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.