Another New Project: Hyatt "Andaz" Condos

In April, Hyatt introduced a new boutique-style luxury hotel brand called Andaz. The first hotels, they announced, would be placed in world's most important "international cross-road" cities. And so far, three such locations have been announced. First was London. Second was midtown Manhattan. And the third location to be announced is— believe it or not — Austin, Texas.

The 210-room hotel is slated to open in 2010 as part of a $750M development on 32 acres formerly occupied by Concordia University. The site is located between I-35 and Red River near 32nd street. On top of the hotel will also sit 150 condo units ranging in size from 800 to 2,700 square feet. The building will be 182 feet tall and condo units will start at around $400,000 or a whopping $500 / SF for a non-downtown location.

hyatt andaz austin hotel condo project concordia tower

Here is a summary from the Statesman:

The hotel, which is expected to open in 2010, will offer amenities such as a spa and fitness center and a 20,000-square-foot park-like roof that includes a cocktail lounge and restaurant.It will have appeal in Austin for its high-quality amenities but also will reflect the city's casual atmosphere, Sarwal said."The Andaz concept will integrate well with this prime location and Austin's cosmopolitan energy," Steve Haggerty, global head of real estate and development for Global Hyatt, said in a statement. "Together, we intend to attract customers looking for fresh, uncomplicated luxury."The hotel will be energy-efficient and will use ecologically friendly building materials. It will also offer organic food.

This is the second major project announced in the last 10 days after a multi-month lull in major announcements. While it's not downtown, it represents another major investment in central Austin and likely signals the creation of a promising new district.

Downtown Condo Tour This Sunday

The Downtown Austin Neighborhood Association (DANA) is holding its 4th Annual Downtown Living Tour Sunday, September 30th, from noon to 5 pm.  The event, which typically attracts more than 1,000 visitors, showcases homes and the benefits of living in downtown Austin. This year's tour will feature a combination of existing residences, units in new buildings, and sales models of upcoming developments. More than fifteen sites will be represented on the tour, including:

* 360 Condominiums
* Austonian
* Four Seasons Residences
* Spring Condominiums
* The 5 Fifty Five
* Sabine on 5th
* The Monarch
* 2nd Street Retail District
* Posada Del Rey
* Bridges on the Park
* Plaza Lofts
* Burk/Henricks House

The tour will start at noon at the lobby of the Carr-America building located at 300 West 6th Street (across from The Belmont). After the tour, enjoy happy hour (5 - 7 pm) prices on refreshments and food at Rio Grande Restaurant. VIP ticket holders will finish out the day with complimentary music, food, and drinks at the new Mexican-American Cultural Center from 7 - 9 pm.

Tickets are available through DANA's web site at  Prices range from $15 for DANA members to $40 for non-members who attend the VIP party.

Austin in 2010: The Tallest Buildings

Today, The Frost Bank Tower looms across the Austin skyline with a singular presence. While it may look like the world's largest nose hair trimmer, it stands 120 feet taller than any other building in the city of Austin. Of the top ten tallest buildings in Austin, only three -- Frost, 300 W 6th, and the Hilton -- were built in the last decade. One of today's ten tallest buildings – the Texas State Capital — was completed nearly 120 years ago in 1888. Speaking of the Capital, Austin must be one of the largest cities in the U.S. to have a four-story building in it's top ten!

Between the Capital (#10), the Dobie (#5), and the UT Tower (#12), many of the tallest buildings have been around for a long-time:

Ten Tallest Buildings in Austin - 2007
1. 515 Feet - Frost Bank Tower
2. 395 Feet - One American Center
3. 391 Feet - One Congress Plaza
4. 377 Feet - Austin Hilton Convention Center Hotel
5. 367 Feet - Dobie Center
6. 329 Feet - Bank of America Center
7. 325 Feet - 300 West Sixth Street
8. 325 Feet - Chase Bank Tower
9. 320 Feet - 100 Congress
10. 311 Feet - Texas State Capitol

Over the next three years, the Austin skyline will change dramatically. If all proposed buildings are built, only one current building - the Frost Tower - will be in the top ten. In fact, 5 new buildings will be taller than any building currently occupied in the city. Of the future top-ten, four are already under construction and five are still in the planning stage.

Here is the full list:

Ten Tallest Buildings in Austin - 2010*
*(If all proposed buildings are completed)
1. 705 Feet - 501 Congress
2. 683 Feet - The Austonian
3. 580 Feet - 21C Austin
4. 563 Feet - 360 Condominiums
5. 550 Feet - 401-499 West 6th Street
6. 515 Feet - Frost Bank Tower
7. 450 Feet - 501-599 West 6th Street
8. 433 Feet - W Hotel & Residences
9. 432 Feet - Spring
10. 416 Feet - Altavida

New Project: 8th & West Tower

Between the credit crisis, skyrocketing construction costs, and the slowing real estate market, we didn't expect to see anymore downtown condo projects for a while. Today, however, we were surprised to learn of another downtown condo project announcement.

Austin's Fortis development today announced a new 20-story 200-unit condo tower to be developed on West avenue between 8th and 9th. While virtually no other details have been announced, the public details are enough to generate public opposition to the project. As the project is in a low rise area just north of sixth street, the project pushes the frontier of high-rise development.

fortis development west 8th 9th condo

The issue is that the location is zoned for buildings as tall as 60 feet -- far less than the 250 foot height of the proposed condo tower. This decision may be a tough one for the city council: they need to decide on the boundaries of Austin's high-rise downtown. In the projects favor, it is within two blocks of the Nokonah at 9th and Lamar, CLB's proposed 33-story super tower on 7th and Rio Grande, and another project on 6th and West. As the developer points out, it is one of very few downtown blocks free of capital view corridor restrictions.

Here is the summary from the Statesman:

A new condo high-rise is being proposed on West Avenue between Eighth and Ninth streets, but residents in the neighborhood on the western edge of downtown have registered their opposition.David Cox, president of Austin-based Fortis Development, is seeking a zoning change to build a tower of up to 250 feet, or about 20 stories, in an area where office zoning now caps height at 60 feet. The project would have about 200 condominiums plus retail space.The zoning request is scheduled to go before the city's Planning Commission on Tuesday, and the City Council would have the final say.If all goes as planned, the project would break ground in the fourth quarter of 2008, said Cox, who also is a vice president with Cypress Real Estate Advisors Inc., which has provided some financing for Fortis, his new development venture.

We'll post additional details and a full profile when we receive them!

Condo Sales: How Firm are They?

While the mortgage lending crisis seems to be easing, jumbo mortgage rates remain significantly higher than they were just two months ago. During this period, many projects have announced stellar sales and reservations of new units brought on the market during this awkward period.

So what's the deal? Is the Austin market so strong that people keep on buying as rates go up? Is everyone in town paying in cash? Is there really demand for another 136 buildings? The answer is no. In reality, some of the buildings have made the reservation process so painless that with $5,000 or $10,000 and a dream you can reserve a unit. If interest rates rise, contractual provisions may allow you out of the contract. If you can't get financing, you get your money back. In fact, at some buildings, the deposit is fully refundable. Go ahead, reserve a unit and then decide if you want to live downtown. If not, just ask for your money back.

For example, the W Hotel and Residences has a $10,000 fully refundable deposit policy. While they report that they have "sold" 150 of their 196 units, this number will certainly drop when the hard earnest money is due at ground-breaking in October, or when some occupants find out that they will not qualify for a jumbo loan.

This isn't true for every project: once a building commences construction the deposit requirements typically become much more strict with as much as 10% of purchase price due to the developer. It's the buildings still in pre-construction sales whose "sales" are the hardest to gauge.

The Monthly Cost of Luxury Living

Condo fees fund the daily operations and maintenance of most condo buildings. They cover security, landscaping, cleaning of common area, common area energy use, maintenance, and other key building functions.

With this posting, we are publishing the condo fees of two new ultra-luxury projects, The W Hotel & Residences and the Four Seasons Residences, for the first time. Our previous analysis has noted that he prices in the new buildings that we have looked at are surprisingly constant -- they have varied from $0.28 / SF / Month to $0.40 / month -- an amazingly tight range. With these two new projects, this is no longer the case. According to our research, the condo or home owner association fees at both buildings are set at $0.61 per month -- 50% higher than any other building we have reported on and 85% higher than middle-of-the-road projects like 360. While it should be no surprise that the Four Seasons and W are more expensive than the Hilton, it's sets a new and unprecedented price for luxury condo living in Austin.

Almost universally, Austin condo fees are calculated on a dollar-per-square foot basis. The rate typically remains relatively constant on all units throughout each building. So, condo fees are not higher for more expensive units, or units with more bedrooms, or units on higher floors compared to less desirable units of the same size in the same building. The only thing that matters is the number of interior square feet. If anyone has numbers for other buildings, send them to us and we will add them to the list.

Here are the updated building-by-building statistics:

Fee by Building - - - - - $ / SF / Month
Avenue Lofts
The Sabine
Plaza Lofts
The Shore
Five Fifty Five Condos
W Hotel & Residences
Four Seasons Residences

The Shrinking Downtown Austin Rental Market

The Austin residential rental market -- the whole thing, not just downtown -- has been very strong throughout 2007. Throughout the first half of the year, both rents and occupancies increased significantly. For example the mid-year citywide occupancy rate was 96.8 percent, up 2 percentage points from December.

Despite the strong rental market, plans for hundreds of planned downtown rental units have recently been abandoned to make way for condos. At the both the Four Seasons Residences and the Monarch, no rental units remain even though hundreds were originally planned. The Monarch, in fact, was originally proposed as an all-rental project before switching to an all-condo design during construction.

What is driving the change? The answer is simple: cost. The downtown condo boom has driven up both land costs and construction costs for downtown projects. As the cost of building downtown goes up, property taxes have also risen at a rapid rate. As these costs go up, developers are forced to pass on the increases to renters or buyers to maintain the viability of the project. So far, the condo market has shown strong resilience --- units continue to sell well even as prices increase. The rental market, however, is very different.

Today, there is only a small high end rental market in Austin. For rentals in the $2,000 - $5,000 / month range, the market is relatively limited. Today, the downtown premium for rentals is very steep -- downtown rents are as much as twice the rents for comparable luxury units in other parts of the city.
Unlike other cities, affluent Austin buyers prefer to buy houses or condos, they do not seem as inclined to rent big dollar downtown rental units. As costs have driven the required rental rates higher, developers have become concerned that they will not be able to rent all of their units at a high enough rate to make their projects financially viable.

While many units have been redirected from rentals to condos, there are still a few projects such as the new AMLI tower that are still slated to be 100% rental projects. As future downtown rentals do come to market, developers will likely focus on smaller unit sizes in order to keep rates competitve in the face of rising construction costs.

Fight over Riverside Lakefront Towers Continues

While zoning variances seem easy to come by for most downtown condo projects looking for increased density or height, there is one request that remains sacred: building in the protected zone around Lady Bird Lake. Long-standing rules prohibit construction within 200 feet of the former Town Lake.

This is a problem for CWS Capital Partners which is trying to build three 17-story apartment and condo towers with 715 units on the south bank of Lady Bird Lake between Congress Avenue and I-35. The project has requested a variance to build 50 feet closer to the lake than current rules allow. The project has faced significant opposition and lost a crucial vote last week.

Here is the summary from the Statesman:

A developer seeking city approval to build three high-rises 50 feet closer to the shores of Lady Bird Lake than city rules allow struck out at the city’s Parks and Recreation Board meeting last night when board members recommended that the city should deny its request.Board members voted 5-4 against CWS Capital Partners’ request for a variance that would allow it to build 150 feet from the shore. The board’s vote will serve as a recommendation to the Planning Commission, which could hear the case as soon as September.More than 70 people attended Tuesday night’s meeting including many nearby neighbors and lake enthusiasts lobbying against the variance for the property located at 222 and 300 E. Riverside Drive.Board chair Linda Guerrero was one of the members who voted to deny the request.“There was an overwhelming concern regarding the project, and the citizens seemed to want to preserve the waterfront overlay (the current rules) overwhelmingly,” she said.

While CWS had been requesting a 150 foot variance, this was a major concession as their original plans called for an 80-foot setback. The project is built on land currently occupied by long-standing apartments built much closer to the lake. Prior to the release of the current rules in the 1980s (they were revised in 1999), buildings could legally be built much much closer to the shore (as close as 25 feet). If CWS does not receive approval for the current variance request, they have proposed building two 17-story towers with the legal setbacks and simply remodeling the existing apartments into town homes -- a legitimate exception to the setback requirements.

While it might make sense to replace old townhouses that are close to the lake with new buildings 150 feet from the lake, the political debate has focused on the integrity of the regulations. The lake is the crown jewel of Austin and the council has taken a "no exceptions" approach to preserve the integrity of the green space surrounding the lake. While it is easy to focus on the setback, an equally important goal of many residents is to extend the hike and bike trails to the east. In fact, one public interest group endorsed the 150 foot version of the CWS proposal.

While the zoning issues are settled for now, it does not seem like the city will get everything it wants: a 200 foot setback, demolition of the old apartments, and an extension of the hike and bike trails to the east. Hopefully CWS will take up the slack, striking the right balance between their development needs and the public interest.

BartonPlace Shows Condo Demand is Still Strong

BartonPlace, a planned 270-unit condo project behind Austin Java on Barton Springs Road, announced today that despite recent media attention and public speculation about whether the Austin condo market is being overbuilt, 300 people have already made reservations for a chance to buy a condo in their 270-unit project. They also announced that they will end the reservation project after tomorrow. After that, the only way to reserve a unit will be with a sales contract on any that do not sell in the pre-sales period. The project is expected to begin construction later this year.

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

The full profile is included here.

Project Rendering:

BartonPlace Barton Place Condo Project Austin Barton Springs

Approximate top floor view: