales Soar in February

There is lots of evidence that the Austin real estate market should be improving: inbound migration rates are extraordinarily high. Job growth is back. Inventory is declining. Rental rates are soaring. February's sales provide the first evidence that the market may be improving.

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for January and February, 2011. In January, the market was flat -- 6 units were sold at a slightly higher average price but a slightly lower price per square foot. Average days on market was very long.

January 2011 MLS Downtown Condo Sales Statistics
Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Jan-10

6

$274,547

$291
953
2005
96%
127

Jan-11

6

$289,650

$265
1,086
1989
98%
139

Change

0%

6%

-9%
14%
-16.00
2%
9%

February 2011 MLS Downtown Condo Sales Statistics

Month

Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Feb-10

8

$291,938

$292
1,002
1979
94%
50

Feb-11

14

$460,327

$353
1,128
1996
97%
143

Change

75%

58%

21%
13%
17.00
3%
186%

In February, however, sales increased dramatically as units transacted soared by 75% from 8 to 14 while absolute prices and $/SF increased substantially. In general, the units were newer and bigger than prior year sales. The results included two sales at the W Residences ($582/SF & $488/SF) and one at the Austonian ($590/SF) which helped to boost the averages. In addition, four units sold at 360, two at Milago, and one at the Shore as well as one each in four older buildings: Cambridge, Greenwood Towers, Westgate, and Penthouse condos.

The February data shows how diverse the inventory has become: with sales prices ranging from $91,500 to $2,035,000, $/SF ranging from $189 to $590 and size ranging from 485 SF to 3,498 SF. Half the units sold were under $350K and half were over $350K. Four units sold for less than $200K and one unit sold for more than $1 million.

As usual, private sales -- which are not reflected in the MLS data -- continued to close at Spring, Four Seasons, the W, and the Austonian. January and February are typically slow months -- we'll watch closely as March results provide a clearer picture of the direction of the downtown Austin condo market -- and see if the acceleration is more than a one month trend.

See the full index here. (Note: original story corrected with updated data)

Report: Downtown Rents Soaring

We're hearing reports of soaring rents in high-end downtown Austin rental buildings like the Monarch, Ashton, and AMLI. In one case, a tenant's recent renewal resulted in a 30% increase in the market rate and the elimination of concessions. In total, this meant a rent increase of more than 50%.

While downtown rental properties struggled to find tenants a few years ago, all of the major buildings are now full. Vacated units are re-leased with amazing speed -- turnovers now average just a few days between tenants. With many new residents and few new units, supply and demand is pushing rents higher very quickly.

With no new projects in site, rents are likely to continue to in crease as new people migrate to Austin and financing for condo buyers remains difficult to obtain.

Austin Population Explosion Continues

Austin's population continues to rapidly grow. For real estate owners, this may be good news -- increasing population with static supply often means price appreciation. While real estate prices in Austin have stayed relatively flat, rental rates are beginning to soar. Over the next few years, as the population is predicted to continue to soar, central Austin real estate prices may well follow.

The Census is conducted every decade -- this is our first look at the actual Austin results from the last 10 years.

Here are some key statistics on growth over the last decade:

- Austin's population grew by 20.4% to 790,390
- Travis County's population grew by 26.1 percent to 1,024,266
- The five county Austin area saw population increase by more than 500,000 people
- Growth in Asian and Hispanic residents drove 71% of Austin's population change
- Texas led the nation in population growth with a 20.6 percent increase to 25.1 million
- 85% of the Texas population now lives on the I-35 corridor (that explain's the traffic!)
- Austin population is 48.7% Non-Hispanic whites, 35% Hispanic, 7.7% African American, and 6.3% Asian. Austin's African American population shrunk from 64,259 to 60,760

Across the State, Houston, San Antonio, Austin, and Fort Worth all saw strong growth. Here are the statistics:

Fort Worth (+38.6%):
534,694 ---> 741,206

Austin (+20.4%):
656,562 ---> 790,390

San Antonio (+16.0%):
1,144,646 ---> 1,327,407

Houston (+7.5%):
1,953,631 ---> 2,099,451

Dallas (+0.8%) :
1,188,580 ---> 1,197,816

The statistics for top cities only tell part of the picture as the most rapid growth over the decade was in the suburban areas outside the official boundaries of the largest cities.

Downtown Austin bucked this trend with tremendous population growth during the decade. While we haven't seen the official 2010 census numbers, a 2009 estimate suggested 44% growth in zip code 78701 between 2000 and 2009.


Downtown Vacation Rentals: Many Delinquent on Hotel Taxes

There are more than 200 Austin vacation rentals currently listed in Austin including units in major downtown Austin condo projects. According to the City, any unit that is rented for fewer than 30 consecutive days and more than $2 / day (Really! $2 / day!) must charge and pay the full hotel tax. Currently, the hotel tax is a very significant 15% composed of two portions: 6% to the state and 9% to the city. On a $2,000 weekly rental, that is a $300 tax bill.

A recent investigation, however, shows that the tax is widely ignored. In a very tight budget year, the City is eager to curtail nonpayment of taxes and the vacation rental industry is a primary target.
The vacation rental industry is growing rapidly. Increasingly, downtown Austin condo owners are listing their units on services such as Homeaway as opposed to offering units in the traditional long-term rental market. With rates of $1,000 - $2,000 per week, a few vacation renters can make a condo owner happy.

But with short-term rentals come hotel tax obligations. The City currently believes that many downtown Austin condo and home owners are not paying the tax that they owe. According to the Austin Chronicle:

"A search of a worldwide vacation rental website in January showed over 200 properties for rent in Austin. However, the Controller’s Office estimates that there are only approximately 80 short term vacation rental property owners registered with the City. OCA was unable to determine whether the short term vacation rental registered with the City match any of the properties listed on vacation rental websites because of the scope limitation discussed earlier in this report.

The properties listed on vacation rental website ranged in size from a studio space attached to a private home suitable for two people to a six bedroom home suitable for fifteen people. The rental rates ranged from $100 to $3,000 per night. In addition, there are other websites where vacation rental properties may be advertised. There may also be properties that the owners do not advertise. Therefore, the short term vacation rental properties not registered with the City could represent a loss of HOT revenue."

The City report makes it clear that the tax must be paid on vacation rentals and recommends that additional steps be taken to notify owners of vacation rentals of the tax obligation and to collect owed taxes.

While it's unclear how much revenue this represents, it's clear that more action is on the horizon to collect unpaid taxes on short term house and condo rentals.



Arthouse Downtown Renovation Featured in Architectural Record

Arthouse, a very cool downtown Arts institution, completed a $4.4 million renovation of it's prime Congress Avenue gallery & office space in October. In the current issue of Architectural Record -- the widest read and most reputable publication for the Architecture trade -- the 20,000+ square foot project is recognized and thoroughly documented.

According to Architectural Record, "More than 4,000 people attended the four days of opening events in October, confirming that Austin is hungry for more cultural as well as visual arts venues. Arthouse may be Austin’s oldest arts organization — it was founded in 1911 as the Texas Fine Arts Association (TFAA) — but it has never been old-fashioned. As an independent, privately funded nonprofit contemporary arts institution, Arthouse shows the work of new artists but does not collect like a museum or represent artists for profit like a gallery. Its programs create opportunities for showing contemporary art and involving the community."

If you haven't been to Arthouse -- you should go --- it's the most interesting and innovative contemporary arts institution in the City - and admission is free.

Here are a few pictures of the project:

Arthouse Austin Congress Avenue

Arthouse Austin Contempory Art Museum Congress

Arthouse Austin Roof Deck Movie

Read the full story and see more pictures and floor plans here.

No More Conventional Mortgages for 23K U.S. Condo Projects

The New York Times is reporting that 23,000 condo buildings are likely to lose FHA lending approval, making it very difficult for condo buyers or owners to receive financing for new units.

According to the article, "stellar credit and steady income will go a long way in helping borrowers secure a home mortgage, but they may not be enough when it comes to buying or refinancing in certain condominium buildings. Stricter guidelines that govern which buildings are approved for conventional mortgages — rolled out by three government agencies in stages since December 2008 — are locking out thousands of buildings nationwide."

With defaults causing massive losses at Fannie Mae and Freddie Mac, the industry is tightening standards to strengthen their balance sheet. According to the National Association of Realtors, 23,000 buildings are likely to lose their FHA approved status over the next few months. Approximately 2,200 buildings have already lost their status. If a project is not on the approved list, it will be very difficult for buyers to get any type of financing.

According to the Times, "Lists of approved buildings are available online at Fannie Mae and the F.H.A.Fannie Mae’s guidelines typically preclude it from buying a new-purchase condo loan from a lender if more than 15 percent of the owners in the condo development are 30 days or more late on monthly maintenance fees."

To be approved by FHA, Freddie, and Fannie, projects must meet the following requirements:

- Th Condo association must set aside 10% of its budget for maintenance and reserves
- New developments are ineligible for financing unless 70% of units have sold or are under contract for Freddie and Fannie and 30% for FHA
- 50% of a building's units must be owner-occupied
- No more than 10% of a building's units may be owned by a single investor

While it's not clear which downtown Austin condo requirements are at risk of losing their approved status, a loss of approval would make units very difficult to sell. The Times article recommends that condo owners review the condo association financials and related forms to ensure compliance.

298 New Apartment Units to Rise on South Lamar

The Austin rental market is very very strong right now. People continue to flood into Austin, and very little central Austin capacity has been added over the last couple of years. In particular, there remains a shortage of units in downtown Austin and in South Austin -- both of which are highly desirable high rent markets.

Now, a new 298 unit apartment complex is set to rise across Lamar from the South Alamo Drafthouse just south of downtown. According to the Austin Business Journal, "The planned Post South Lamar project will total 298 apartment units with an average 852 square feet each. The ground floor will also house about 8,555 square feet of street-level retail space. Officials said they expect to complete the project by the third quarter 2012."

A separate report indicated that the project would include multiple buildings and would be 4-5 stories tall. The project will cost $41M to develop. According to the Statesman, "Austin’s apartment market is booming, as population and job growth create demand. Average rents per-square foot hit an all-time high of 98 cents at the end of 2010, according to Capitol Market Research.
Occupancy rates averaged 94.8 percent, a multi-year high."

The new complex will replace a smaller existing apartment building on the site.

Downtown Austin & Snow

A great picture of a snowy downtown Austin taken this morning! (Photo by Stanford Moore)

Downtown Austin Snow

Large Rainey Street Lot Under Contract

According to the Downtown Austin Blog, a prime lot between Rainey Street and the Mexican American Cultural Center -- just North of River Street -- is now under contract and could result in a new retail or residential development. The Rainey Street District -- located between the convention center and the lake just west of I-35 -- is a historic neighborhood that has come alive with downtown residents, restaurants, and bars. With the Shore, Milago, and Legacy on Town Lake all in the district, hundreds of residents provide a foundation to bring the neighborhood to life.

Despite the neighborhood's rapid transformation over the last two years, there has been very little new development. Most of the changes have come through the adaptation of residential houses to bards and restaurants.

According to the report, "A 0.5702-acre parcel (24,840ft) development site in Downtown Austin’s Rainey Street neighborhood has been placed under contract. The site, 68-74 Rainey Street, is owned by Equity Secured Capital LP and comes with an asking price of $2.5MM.  It consists of three adjacent lots, one is double size, so the total Rainey Street frontage is equivalent to nearly four lots.  At first glance, it doesn’t appear that power-line easements or Waterfront Overlay District create any encumbrances."  

rainey street development site

While anything could happen with the contract, it's another sign that developers have their eye on Rainey Street. The neighborhoods with the most character are often historic and central. For this reason, it was probably inevitable that the Historic Rainey Street neighborhood in the heart of downtown would become a prime target for further development.

Kevin Burns Condo Inventory Analysis

Kevin Burns, the founder of urbanspace, presented some interesting market statistics in his most recent newsletter. Most notably, Spring -- the last moderately priced high rise downtown Austin condo project -- is down to 70 or so units after selling 11 units last month.

Here is Kevin's current analysis of the downtown market:

I attended the Angelou Economic Forecast last week. Angelos Angelou, a very well respected economist, reinforced to his audience that I am not the only one that loves our city.

50,000 people moved to Austin last year and he forecasts 125,000 additional people in 2011 and 2012. He also expects 44,000 new jobs. This large migration to Austin is definitely going to put a strain on our public infrastructure and housing inventory.

Austin is forecasted to have a 17,500 unit shortage of multi-family units and a 5,800 new home shortage over the next two years.

In downtown, we are already feeling the pain due to a lack of apartments. The rental rates are now averaging $1.91/ft. While the average apartment complex downtown is more than 96% leased. The most expensive apartment complex downtown is now 100% leased as of last week. These trends are going to push people into buying as rental rates increase.

All of the condominiums that delivered in 2008 and prior have been sold. The Spring, which delivered in 2009 only has about 70 units left (they sold 11 last month). The Four Seasons, W and Austonian have been selling quite well. Most importantly there are no new condo projects under construction. So our current inventory is all that you can expect in downtown for the next 3-5 years. 


Hike & Bike Trail "Boardwalk" Extension to Proceed

The Austin City Council took an important step to extend the much-loved Hike and Bike Trail surrounding Lady Bird Lake. By authorizing $14.4 million for the trail improvements in the 2010-2011 budget, the City is set to complete the downtown Hike & Bike Trail by building a boardwalk to cover a 1.1 mile trail gap east of Congress Avenue 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 and cross the I-35 frontage roads 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. For bikers and distance runners, it will now be possible to travel nearly 11 miles around the trails. The extension should also be a boon to the parks and neighborhoods that border the trail East of I-35. Since the loop is incomplete and confusing, fewer people utilize the eastern portion of the trail today.

Austin Hike Bike Trail Ladybird Lake Boardwalk Extension

According to the Austin Business Journal, "Austin City Council members Thursday authorized the first $56 million round of transportation projects from the bond package passed last year. The 2011 fiscal year budget amendment injects money from the voter-approved 2010 Mobility Bond Program, which set aside a total $90 million for road, sidewalk and other transportation projects. The package details about 50 items, including about $14.4 million for the Lady Bird Lake boardwalk extension."

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 will be able to proceed with an innovative 1.1 mile boardwalk over the water to extend the trail without requiring redevelopment of existing properties. The project has been widely hailed by downtown residents but opposed by some of the land owners whose lakefront property will now face the boardwalk.

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.

Analysis: 2010 Condo Sales Results

The Annual AustinTowers | urbanspace Condo Sales Report
2010 Analysis: Downtown Austin Condo Sales

Despite the tough economy and weak national mortgage market, 2010 downtown Austin condo sales increased 50% over 2009 results. With 168 downtown Austin condo sales tracked through the Austin Multiple Listing Service (MLS) and with prices just 1% lower than 2009, 2010 was a surprisingly strong sales year.

For downtown Austin, this is great news. With more than 2,000 new downtown condo units built downtown in the last decade, overcapacity and the real estate downturn threatened to depress condo prices. The 2010 sales results show that the market remains quite strong given the difficulties facing the broader real estate and mortgage markets.

While sales volumes increased substantially -- not including additional non-MLS sales at the Austonian, Four Seasons, Spring, and BartonPlace -- market pricing remained essentially unchanged at $294 per square foot - a 1% decline from $296 / sq foot in 2009. Because the average unit size increased by 3% to 1,142, average sales price increased 4% from $330K to $344K.

2010 Downtown Condo Sales: 2009 v. 2010
Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM

2009

112

$330,344

$296
1,106
1990
94%
88

2010

168

$343,983

$294
1,142
1992
95%
99

Change

50%

4%

-1%
3%
1.4
2%
13%

A close look at the 168 recorded MLS transactions revealed the following highlights:

  • 360 was the downtown project with the most sales (38) and the highest $ / SF ($378)
  • The average time to sell a condo was 100-days, a 12-day increase from 2009.
  • 8 units sold for $1 million or more during 2010 compared with 2 in 2009 and 1 in 2008. 5-Fifty-Five, the condo building over the Hilton hotel, had the most million dollar sales with 3 during 2010.
  • 38 units sold for less than $200,000 with the least expensive condo selling for $86,000.
  • Austin City Lofts saw the sales price per unit at $674,643 while Greenwood Towers, built in 1966, saw the lowest average price per unit at $114,500
  • Units sold the fastest in the Sabine, a recent condo conversion project, with an average of just 34-days on the market. Units sold slowest at Plaza Lofts with an average of 341 days on the market.

While 2010 was a very strong year compared to 2009, it's interesting to compare 2010 to 2008 --- the first year that many of the new projects hit the market. In comparison, 2010 saw volumes increase 29% of 2008: from 130 to 168 units. Price per square foot decreased 4% from $308 to $294. Average days on market -- the time required to sell the average unit -- increased by a week to 100 days.

There is much more! See the full report here!

New Renderings for Congress Avenue Boutique Hotel

Last year, we reported the likely addition of a 15-story boutique hotel to Congress Avenue. The proposed boutique hotel was to have 60-70 rooms and would be constructed on Congress between fourth and fifth streets across from the Frost Bank Tower.

Now, it appears the building is set go at a much grander scale. Under the new plans, developers hope to build a 26-story 130 room structure on top of a small 120-year-old Congress Avenue building. Thanks to Downtown Austin Blog for posting the first images. The proposed is expected to go in front of the downtown commission soon. It will require a zoning variance to allow for additional site density.

Renderings of the new hotel tower proposed for 416 Congress Avenue
416_Congress.pdf_page_17_of_26-20110118-135014

As proposed, the boutique hotel will integrate the 1893 Romanesque facade into a new 26-story tower designed by prominent Austin architect Dick Clark. The building is essentially a "sliver tower" -- an extremely small footprint tall building designed to fit over a tiny lot occupied b a small building. In this case, the average floor plate will be just 3,500 square feet or 50 by 70 feet. Other cities, such as New York City, prohibit the construction of these sorts of towers. For Austin, which is eager to expand downtown development, to add downtown hotel capacty, and to revitalize Congress Avenue, the project will likely be attractive.

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

The new hotel will be built on this site: 416 Congress Avenue
Congress Avenue Austin Boutique Hotel

Additional Schematics show how the new structure will integrate the existing facade
416_Congress.pdf_page_24_of_26-20110118-134932



Austin Murder Rate Up 68%: No Murders Downtown

There were 37 murders in Austin in 2010 -- a 50% increase over 2009 and the highest number of killings since 1997. Fortunately for downtown residents, there were no murders during the year in the downtown area.

In fact, there were no murders in the area bounded by 45th street to the north, Ben White to the south, I-35 to the East, and Ladybird Lake / Lake Austin to the West. The closest murders to downtown were off east 13th street and Riverside Drive -- both east of I-35.

The vast majority of Austin murders were in two areas: East Austin between I-35 and 183 and North Austin near Runberg just West of I-35. According to the Statesman, "The most common motive for homicides in 2010 was random quarrels or revenge-motivated killings, police said. Police Cmdr. Julie O'Brien said such homicides include bar fights and drug deals."

New Condo Towers Possible Near Capital

In the dead zone between the Capital and UT, the State is looking at executing a new master plan that would ass a north gateway to the capital as well as a number of new buildings. If the full plan is realized, new condo towers and a new museum would be added alongside Congress Avenue between 15th street and MLK.

According to the Statesman, "Developers would be invited to participate, whether by constructing the state offices or suggesting "market-driven" uses for land that now has parking lots or garages. Eventually, the edges of the Capitol complex might be lined with condos, a hotel or private offices that could provide income to the state through ground leases."

Austin Texas Capital Master Plan

In addition to new buildings (shown above in blue) and the demolition of outdated office buildings, the master plan envisions a more dramatic tree-lined Congress Avenue north of the capital. With the new plan, the capital compound would feel like a larger parklike environment surrounded by new government, commercial, and residential development and potentially including a new hotel and museum.

Exclusive First Look: 2010 Condo Sales

We've just received last years downtown Austin condo sales data and are excited to be able to provide a quick preview of the aggregated full year data. Over the next few weeks, we'll crunch the numbers and provide deeper analysis including condo sales and values by building for the major downtown Austin projects.

In 2010, MLS condo sales grew by an amazing 50% over 2009 results. With 168 transactions plus a significant number of non-MLS sales at the Austonian, Four Seasons, Spring, and BartonPlace, 2010 was a strong rebound year.

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM

2009

112

$330,344

$296
1,106
1990
94%
88

2010

168

$343,983

$294
1,142
1992
95%
99

Change

50%

4%

-1%
3%
1.4
2%
13%

While sales volumes increased, pricing remained essentially unchanged at $294 per square foot - a 1% decline from $296 / sq foot in 2009. Because the average unit size increased by 3% to 1,142, average sales price increased 4% from $330K to $344K.

In addition, % of ask increased slightly to 95% while average days on market slid from 88 to 99 days.

All in all --- it was a good year. Over the next few weeks we'll look more closely at November and December results while providing deeper analysis of the full year trends.


First Austonian Sale Hits MLS!

One of the tough things about buying units in new projects is that it's hard to know the fair market value. While the developer will set a price -- it's the open market that determines whether that price is fair. As the famous Los Angeles agent Ari Emmanuel recently said, "Fair is where you end up." For new projects, where others end up tends to be a secret.

So, it's always interesting when the first new units in a prominent new building begin transacting on MLS. While it is not clear if it is a new or resale unit, the first Austonian transaction crossed the MLS in late December.

In this case, a 1,464 square foot 2/2 with 2 parking spaces sold for $680,000 after little more than a month on the market. The unit sold for 94% of it's asking price. The final sales price was $464 per square foot. Currently on MLS, a similar mid-size unit is listed for $640 per square foot which would suggest that the quick sale may have been under-market. As more sales cross the MLS, the true value of Austonian units will become clearer. Until then, this will be the one data point that realtors will use as they negotiate with the sale office and owners listing units for resale.

In a crazy tall project like the Austonian, projects on upper floors are likely to carry a pricing premium. The unit that sold in December was located in the bottom half of the building.

Currently, there are just three Austonian listings on the MLS ranging in price from $1.03 million to $5.30 million. The $5.3 million unit is a beautiful 4,700 square foot 3/3.5 on the 45th floor. In addition, a single 1,609 square foot 2/2 unit on the 17th floor is available to rent for $6,400 / month -- an amazingly high $3.98 / square foot per month.



Security Cameras Headed Downtown

According to the Statesman, 23 new security cameras are planned for police-use downtown for the purpose of "force extension".

downtown austin security camera

According to the Statesman, "the City Council unanimously agreed Thursday to accept $250,000 from the Downtown Austin Alliance for 23 cameras between Interstate 35 and Congress Avenue, north of Fifth Street and south of Seventh Street. Officials are still pinpointing the exact locations but said they hope the cameras will be rolling in the next couple of months."

The City has been discussing the use of cameras to keep a closer eye on downtown for years. Once installed, the cameras will help the City improve surveillance in areas where police may not be present. According to the Statesman, "videos from the cameras will be monitored by watch commanders who are already on duty and help direct police throughout the city based on need. Officers on special assignments will also review the video to help combat crime trends in certain areas."


New! Keep up with AustinTowers

Unbelievably, this month marks the fourth year of AustinTowers. For our anniversary, we're excited to add new ways for our thousands of frequent readers to keep up with the News on AustinTowers!

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New Office Tower Planned for Downtown Block 51

After developing and selling out 360 -- one of the most successful downtown projects -- Novare Group announced in 2008 that they would build two new towers on Block 51 & 52. The prime downtown blocks, one the site of the downtown post office and the other on an adjacent block to the West of the post office, were to contain 900 condo units in two 37 and 40 floor towers which were to be completed by 2012. Needless to say, the real estate crisis and ensuing commercial credit crunch forced Novare to rethink their plans.

The Austin Downtown Post Office
Downtown Austin Post Office

Last week, an engineering firm filed paperwork indicated that Endeavor Real Estate Group now plans to develop a 195,000 square foot 14-story office tower and garage on the Block 51lot. The project no longer contains any condo units as originally planned. The new project is slated to use just the southern half of the lot, leaving options for future development of the remaining portion.

Originally, the development plans for Block 51 were to contain plans for a new downtown post office. This would allow demolition of the existing post office, freeing up a prime downtown site. The downtown post office is considered an urban disaster --- it wastes a prime downtown block with a low rise building surrounded by a parking lot.

According to the Statesman, "The office tower would include a restaurant, bank and a parking garage, according to plans on file with the city. Last May, Taylor Andrews, president of Andrews Urban, said Novare Group and IBC at that time were still working on a possible condo project on Block 51. However, Andrews, who is Novare’s Austin partner, said that plans for that project, and a condo tower and hotel Novare planned on the neighboring post office site, would depend on obtaining construction financing in the constrained lending environment."

Forecast: Austin Rents to Sharply Rise

According to the Austin Business Journal, "apartment occupancy rates jumped notably in 2010, prompting decreased supply and higher prices, according to a recent report."

As demand continues to outstrip supply this year, the City is predicted to become the country's second best industry performer --- in terms of rent growth -- after San Jose, California.

According to the study by MPF Research, Austin "occupancy is expected to rise another 2.2 percentage points this year with a concurrent 6.8 percent increase in rental rates. Only San Jose, with 10.2 percent revenue growth, is expected to outperform Austin's net 9 percent revenue increase this year."

Currently, the average Austin rent is $854, up 2.4 percentage points from last year. Rents are significantly higher downtown where typical units are priced from $1.50 to $2.00 per square foot.

Are Downtown Property Appraisals Too Low?

The $21.75M purchase last week of a prime downtown block adjacent to Republic Square for a new 17-story Travis County Courthouse exposed problems in the county's tax appraisal accuracy.

If you look at the historical tax appraisal data for the downtown lot, the appraised value was clearly significantly below market:

2005 Value: $7.6M
2006 Value: $7.6M
2007 Value: $7.6M
2008 Value: $7.6M
2009 Value: $7.6M
2010 Value: $13.9M

2010 Purchase $21.75M

The actual value of the lot -- confirmed through an independent appraisal which determined the fair market value for the transaction -- was 56% higher than the current appraised value and 186% higher than the appraised value in each of the preceding 5 years. What this means is that the previous owners of the land paid significantly less than their fair share of property taxes as a result of the faulty appraisal. In fact, the owners probably saved $2M last year and $3M the year before on their annual property tax bill.

Unfortunately, the Courthouse sale was not an isolated incident. It's been long known that downtown property tax appraisals are significantly below market value. As a result of the under collection of taxes on the county's most valuable land, residential and commercial property owners of less valuable but more accurately appraised property are paying an unfair share of property taxes.

According to the Statesman, "Patrick Brown, chief appraiser in Travis County, said this week that he has found mounting evidence that downtown commercial properties have been significantly undervalued for years — meaning the owners have received what has amounted to years of significant tax breaks.

'We have admitted as much,' Brown said. 'Our commercial land values have been low the last several years.'

If true, homeowners and small businesses have been shouldering more than their fair share of the tax burden, an assertion made for several years by critics of the Travis Central Appraisal District. But Brown said property values have dropped or remained flat during the economic downturn, and the appraisal district probably will not significantly increase downtown appraisals in the near future."

For downtown condo owners and shoppers, the low appraisal values are mixed news. For individual unit owners, condo valuations are set individually and are unlikely to change. Because so many individual units change hands, it is easy for the county to determine values. For buyers looking to move into a future development, the likely increase in property taxes for undeveloped or partially developed land means that development prices and resulting unit prices will increase. With few new projects in the pipeline, however, the change only means that it will be even harder for new projects to create a viable business case to justify financing.