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

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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.

Ignoring Criticism, Travis County Buys Key Downtown Block

Ignoring public criticism and without a public process, Travis County closed on a prime downtown block just South of Republic Square in downtown Austin for $21.75 million. With this transaction, Republic Square is likely destined to become a dead block surrounded by government buildings.

As a result of the transaction, the prime park block is unlikely to have retail, restaurants, or adjacent residents. In evenings and on weekends the buildings will be dark and deserted. As we originally reported, the new 17-story courthouse will create a dead zone on one of the most important vacant lots in the City. With the County's record, the architecture will be uninspiring and won't be engaging. Republic park -- one of the few downtown open spaces -- will be cut off from the emerging second street district and historic warehouse district. The move will also remove a prime block from the tax rolls, limiting available funds for future downtown development.

While the lot purchase is a strong signal of the county's intentions, they do not have the funds to complete the project. As a result, the county must initiate a multi-hundred-million dollar bond election in order to fund the project. Hopefully, the project will be voted down at that point.

Significant opposition to the project sprung up as soon as the project was announced. A Facebook group dedicated to stopping the courthouse project can be found here. Travis County Judge Sam Biscoe publicly stated that he has not heard much criticism and seems open to hearing from the community on this issue (sam.biscoe@co.travis.tx.us).

New East Austin Condo Project Planned

If you take the new light rail from downtown, the first stop is at Plaza Saltillo on 5th and Comal just 8 blocks East of I-35. With a thriving bar and restaurant scene evolving on east 6th street and great new public transportation options, it's no wonder that developers are headed to the area.

Plaza Saltillo in East Austin
Plaza Saltillo Austin

Over the last few weeks, developers have announced preliminary plans to develop two new projects in the area.

First up is a 40-unit mixed-use condo development is planned at East Seventh and San Marcos streets. Earlier this month, the City Council unanimously approved a development bonus for the project in exchange for a commitment from the developer to provide affordable housing units as part of the condo project.

Nearby, a second project is in the works. On East 6th and Waller streets, a 40,000 square foot boutique hotel is currently on the drawing boards.

In the future, a 10 acre site owned by Cap Metro could also be sold for development.

As one of only five red line stops in the City of Austin -- and the closest stop to downtown, Plaza Saltillo is ripe for future transit-oriented development. With an evolving dining, shopping, gallery, and bar scene in the area, development is likely to greatly accelerate over the next few years.

Travis County to Ruin Republic Square

Over the last decade, the Austin Museum of Art has attempted to build a new downtown museum on the south side of Republic park multiple times. With a prime lot (now a parking lot) between 3rd and 4th street off Guadalupe, the museum aimed to be a cultural anchor for the second street and warehouse districts.

Today, Travis County announced that they have entered into an agreement to purchase the lot for $21.75 million to build a county courthouse. For downtown Austin, this is a disaster.

First, it raises the question of why the county would use tax payer money to buy one of the most expensive parcels in the city for a courthouse. Second, they seem ignorant to the fact that a county courthouse will kill the block. With government buildings on all sides of the square, there will likely be no retail, no commercial, and no residential uses. The new courthouse will create a dead zone on one of the most important vacant lots in the City. With the County's record, the architecture will be uninspiring and won't be engaging. Republic park -- one of the few downtown open spaces -- will be cut off from the emerging second street district and historic warehouse district.

While development options may be limited in today's stressed commercial lending environment, this is not a time that we need the county to step in. Hopefully, there is still time for the county to reconsider and find a different lot that better uses taxpayer money and that preserves what is evolving to be one of the most dynamic and high-potential corners of downtown.

Downtown Condo Sales Heat Up

According to the Austin Business Journal, sales at the newest downtown condo projects including W, the Austonian, the Four Seasons Residences, and Spring have accelerated in recent weeks with more than 30 closings in October for downtown condos

Sales at the five newest downtown condo buildings heated up in recent weeks, showing a continued trend since late summer that condos are selling well despite the sluggish housing market overall. According to the report, the W has now sold 60% of its 159 Units and BartonPlace has sold 54% of its 270 Units. SInce these units are sold directly by the sales offices, they do not hit MLS and are not reported in monthly MLS statistics.
Read More...

The Condo Mortgage Crisis

In the current real estate market, condo sellers need all the buyers that they can find. With mortgage lending requirements still incredibly tight, the pool of available buyers is much smaller than it was just a few years ago. Now, new rules for FHA loans targeted specifically at condos will further limit the options for condo buyers.

According to National Mortgage Professional Magazine, "Tens of thousands of condominium unit owners across the country may not know it, but their ability to sell or refinance could be jeopardized by a rolling series of federal government deadlines."

On December 8, as many as 25,000 condo projects across the country missed the deadline for FHA recertification and approval which is required for FHA loan approval through normal processes. According to the magazine, "What this means, lenders and condo experts say, is that unsuspecting unit owners nationwide could suddenly be cut off from an increasingly important source of mortgage money. In some markets where FHA-insured mortgages are used for 75 percent or more of first-time home purchases, condo sellers could be severely handicapped."

The only silver lining is that the FHA has liberally granted last minute extensions for many projects into next year. According to the story, "the eligibility issue dates from November 2009, when the FHA published new rules on the types of condo projects acceptable for mortgages on unit sales and refinancings. The rules were the outgrowth of a review that found that the FHA - which is essentially a government-owned insurance company - had approved thousands of projects over the previous two decades but possessed inadequate information on their underlying homeowners associations' budgets, legal documents, insurance coverage, renter-to-owner ratios, delinquencies on condo-fee payments, the amount of commercial space, and a variety of other characteristics that could affect a project's financial stability."

According to the HUD condo approval tool (here), the following downtown Austin condo projects have received approval so far:

- 360
- Avenue Lofts
- 904 West Condominiums
- Spring
- BartonPlace

Read More...

Exclusive: October Downtown Condo Sales

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for October, 2010. For the second month in a row, sales volumes fell far below the year ago level. With the sale of two high value units, however, average sales price spiked 28% to $571K.

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Oct-09

13

$444,173

$323
1,376
1988.461538
94%
151

Oct-10

8

$570,625

$295
1,834
1995
96%
74

Change

-38%

28%

-9%
33%
6.54
2%
-51%

During October, 8 units worth a total of $4.6M were transacted on the MLS: 5 less than during the same period in 2009. The % ask increased year over year to 96% of the listing price.

Over the last few months, the vast majority of transactions have been for units priced below $300k. In the first nine months of the year, only four units of 130 sold were priced above $1M. In October, however, two units sold for more than $1M -- one in Westgate and one in 5 Fifty Five. The higher priced unit sold for $1.425 million -- the second highest downtown condo transaction that we have on record. In counter to the long-standing trends, only one unit sold in October was sold for less than $300k.

So where were the units that sold? Unusually, none of the units were in 360. Three were in the Shore and two were in Milago.

As always, the results show the weakness of the MLS. While 8 units sold through MLS, additional units went ton sale at the Austonian, the Four Seasons, Spring and other new projects outside of the MLS. While the MLS numbers slid in October, the market has grown year-over-year in 14 of the past 16 months showing increasing strength. As we have noted, as more projects hit the secondary market, MLS transactions are expected to grow and diversify. In particular, we expect to see more expensive units sell on MLS v. through private transactions in the new high end projects, That said, it is difficult to know exactly what is happening in the broader market as sales office transactions are rarely included in the MLS numbers.

Over the next few months, the MLS will grow to become more representative as new construction inventory dwindles and resale units in the Austonian and the Four Seasons Residences begin to hit the market.

See the full index here.



Hello W Austin!

Tomorrow morning, the W Austin hotel will finally open.

The 251 room hotel and many of its key amenities will come to life tomorrow at 11:30AM with the rest of the project to be completed over the next few months. The hotel will open with a limited number of guests with public bookings beginning on December 12. The gym and spa will open at a later date.

The 36-story project, located at Second and Lavaca in the heart of the second street district, is the last of the major downtown condo towers to be completed.

According to the developers, more than half of the 159 units at the W Austin Hotel and Residences have already been sold. Although the condos have not yet been completed, the developers expect that the first residents will be able to move into their units in late January or Early February. Sometime after that the new Austin City Limits studios will be completed.

W Austin Hotel

Today, the entire staff of 300 employees treated the neighborhood to a 5 minute dance sequence performed to in front of the hotel on Second Street and Lavaca. With the W opening, the second street district will finally come to life. Like other W Hotels, the Austin W will likely become a thriving social hub at all hours of day and night.

Convention Hotel Math

Conventions are great for downtown Austin. They bring in people that fill local downtown restaurants, bars, and stores and they help local businesses thrive. They help keep downtown well-populated and busy, they create tons of downtown jobs, and their tax dollars help fund downtown improvements. With just a few thousand people currently living downtown, it's non-residents who keep downtown alive.

To attract conventions to Austin, it really helps to have large anchor hotels to hold all of the attendees. This is one of the reasons that the City originally spearheaded and funded the development of the Hilton --- currently the only downtown Austin convention hotel.

Now, the City Council is trying to figure out how to get a second downtown Austin convention hotel built downtown. The main issue is that the 800-room Hilton is not big enough to hold 1,000 to 3,000 attendee conventions which expect to place the majority of their attendees in 1-2 convention hotels. According to a city study, a second convention center hotel could generate as much as $1.9M in annual tax revenue and 680 permanent jobs.

In particular, the addition of a second convention-scale hotel would help the City attract the most lucrative mid-scale corporate and medical conventions, bringing bigger-spending convention goers downtown.

While the mayor has made bringing a second convention hotel to Austin a priority, no developers or investors have stepped up to provide resources as of yet. In the current commercial real estate environment, It is more than likely that the City will need to provide incentives or funding to making the project happen.

City of Austin: Dowtown Vacation Rental Investigation Under Way

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. Officially, 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.

The City currently believes that many downtown Austin condo and home owners are not paying the tax that they owe. In a tight budget year, they are looking for additional sources of revenue. As a result, the City's audit department is currently conducting an investigation of how much unpaid bed tax is being generated through short term vacation rentals. Once the results of the probe are in hand, the City os evaluating a code amendment related to short-term residential rentals. Supposedly, the probe was initiated after a series of neighborhood complaints from Austin residents opposed to neighborhood vacation rentals.

For most downtown condo owners, the tax doesn't matter as very few units are currently listed on the vacation rental market. For those who do rent units, the tax is significant. For many, awareness of the charge may be the key obstacle to compliance. We'll see how this investigation evolves. . . .

The Next Wave of Rainey Street Development

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 very cool district of restaurant and bars.

First came Lustre Pearl and Clive. Then, the G' Raj Mahal Cafe. Now, three more houses are entering the process to become restaurants or bars. Since the entire district is registered as a National Historic District, all such requests must pass through Austin's Landmark Commission.

The Rainey Street District is located between the convention center and the lake just West of I-35. 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.

Here are some of the destinations currently anchoring the emerging Rainey Street district:

Clive
Clive Bar Austin

Lustre Pearl
Lustre Pearl Bar Austin

G’ Raj Mahal Cafe
G Raj Mahal Cafe Austin Rainey Indian

Mexican American Cultural Center
Mexican American Cultural Center

BartonPlace: 57% Sold

We received an update from the head of sales at BartonPlace. According to the team, the 270 unit 6-story project is now 57% sold. This leaves 116 units left to sell.

A couple of readers noticed that a small number of BartonPlace leases were hitting the MLS and asked whether these were being offered by the sales office. We checked and the answer is "no!" --

As is often the case, buyers have closed on their purchases and are leasing them on the open market. Some of these are likely investment purchases. Others are being leased by buyers whose lives and plans may have changed since they originally committed to a unit.

Currently there is just one 743 square foot 1/1 being offered for lease at $1,900 / month. 8 additional units are currently being offered for sale on MLS at prices ranging from $367K to $878K.

Here are pictures of the unit that is currently for lease:
Barton Place Austin Condo View
Barton Place Austin Condo

New Movie Theater to Open Downtown

One of the things that has been missing from downtown is a full-time first run movie theater. This is about to change in a big way.

A new maquis will soon rise on Second Street between BoConcept and Malaga with 4 new theaters taking over the second floor of the AMLI 2 rental tower as well as a balcony with a nice view of the second street action. The new 8,000-10,000 square foot "Violet Crown" art house theaters will feature everything that movie lovers could want including:

- Digital projection
- A full bar and cocktail lounge
- Gourmet concessions
- Free validated parking
- 4 intimate 50-seat theaters
- Stadium seating
- Wide range of food options that can be ordered in the lounge and consumed in the auditoriums but without alamo-style theater food service
- Ability to reserve specific seats

Violet Crown 2nd Street Movie Theater Austin

A movie theater such as the Violet Crown will be a great asset for downtown -- and the 2nd street district in particular -- as it will Read More...

Strong Job Growth will Help Austin Real Estate Market

Job growth is a requirement for real estate appreciation in a normal market. While this still isn't a normal market, the latest Central Texas employment numbers provide hope that normalcy may someday return.

According to the Texas Workforce Commission, the Austin-San Marcos-Round Rock metropolitan area added 17,300 jobs over the last 12 month period. This 2.3 percent increase dropped the unemployment rate from 7.2% in August to 6.8% in September. In comparison, the national unemployment rate is still 9.2% and the Texas unemployment rate is 7.9%.

According to the Austin American Statesman, "From August to September, the area brought on 2,700 positions, primarily from government adding 4,400 jobs. Government employment was up about 3,000 jobs year-over-year in September. Education, health, leisure and hospitality were the only other sectors to add jobs from August to September, adding a cumulative 1,400 jobs. Professional and business services shed about 1,100 positions during the same one-month period, the largest decrease that period."

Austin has been very lucky. Our real estate dip has been relatively minor. Read More...

Exclusive: Strong August but Weaker September Downtown Condo Sales

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for August and September, 2010. After 14 months of year-over-year sales gains, sales volumes in September dropped to below their year ago level.

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Aug-09

14

$252,029

$255
986
1987
93%
57

Aug-10

16

$330,088

$298
1,056
2004
94%
57

Change

14%

31%

16%
7%
16.07
1%
0%

Month

Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Sep-09

15

$258,993

$307
845
1986
91%
81

Sep-10

12

$221,745

$282
786
1993
96%
113

Change

-20%

-14%

-8%
-7%
7.13
6%
40%

During August and September, 28 units worth a total of $7.9M were transacted on the MLS: 1 less than during the same period in 2009. While volume and price both increased in August and then decreased in September

Read More...

Seaholm Redevelopment Goes to Council Vote

It was announced in May that Constructive Ventures plans to build 425 new condos in two 400-500 foot towers on an Austin Energy site just West of the 360 condo project downtown. This week, the City council's draft agenda for the 10/14 meeting includes an agenda item to review the master development agreement for the site.

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

Seaholm  Condo Towers Austin

According to the Austin Business Journal, "unanswered questions regarding the cost for Austin Energy to relocate its control center from the Seaholm redevelopment area stalled the residential condominium project planned to replace it. Austin City Council members questioned Read More...

Updated: Building-by-Building Monthly Condo Fees

Condo fees fund the daily operations and maintenance of most condo buildings. They cover security, landscaping, cleaning of common area, common area energy use, maintenance, and other key building functions. In addition -- and this is very important -- a portion of condo fees are held by the building as reserves to fund major maintenance projects. On average, our research shows, condo unit owners can expect to pay $0.44 / SF / per month or $440 in monthly condo fees for a 1,000 SF unit.

An important thing to note is that condo fees are not fixed forever --- they rise over time. Some buildings -- such as the Five Fifty Five Condos and the Sabine -- have seen significant increases over the last year in the price per square foot rate charged. Since the last time we calculated fees, the average fee has increased from $0.41 to $0.44.

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

The prices in new buildings that we have looked at are surprisingly varied -- they range from $0.31 / SF / Month to $0.62 / month -- an amazingly broad range.

Here is our updated list of condo fees by project:

Fee by Building - - - - - $ / SF / Month
Milago
.......................$0.31
Avenue Lofts
.................$0.33
360
..........................$0.36
The Shore
....................$0.37
Spring...................... $0.38
Barton Place
................ $0.38
Brazos Place
................ $0.40
Plaza Lofts..................$0.42
The Sabine
...................$0.45
Five Fifty Five Condos
.......$0.46
Austin City Lofts............$0.48
W Hotel & Residences
.........$0.60
Austonian.... . . . . . . . .$0.61
Four Seasons Residences
......$0.62
Average......................$0.44

389 of 736 Units Sold So Far in Spring, W, Austonian, and Four Seasons

There are four downtown buildings -- Spring, the Four Seasons Residences, the Austonian, and the W -- where you can still find new condo units (+ BartonPlace which is just across the lake). When these buildings are sold out, it will be a long time before new downtown Austin condo inventory appears.

Today, the Statesman reported previously unpublished data on current sales for the four remaining projects. What the developer-provided data shows is that 389 of 736 available units in these four new projects are currently sold or under contract. While this 53% sales rate means that there are still 347 mostly high-end units left to sell, the numbers do represent amazing progress for the downtown condo market.

During the last 12 months, 165 units were transacted on the MLS. In comparison, the 389 units sold through private sales represents more than 2x last year's complete downtown Austin condo sales volume. Since new unit sales in these four projects are not included in the MLS, it's been very difficult to gauge the full scope of downtown Austin condo sales, especially for units priced over $600,000. While very very few units priced over $1 million have sold on MLS, the average unit listing price for the four new buildings is greater than $1 million. What the new data shows is that sales have been relatively strong and likely accelerating as the project's neared completion.

Here is the developer-reported sales by project:

Spring: 158 / 247 (64%) units sold or under contract
W Residences: 84 / 159 (53%) units sold or under contract
Four Seasons: 77 / 148 (52%) units sold or under contract
Austonian: 70 / 178 (39%) units sold or under contract

With this new data, there are a few key observations: Read More...

WSJ: Shanghai or Austin, Who's Sexier?

The Wall Street Journal's China Daily published a very unscholarly analysis of two cities recently recognized for their sexiness in comparison to their national peers. In the U.S.A., Austin received top honors. In China, Shanghai was on top. Having just returned from Shanghai, it is an amazing place --- a super modern city of just under 20 million people. This may be the only time the two cities are compared in such an article!

Shanghai, China (Photo Copyright 2010 Paul J. D'Arcy)
Shanghai China Downtown 2010

Here is the "report" from the Wall Street Journal:

Tall buildings, big events, modernity: The characteristics of a sexy Chinese city.

Condom sales, birth rates, transmitted disease and toys: The determinants of a sexy U.S. city.

In unrelated surveys released this week, Shanghai was named China’s sexiest metropolis (in Chinese) while Austin, Texas was
crowned with that honor for the U.S. Read More...

La Vista on Lavaca: The New Intel Shell

It's official: the planned "Fondren Building" (AKA La Vista on Lavaca) -- a nine-story residential mixed-use tower consisting of 19 condominiums on the top four floors, a three-floor Executive Business Center, and first floor restaurant -- has been abandoned mid-construction by its new owners. As a result, a 9-story concrete shell now sits idle on Lavaca street near the capital.

According to the Austin Business Journal, the owners of the Fondren have filed for bankruptcy claiming 13.8 million in debts and $9.3 million in assets. In August, the partnership asked a judge for permission to sell the building to a New York investor for $8.4 million. Apparently, this deal has
fallen-through leaving the developers with few options for liquidation.



Complicating efforts to sell, the Austin Business Journal reports that "Travis County, which is owed $175,950 in unpaid property taxes, and Dallas-based Precept Builders Inc., which is owed $3.7 million, filed objections after the request to sell."

The 8-year-old project has had multiple owners and a sorted history. Read More...

Downtown Apartment Market Softening

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

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

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

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

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

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

Exclusive: Summer Downtown Condo Sales Stay Strong

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

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Jun-09

8

$431,738

$292
1,400
2000
87%
117

Jun-10

18

$387,241

$324
1,160
1999
95%
100

Change

125%

-10%

11%
-17%
-1.00
9%
-15%

Month

Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Jul-09

12

$265,450

$265
1,021
1987
97%
88

Jul-10

14

$338,192

$298
1,121
1999
96%
74

Change

17%

27%

12%
10%
12.00
-1%
-16%

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

Read More...

Swim! Pictures of Downtown Condo Pools

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

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

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

Spring
Spring Austin Condo Pool

See more cool pools!
Read More...

New Profile Posted: 904 West

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

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

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

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

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

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

Here are some additional details from the Statesman:

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

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

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

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

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

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

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

Zilker Park Residences Withdrawn From Market

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

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

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

The 2008 Plan for Zilker Park Residences
Zilker PArk Residences

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

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

New Project Listings: 904 West

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

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

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


La Vista on Lavaca is Dead. Again.

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

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



Continue reading here: Read More...

Downtown Austin Condo Sales Soar in May

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

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
May-09

11

$347,045

$308
1,150
1990
96%
63

May-10

24

$258,967

$285
934
1976
96%
118

Change

118%

-25%

-8%
-19%
-13.91
0%
87%

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

Read More...

With Downtown Marriott Dead, Land Owners Seek New Hotel Developer

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

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

Now, the City is trying new tactics to Read More...

Shhhh! New Congress Tower Planned

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

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

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

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

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

1155 Barton Springs Condo Project Files for Bankruptcy

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

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

155 Barton Springs South Austin Condo Project

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

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

Austonian, Four Seasons Prepare to Open

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

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

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

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

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

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

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

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

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

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

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

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


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


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


The Visual Tour Continues Here: Read More...

New Hotel Planned for Congress Ave!

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

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

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

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

The 416 Congress hotel is expected to open in 2012

Two More Austin Condo Skyscrapers Announced!!!

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



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

Here is a summary from the Statesman:

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

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

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

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

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

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

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

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

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

Hilton Condo Owners Sue Over Quality Problems

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

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

According to the Statesman:

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

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

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

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

The city has acknowledged some of the problems.

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

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

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

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

360 Developer Planning Two New Austin Buildings!

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

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

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

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

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

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

Seaholm Development Update

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

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

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

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

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

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

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

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

Austonian, W, Four Seasons, & Spring Sales Estimates

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

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

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

Sales Estimates for Projects Under Construction

Project
Year
Units
Contracts
Avail.
% Sold
Absorption / month
Avg Price
Avg Size
$ / SF
Austonian

2010

178
55
123
31%
1.89
$1,516,000
2203
$688

Four Seasons Residences

2010

148
74
74
50%
2.64
$1,269,447
1969
$645

W Hotel & Residences

2011

159
82
77
52%
2.49
$1,067,352
1716
$622

Spring

2009

248
120
128
48%
3.87
$521,063
969
$538

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

The Four Seasons Residences to Focus on Service

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

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

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

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

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

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

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

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

15-Story Downtown Office Tower Proposed

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

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



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

Exclusive: January & February Downtown Condo Sales

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

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Jan-09

4

$358,225

$321
1,129
1996
93%
85

Jan-10

6

$274,547

$291
953
2005
96%
127

Change

50%

-23%

-9%
-16%
9.00
3%
49%


Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Feb-09

6

$400,833

$322
1,258
1998
90%
116

Feb-10

8

$291,938

$292
1,002
1979
94%
50

Change

33%

-27%

-10%
-20%
-19.00
5%
-57%

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

Read the full analysis:

Read More...

Coming up: Urbanspace Downtown Q&A

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

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

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

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

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

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

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

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

Lora Reynolds Gallery
Lora Reynolds gallery Austin Texas

Forbes: Austin Economy Good

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

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

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

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

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

Another Downtown Building Boom?

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

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

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

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

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

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

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

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

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

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

7RIo Tower as originally Proposed
7Rio Tower CLB Austin Condo

Sabine Auction Results!

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

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

Here are the key metrics on the sale:

Sale Prices by Unit Type
Unit Type
Original Price
Sale Price*
$/SF
Discount
1/1

$252,631

$189,120
$264
25.1%

1/1 + Study

$289,900

$196,733
$210
32.1%

2/2

$464,083

$310,007
$214
33.2%

All Units

$341,697

$237,388
$228
30.5%
* Includes 4% Buyer Premium

Sale Prices by Unit

Unit #

SF
Bed/Bath
Original Price
Starting Bid
Sale Price*
$/SF

303

693

1/1

$234,900

$85,000
$172,640
$249
305
1462

2/2

$409,900

$145,000
$276,640
$189
308
925

1/1 + Study

$267,900

$95,000
$193,440
$209
401
1461

2/2

$485,900

$165,000
$319,280
$219
404
728

1/1

$249,900

n/a
$194,480
$267
409
918

1/1 + Study

$259,900

$95,000
$193,440
$211
501
1461

2/2

$485,900

$175,000
$327,600
$224
502
755

1/1

$239,900

$95,000
$193,440
$256
504
728

1/1

$249,900

$85,000
$192,400
$264
508
951

1/1 + Study

$279,900

$95,000
$188,240
$198
510
682

1/1

$204,900

$85,000
$166,400
$244
605
1467

2/2

$434,900

$155,000
$287,040
$196
610
682

1/1

$229,900

$85,000
$167,440
$246
701
1461

2/2

$469,900

n/a
$350,480
$240
703
695

1/1

$240,900

$95,000
$197,600
$284
704
728

1/1

$259,900

$85,000
$195,520
$269
705
1467

2/2

$449,900

n/a
$315,120
$215
707
1426

2/2

$409,900

$135,000
$279,760
$196
801
1461

2/2

$530,000

$185,000
$357,760
$245
802
755

1/1

$273,400

$105,000
$205,920
$273
804
728

1/1

$311,900

n/a
$196,560
$270
805
1460

2/2

$469,900

$165,000
$309,920
$212
808
951

1/1 + Study

$311,900

$95,000
$198,640
$209
904
728

1/1

$263,900

$85,000
$197,600
$271
907
1426

2/2

$434,900

$135,000
$263,120
$185
909
918

1/1 + Study

$294,900

$95,000
$195,520
$213
910
682

1/1

$244,900

$85,000
$180,960
$265
1001
1419

2/2

$550,000

$195,000
$365,040
$257
1004
728

1/1

$279,900

$95,000
$197,600
$271
1007
1426

2/2

$437,900

$145,000
$268,320
$188
1008
951

1/1 + Study

$324,900

$105,000
$211,120
$222

AVG

1,043


$341,697
$117,222
$237,388
$228
* Includes 4% Buyer Premium

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

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

UrbanSpace to Hold Monthly Q&A for Downtown Buyers


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

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

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



Sabine Auction Pricing Analysis: Looking at MLS Sales

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

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

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

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

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

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

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

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

See the full analysis: Read More...

Austin is Very Very Very Lucky

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

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

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

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

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

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

Sabine Auction Update

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

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

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

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

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


Get the full details on the auction here.

Waller Creek Tunnel Project Advances

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

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

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

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

Waller Creek
Waller Creek Tunnel Austin

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

Downtown Rail Service to Start in March

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

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

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

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

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

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

Austin Cap Metro Metrorail light rail train car

Austin Cap Metro Metrorail interior

Austonian Dismantles Crane, Throws Party

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

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

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

Photos by blimpphoto.com
Austonian Austin Condo View North
Austonian Austin Condo View West

Update: New Central Library Progress

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

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

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

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

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

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

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

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

Sabine Auction Planned for February

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

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

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

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

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

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

21c Austin: Condos Out, Apartments Possible

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

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

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

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

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

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

New 27-Story Condo/Office Project Announced!

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

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

As proposed, the new building would include:

- Street level retail and parking on the lower floors

- 16 stories of office space

- 90 condo units on the top seven floors

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

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

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

$200M Project Approved for South Shore of Ladybird Lake

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

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

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

Sabine & Star Riverside Posted for Foreclosure

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

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

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

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

Austin: #1 For Being Ranked on Lists

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

Here are some of the highlights:

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

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

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

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

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

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

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

Austin Home Listings Slide by 20%

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

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

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

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

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

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

$500B in Home Value Disappears

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

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

View the full report
here.

New: Urban Lifestyle and Residential Guide (Free)

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

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



You can get your free copy of the Guide here.

21c Austin: New Renderings Magically Appear

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

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

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

21c Version One (3rd & Brazos)


21c Version Two (Red River & Cesar Chavez)
21c Condo Project Downtown Austin

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




According to the Statesman:

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

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

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

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

But there is still a major obstacle.

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


We'll see what they announce this week!

Austin: 3rd Best City for Development

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

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

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

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

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

October Surprise: Austin Home Sales Surge

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

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

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

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

New, Less Restricttive FHA Rules for Condo Loans

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

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

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

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

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

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

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

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

Exclusive: Strong October & September Downtown Condo Sales

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

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

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

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

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

Statistic
SF
Listing $/SF
Listing Price
Sold $/SF
Sold Price
DOM
Min

472

$189.15
$115,000
$180.92
$110,000
1

Max

3,025

$527.00
$1,400,000
$452.23
$1,368,000
600

Average

1,091

$320.89
$371,836
$300.08
$344,970
11

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

Free Downtown Austin Guide Book

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

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



You can get your free copy of the Guide here.

New Home Buyer Tax Credits in Works

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

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

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

Here are additional details on the proposed tax credit extension:

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

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

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

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

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

W Receives Financing: Averts Crisis

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

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

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

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

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

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

Secret Congress Avenue Town Home on Market

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

Congress Avenue Town House Austin Downtown Town Home

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

The pictures say it all:

Congress Avenue Town House Austin Downtown Town Home

Congress Avenue Town House Austin Downtown Town Home

Congress Avenue Town House Austin Downtown Town Home

Congress Avenue Town House Austin Downtown Town Home

Congress Avenue Town House Austin Downtown Town Home

Congress Avenue Town House Austin Downtown Town Home

Congress Avenue Town House Austin Downtown Town Home

Downtown_austin_congress_roof_top_pool

Congress Avenue Town House Austin Downtown Town Home

Recession Over in Austin: What Will Happen to Housing Prices

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

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

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

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


Austin

Texas
California
New York

Employment

-0.71%

-2.43%
-5.04%
-2.25%

Single Family Housing Starts

-6.31%

-19.11%
-21.05%
-23.82%

Industrial Production

-12.61

-12.69%
-10.09%
-12.15%

Growth Over Last 6 Months

+

-
-
-

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

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

12-Floor "Capital Terrace" Development Proposed

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

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

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

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


New Federal Courthouse to Rise Downtown

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

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

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

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

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



Austin Intel Site Federal Courthouse

Austin Federal Court House

Austin federal Court House Republic Square Park

New Austin Court House Downtown

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

Ballet Austin Party Held at Austonian

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



Copyright 2009 Ballet Austin Fete 2009 Austonian

New FHA Rules for Condo Mortgages

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Shore Closeout Promotion

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

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

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

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






Type

Floorplan

Unit #

Interior SF
Terrace SF

List Price

1 BR
A5

2005

714
79

$275,000

1 BR

A7

2206

842
103

$335,000

1 BR + Den

D9

2008

923
77

$355,000

1 BR + Den

D8

1807

879
80

$325,000

1 BR + Den

D8

2007

879
80

$345,000

1 BR + Den

D8

1707

879
80

$315,000

1 BR + Den

D9

1708

923
77

$355,000

1 BR + Den

D8

1907

879
80

$335,000

2 Bedroom + 2 Bath






2BR

B10

1610

1122
186

$470,000

2BR

B10

1910

1122
186

$500,000

2BR

B10

1810

1122
186

$490,000

2BR

B4

2105

1141
347

$455,000

2BR

B4

2205

1141
119

$465,000

2BR

B3

2204

1193
66

$495,000

2BR

B9

1809

1206
204

$510,000













Close-Out Promotion Take 10% off list price for a limited time!


Type

Floorplan

Unit #

Interior SF
Terrace SF

List Price

1 BR
A4

802

905
229
$337,000

2 BR + Den

E4

2202

1513
98
$725,000

2 BR + Den

E3

2203

1610
111
$755,000







Live Work

LW1

101

1674
35
$450,000

Sage Auction Results

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

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

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

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

Sage Condo Auction Austin

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

Texas A&M Expert: I See the Bottom!

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

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

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

Texas A&M Austin MLS Tracking with 2009 Estimates

Date

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


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

BartonPlace July Construction Update

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

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

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

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

Here are the latest construction images:

BartonPlace Barton Place June Construction Update Austin Condo

BartonPlace Barton Place June Construction Update Austin Condo

BartonPlace Barton Place July Construction Update Austin Condo

Bel Air Auction: More Bad News

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

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

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

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

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

Star Riverside Halts Construction

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

Star Riverside
Star Riverside Austin Condo Rendering

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

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

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

Updated: Bel Air Condo Auction Results

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

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

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

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

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

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

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

Bel Air Interior

W Must Replace Troubled Lender to Proceed

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

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

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

Sage Announces Auction Plan: Here We Go Again

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

904 West Avenue Condo Project Austin

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

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

Enfield Condos To be Completed After 2-Year Pause

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

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




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

25 Bel Air Loft Condo Units to Be Auctioned

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

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

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

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

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

Bel Air Lofts
Bel Air Lofts South Congress Austin

Bel Air Lofts South Congress Austin Kitchen

Bel Air Lofts South Congress Austin Living

Austonian Now Tallest Building in Austin

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

Austonian Austin Condo Construction

Austonian: Sweet Services for Visiting Guests

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

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

Rendering: The Austonian Club
Austonian Austin Condo Club

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

Rendering: Austonian Cabana & Pool
Austonian Austin Condo Pool and Cabana

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

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

Austonian Construction Progress
Austonian Construction Photo

EXCLUSIVE: Downtown Condo Market Surges

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

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

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

One-Month Sales Report







Month

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

13

$297,792

$304
995
1969
95%
91

May-09

11

$347,045

$308
1,150
1989
96%
63

Change

-15%

17%

1%
16%
20.91
1%
-31%


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

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

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

 

The Worst Condo Project Ever?

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

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

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

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

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

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

- The condo owners are suing the developers

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

- The developers are suing each other

- Unpaid contractors have placed liens against the individual units.

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

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

- The lenders are preparing to foreclose on the developers

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

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

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

3 Dead in UT-Area Apartment Construction Accident

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

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


Episcopal Church to Develop Downtown Block

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



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

Here is a summary from the Statesman:

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

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

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

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

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

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

Austin Leads Nation in Job Growth - AGAIN!

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

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

Here is a summary from the Statesman:

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

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

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

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

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

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

The Ugly Side of Downtown Austin

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

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

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

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

WOW! Austin Home Prices Rising!

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

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

Why has Austin stayed strong? There are three reasons:

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

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

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

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

Here is a summary from the Austin Business Journal:

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

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

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

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

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

W Hotel & Residences Developer Faces Delisting

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

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

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

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New Downtown Restrictions to Limit Lakeside Skyscrapers

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

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

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

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

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

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

Here is the complete auction data:

Unit

Plan

SF
Listing
Opening Bid
Sold (incl. 4% Fee)
$/SF
Discount

709

1 Bedroom / 1 Bath

1272

$414,900
$170,000
$288,080
$226
31%

1007

2 Bedrooms / 2 Baths

1399

$479,900
$190,000
$339,040
$242
29%

708

2 Bedrooms / 2 Baths

1358

$519,900
$210,000
$329,680
$243
37%

1008

2 Bedrooms / 2 Baths

1324

$494,900
$190,000
$326,560
$247
34%

1108

2 Bedrooms / 2 Baths

1324

$504,900
$200,000
$329,680
$249
35%

705

1 Bedroom / 1 Bath

891

$304,900
$120,000
$229,840
$258
25%

1208

2 Bedrooms / 2 Baths

1324

$514,900
$210,000
$346,320
$262
33%

710

1 Bedroom / 1 Bath

623

$199,900
$80,000
$168,480
$270
16%

1103

1 Bedroom / 1 Bath

832

$324,900
$130,000
$229,840
$276
29%

808

2 Bedrooms / 2 Baths

1324

$519,900
$210,000
$374,400
$283
28%

1107

2 Bedrooms / 2 Baths

1399

$489,900
$200,000
$399,360
$285
18%

1109

1 Bedroom / 1 Bath

884

$359,900
$140,000
$255,840
$289
29%

908

2 Bedrooms / 2 Baths

1324

$484,900
$190,000
$385,840
$291
20%

1203

1 Bedroom / 1 Bath

832

$332,400
$130,000
$244,400
$294
26%

1207

2 Bedrooms / 2 Baths

1399

$499,900
$200,000
$418,080
$299
16%

707

2 Bedrooms / 2 Baths

1399

$519,900
$210,000
$422,240
$302
19%

706

1 Bedroom / 1 Bath

812

$339,900
$140,000
$250,640
$309
26%

1210

1 Bedroom / 1 Bath

623

$259,900
$100,000
$200,720
$322
23%

PH

Custom Plan

2745

$1,575,000
$600,000
$967,200
$352
39%

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

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BartonPlace Event Invitation

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

The details are:

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

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

Where: BartonPlace PresentationCenter
(1800 Barton Springs Rd)

RSVP by May 20th to ashley@bartonplaceaustin.com Read More...

Brazos Place: Auction Fine Print

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

Brazos Place Austin Downtown Condo Auction

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

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

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

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

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

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

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

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

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

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

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

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

New Condo Mortgage Restrictions

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

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

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

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

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

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

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

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

Star Riverside Auction: Bizarre Side Show or Outright Scam?

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

Star Riverside Austin Condo

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

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

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

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

See the ridiculous auction firsthand here.

CNN Report: Condo Auctions Common (Mentions Brazos Place)

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

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

Here are highlights from the CNN article:

A free Lamborghini in Miami, Florida.

Complimentary housekeeping in Phoenix, Arizona.

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

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

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

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

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

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Analysis: Brazos Place Auction

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

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

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

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

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

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

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

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

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

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

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

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

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

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60-Unit East Austin Condo Project Sells Out

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

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

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

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WSJ: Austin Apartment Vacancy Surges

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

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

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

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

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Federal Courthouse to be Constructed by Republic Square Park

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

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

New Federal Courthouse Repblic Square Park Austin

Here is a summary from the Austin Business Journal:

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

The White House today approved $116 million from the American Recovery and Reinvestment Act for the U.S. federal courthouse in Austin, said Wyeth Ruthven, a spokesman for U.S. Rep. Lloyd Doggett.

“This $116 million means local construction jobs now when we need them most, a significant addition to downtown Austin, and a long overdue improvement benefiting all who rely upon our federal justice system,” said Doggett, D­-Austin. Doggett voted for the stimulus package.

The planned seven-story Austin courthouse has been delayed for years because of financial reasons. It will be built at the corner of Fifth and Nueces streets, across from Republic Square Park. The design is mostly done.

Problems at the Sabine: Residents Sue Developer

This week, 35 residents of The Sabine filed suit against the developers for list of problems that the condo owners say have been ongoing for month. The Sabine is an 80-unit condo conversion project of a mostly-empty office building on Waller Creek into a new condo project adjoining the Hilton Garden Inn on 5th Street near I-35. The project was completed last year although many units still remain on the market.

According to the residents:

- The building seems to have serious elevator problems. In fact, a 12/29 elevator inspection exposed 19 code violations including some that were described as serious safety problems.
- Problems with water leaks, window seals, and sound-proofing.
- Failure to pay property taxes on more than 40 units -- a delinquency which may result in additional litigation

While it is difficult to tell how long it will take to resolve these issues, the problems do indicate quality issues for the newly completed condo conversion project. Litigation like this is rare, and shows that residents are angry and ready to revolt. These problems certainly illustrate the risks of being the first occupants of any building. Buyer have little choice but to take the developers word that they will deliver a quality building without cutting corners.

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The 10 Mile Loop: Austin to Proceed with Hike & Bike Trail Extension

Over the last few months, the City has been floating a proposal that would achieve one of Austin's most important urban planning goals: filling the 1.2 mile gap in the 10.1 mile hike and bike trail around Lady Bird Lake. While land owners along the 1.2 mile stretch of the lake have objected, the City has decided to proceed with a proposed over-water boardwalk to complete the loop.

The Boardwalk Trail at Lady Bird Lake would extend the Lady Bird Lake hike and bike trail more than one mile from the east side of the Austin American-Statesman building to Lakeshore Park. Currently, pedestrians, runners and bikers are forced to use the Riverside Drive sidewalk over Interstate 35. While there are some opportunities for extension of the trail on the shore, the trail will be primarily over the water.

The extremely popular trail is a great community asset for anyone who spends time downtown. The bold $15 million project will complete the trail, improving bike and pedestrian access throughout downtown Austin.



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Austin May Eliminate Downtown Meters! (there's a catch)

Good news! The City of Austin is considering eliminating 3,800 single space parking meters!

The only downside is that they plan to replace the 3,800 meters with 750 whole block "pay station kiosks" that will make you walk down the block to figure out how to use a complex machine to print a ticket to place on the inside of your car after you walk back down the block.

Why? Apparently, each of the existing meters fails every 90 days on average -- and replacing them with a large complex machine with ink, paper, and an internet connection should eliminate this problem. Coincidentally, it would also allow the city to take credit cards and charge higher prices for downtown parking over time.

All this for just $8.4 million!

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On Sale! Bridges on the Park Now 20% Off?

In a highly unusual strategy, Bridges on the Park has announced a "March Sale" in which they have reduced unit prices by 20%. With the reduction, prices start under $300,000 for a 1 bedroom 1 bath unit and under $400,000 for a 1,349 square foot 2/2 unit. The pricing reduction shifted the price per square foot from $350-$430/SF to $285-$340/SF.

Bridges on the Park is a six floor 104 unit project on a 2.5 acre site just south of the lake and the hike & bike trail on South Lamar. The project was recently completed.

During construction, Bridges on the Park raised prices to their current rates after lining up a surprisingly strong waiting list for reservations. When the final prices were announced and the economy turned south, the reservations did not turn into sales as expected. Now Bridges on the Park has restored prices to levels closer to the originally announced amounts. While a highly unusual sales tactic, for new buyers looking to get close to downtown at reasonable price, this is very good news.

Bridges on The Park Austin Condo

Here are some examples of units currently for sale at Bridges on the Park:

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Urbanspace Finds Success During Downturn

While the economic crisis and continuing problem in the national real estate market dominate the news, Austin's own urbanspace realtors today announced that the firm has added 12 new realtors and plans to move into a new downtown headquarters. For followers of the downtown market, their strength and growth is a powerful sign of the continued interest in downtown Austin living.

Here are some details from the announcement:

As Austin is growing, so is urbanspace. In concert with the growth of the urban market place, the Company has expanded both its team and physical space. In the past six months, the urbanspace team has welcomed 12 new residential and commercial agents to better serve the specialized needs of a dynamic Austin urban market. urbanspace's move into its new home allows it to complement its growth with a space designed to enhance the client experience as well as create a warm work environment for its agents.

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Free Guide Book: Downtown Austin Urban Life Style Guide

UrbanSpace Realtors, a large real estate firm focused on the downtown residential market, has published a comprehensive guide to downtown neighborhoods and living options as well as dozens of their favorite dining, entertainment, and cultural destinations. The guide is amazingly comprehensive: it profiles more than 80 rental and condo projects in and around Austin and shows nearby Urbanspots -- the cool community destinations that draw people downtown. The guidebook groups projects by downtown neighborhood and includes written profiles and a variety of useful maps.

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

urbanspace urban life condo guide austin

You can get your free copy of the Guide here.

AMOA Tower Cancelled

Less than a year ago, the Austin Museum of Art announced a new project which would combine an 40,000 square foot museum facility with an adjacent 425,000 feet of commercial office space in a new 465,000 square foot project on the AMOA-owned site adjacent to Republic Square Park in the center of downtown Austin.

Yesterday, the developers option on the project expired. While the project was supposed to commence construction in early 2009, Hines Interests, LP has been unable to secure the funding required to develop the new building. As a result, AMOA’s latest plan for a significant downtown home are no longer viable.

The project, which was to be designed by the world renown architecture firm, Pelli Clark Pelli, would have been the first major downtown office building since the Frost tower was constructed in 2004. While the cancellation is not surprising in this very difficult commercial financing climate, it does represent a major setback for AMOA which has abandoned multiple plans for a new downtown building over the last decade. Yet, with a prime downtown block under their control, AMOA should be able to find a future partner to revise the project. Even with a development partner, however, it will be difficult for AMOA to rally its patrons to support another capital project after so many failed attempts.

AMOA Rendering Austin Museum of Art Tower Pelli Clarke Pelli

Here is a summary from the Austin Business Journal:

The economic downturn has claimed a major downtown Austin project as victim, the proposed Museum Tower office building and the Austin Museum of Art’s proposed new home.

Hines Interests LP will not renew its option on the land owned by the Austin Museum of Art when that option expires this afternoon, the last day of 2008. That land had been slated for a 30-story, 425,000-square-foot office building dubbed the Museum Tower and a new home for AMOA.

AMOA had planned to sell a portion of the block it owns just south of Republic Square Park to Hines for the tower. As part of the deal, the Houston-based real estate company was also going to build a new 3-story, 40,000-square-foot home for the museum.

In response to questions from the Austin Business Journal , Hines released a statement from Travis Overall, Hines vice president, saying: “Due to the uncertain economy, we made the difficult decision not to renew the option in 2009. However, Hines is still interested in developing an office building in Austin when the market recovers, and we hope it will be in conjunction with AMOA and its museum. The project will not restart until the market improves. Our hope would be to get a new deal together in 2009 or 2010, and then move full steam ahead. We see great potential in the long-term viability of the city of Austin.”

The Museum Tower would have been the first new, large-scale office project in downtown since construction was completed on the Frost Bank Tower in 2004.

For the museum, the project also represented a chance to achieve its longstanding dream for a new downtown home. The new museum space was planned to double AMOA’s exhibit and education space from the 16,000 square feet it currently inhabits at the 823 Congress office building.

“Hines has been an excellent partner, and AMOA looks forward to building a new home for AMOA-Downtown when economic conditions become more favorable,” AMOA officials said.

This is the latest blow for AMOA, which has been trying since the late 1990s to develop a new facility downtown. In August 2006, AMOA said it was planning to partner with local developer Tom Stacy on the creation of condo tower and new museum on the site south of Republic Square. But the deal never materialized. The museum ultimately had to taper its wishes -- and even cut staff -- when the economy went south after the dot-com bubble burst.

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

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

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

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





More information is available at www.firstnightaustin.org.

Las Manitas Quickly Demolished

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

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

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

Read More...

Downtown Water Treatment Plant Decommissioned, New Neighborhood to Emerge

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

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

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

Renderings of Proposed Green Water Treatment Plant Redevelopment


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

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

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

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

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

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

Here is the summary of the Treasury program from CNN:

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

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

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

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

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

Kevin Burns Urbanspace Realtors Austin
Kevin Burns
urbanspace CEO & Broker


Here is transcript of our interview with Kevin Burns:

How long have you lived in Austin?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

La Vista on Lavaca is Back: to Proceed With Construction

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

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

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





Here is a summary from the Austin Business Journal:

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


BartonPlace Construction Update

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

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



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

Massive 30-Acre Riverside Development to Proceed

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

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

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

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

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

Here is a summary from the Statesman:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Original Series on Downtown Austin TV

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

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

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

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

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

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


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

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

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



Watch the full story here or read the transcript below:

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

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

D'Arcy said supply is going up as well.

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

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

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

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

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

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

One Day Only: Tour the Major Downtown Condo Projects

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

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

Brazos Place Opens to Residents, Units Still Available

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

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

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

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

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

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

Here are current images of the project:






New Apartment Tower to be Built in Warehouse District

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

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

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

Gables West Avenue Apartments at 3rd & West


Here is a summary from the Austin Business Journal:

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


Hotel Van Zandt Cancels Condo Project


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

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

THE ORIGINAL PLAN FOR THE HOTEL VAN ZANDT:


THE NEW PLAN FOR THE HOTEL VAN ZANDT:

Austonian Proceeds: To be Tallest Residential Building West of Mississippi

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

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

austonian austin condo press conference

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

Here are additional facts on the Austonian:

Height of Building: 683 feet; 56 stories

Gross Area Square Feet: 850,000

Total Residential Area Square Feet: 600,000

Total Number of Units: 188

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

Shared Amenities: Over 40,000 square feet

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

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

austonian amenities deck

Austonian Tallest Austin Building Rendering

$50 Million Downtown Condo Project Cancelled

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

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



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

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

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

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

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

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

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


Larry Speck/PIRATE DESIGN


MITHUN


CATELLUS DEVELOPMENT GRO


BOSSE AND TURNER ARCHITECTS


COTERA AND REED ARCHITECTS

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

Patagonia to Lead Congress Avenue Comeback

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

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

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

Here is a summary from the Statesman:

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

Austin Hike & Bike Trail to be Extended

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

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

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

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

According to the Statesman:

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

New Downtown Affordable Housing Initiative

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

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

The City plans to choose a developer in June.

Here is a summary from the Statesman:

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

BartonPlace Approved by City, To Begin Construction

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

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

BartonPlace Barton Place Condo Project Austin Barton Springs

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

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

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


New AMOA Tower Soon to be Announced

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

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

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

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

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

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

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

New Businesses to Open on 2nd Street

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

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

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

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

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

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

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

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

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

Three Downtown Projects Likely Postponed

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

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

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

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

The Most Controversial Project: Version 3.0

The Congress Avenue Marriott -- a 1,000 room hotel complex on 2nd and Congress avenue -- is the most controversial, and one of the least popular downtown projects. The project is best known for displacing Las Manitas and other local businesses. While the full details of the current plan are not known, the last two versions of the project were criticized for bland institutional architecture and a lack of ground-floor retail on a key block connecting the convention center area to the second street district.

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

The original plan for the project included 1,000 rooms across 3 separate Marriott-branded hotels in one convoluted multi-facted building. The second version of the project included two hotels in one building. Version 3.0, announced today, includes just one Marriott hotel with 1,000 rooms. With the changes and increases in downtown construction costs, the project budget has supposedly climbed from $185 million to more than $250 million.

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

Here is a summary from the Austin Business Journal:

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



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

The Austin Parking Enterprise has Arrived

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

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

Here is a summary from the Austin Business Journal:

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


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

Is That Really the View?

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

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



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



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



Here is the summary from the Statesman:

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



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

New Destination Library May be Incorporated into Seaholm Plan

Over the last year, a task force has been working on a plan to create an ambitious new destination library for downtown Austin, This flagship facility would incorporate world class architecture and a prime downtown location to create a dramatic new public space that will be a prime asset for downtown denizens.

The big question has revolved around location -- what is the best available spot to realize this vision? A new consensus seems to be emerging around a prime lake-front lot between Seaholm and the current site of the Green Water Treatment Plant. The location -- currently an electrical substation -- is adjacent to the beautiful art deco Seaholm power plant structure which is set for mixed use redevelopment over the next few years, The facility is currently being decommissioned in preparation for redevelopment. On the other side, the Green water treatment parcel is in the earliest stages of development -- initial plans have not even been drafted.


Graphic Source: Austin Chronicle

Here is a summary from the Chronicle:

"So many parcels, so many plans! For the new central library, the site now proposed and favored by library advocates and the city is the current site of the Seaholm substation, an Austin Ener­gy facility that fronts on Cesar Chavez, between West Avenue and Shoal Creek. Library advocates are excited about the location, where a stand-alone destination library (envisioned as world-class architecture) would overlook Lady Bird Lake. That signature structure would be flanked to the west by the redeveloped Seaholm Power Plant site and to the east by a four-block, high-rise redevelopment on the Green Water Treatment Plant site. Shifting the library from the Green site proper, said Council Member Brewster McCracken, will accelerate the project's schedule – with a design competition now slated for 2008. "They're a huge winner on this," he said of the library, which also gains parking and site preparation in the deal."

The Beginning of a Congress Avenue Comeback

Prior to 1960, Congress avenue was the center of retail and commerce for the City of Austin. Over the last 5 decades, Congress Avenue has been in a steady state of decline as city residents increasingly looked to suburbs for shopping and commerce. Today, there are only 13 retail business on the prime central stretch between the Capital and the lake.

Historic Congress Avenue 1940s
IMAGE: Congress Avenue was the heart of commerce in the 1940s

With the creation of the thriving second street district and the arrival of a new breed of downtown condo residents, Congress avenue may be on the upswing. Over the next few years, the Austonian and a sprawling multi-Marriott complex will link Congress Avenue to the Second street district and the convention center dining district.

Today, a first step towards the revitalization of Congress avenue was announced. After 9 years of closure, the historic Yaring's department store on Congress between 5th and 6th is being redeveloped into retail and commercial space -- bringing new life to a shuttered eye sore on a key downtown block.

Here is the summary from the Statesman:

The historic Yaring's department store on Congress Avenue, which has sat empty for nine years, is getting a dramatic redo.The building at 506 Congress Ave., which was constructed in the late 1880s, is best known for the store Jacob Schmidt opened in 1936. Yaring's, once a pillar of downtown commerce, closed in 1998. A forlorn "For Lease" sign has hung across its pink stucco facade for years.Now, the plan is to renovate it for retail or restaurant use on the first floor and offices on the second and third floors, said Kevin Kimbrough, vice president of Oxford Commercial, which oversees leasing of the building for owner Walter Penn.



Yaring's Department Store Congress Avenue Austin
IMAGE: Yaring's Department Store on Congress Ave to be Redeveloped

Seaholm Rezoning Under Way

Over the next decade, the redevelopment of the Seaholm power plant and Green Sewage Treatment Plant will forever transform Austin's downtown. By reclaiming a dozen blocks in the core of downtown between Lamar and San Antonio, 1st and 3rd streets, these projects will provide a multi-use urban district that connects the second street district to Whole Foods.

With the development of retail, cultural institutions, office, hotels, and condo units, these developments are likely to shift the center of gravity for downtown Austin further to the West. In fact, the Seaholm development, with the redeveloped shell of the mammoth art deco power plant at its core, may become the new heart of downtown. The Second Street district, which now forms the Western edge of the downtown core, will be much more central once development reclaims the blocks to the West.

Downtown Austin Map Seaholm Green Condo Development

Here is a summary from the Statesman:

The city is taking the first steps toward redeveloping two of its high-profile downtown properties by rezoning them.The City Council will vote tonight on rezoning the Seaholm Power Plant site in preparation for a mixed-use project that will include 80 condos, a 160-room hotel, 100,000 square feet of office space and up to 60,000 square feet of retail.The city wants to rezone the property to allow building heights of up to 393 feet. The height is now capped at 120 feet.The City Council could also approve a resolution to begin the process of rezoning the site of the Green Water Treatment Plant.No plans for that site have been formed, but the city intends to release requests for proposals from developers early next year.

Introducing Austin's Municipal Parking Authority

As downtown Austin continues to grow and thrive, it gets harder and harder to find a parking spot. For city planners, there are two ways to view this phenomena: either as a problem or an opportunity.

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

Other cities with emerging downtowns have overcome similar obstacles by building -- or providing incentives to build -- abundant free parking. In Fort Worth, for example. the Bass family which controls much of the land in the heart of downtown, built a successful pedestrian downtown by combining rapid multi-use pedestrian-friendly development with abundant free parking (and a private downtown security force). The combination worked and downtown Fort Worth has gone from an abandoned urban core to a vibrant 24x7 downtown in a little more than a decade.

Austin has a different plan. The City has proposed a Municipal Parking Authority which would build garages throughout downtown in partnership with developers in a joint venture that would bring in millions of dollars of parking revenue to the city. At $19,000 a space, parking is expensive to build. While the City clearly sees the parking shortage as a opportunity to add capacity and earn money for the city, this perspective may be short-sited. By focusing more on low cost parking and less on profits, the city could likely generate more revenue through sales and property taxes as well as hie prices for city owned land sold in the future.

Huge Downtown Site Slated for Development

Over the last few years, much of Austin's downtown has been redeveloped -- or planned for redevelopment.

Whole Foods has transformed an area of car dealers and auto body shops. The second street district transformed a region of old warehouse and industrial buildings. Seaholm power plant has been decommissioned and is now slated for mixed use development. Congress avenue is set to be transformed with a new hotel megaplex and the Austonian tower.

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



The plant, which is located between Cesar Chavez and Third streets between Seaholm and San Antonio is about to be decommissioned to make way for a new development. On November 29, the city will begin the process of soliciting proposals for redevelopment of the site. Once complete, the new development will likely add retail, housing, and office space while filling in the missing streets on the city grid.

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

Over the next year, the City will seek and review proposals from developers interested in the site. Once a developer is selected, construction is expected to begin in 2010. Full build out of the site could take as many as 10 years. The land, which is currently owned by the city, is expected to sell for as much as $65 million (half of the proceeds will then be used for site improvements including reforming the street grid throughout the site). At that price, developers will need to build some tall buildings -- condo, rental, or commercial -- in order to profitably develop the site.

After 3 Months, Monarch Converts Back to Apartments

In an embarrassing reversal, the Monarch Condominiums has decided to convert from a 100% condo project to a 100% rental project. This follows the projects switch from rental to condo just 3 months ago.

At the time of the switch, the condo market was very strong and and the downtown rental market appeared unable to support a 305 unit high-end downtown project. As construction costs continued to escalate, the Monarch sought greener pastures in the condo market. With construction costs rising and rents determined by the market, the Monarch likely had no good options. With the building only months away from completion, they made a big bet that they could sell enough condo units quickly enough to make the bet pay off. With experience in the crazy Florida condo market where projects would sell out in days, they were optimistic that the Austin market could support quick sales.

It didn't work out the way they expected. The Monarch was likely hurt by three factors:

- It takes a long time to sell 305 condo units in Austin, even in good times. With just 150 single family sales in central Austin each month, the strongest projects sell 5-10 units per week. With limited time before completion, the Monarch didn't have enough time to sell enough units before completion. When the competition has beautiful sales centers and expensive virtual reality presentations, it can be hard for new projects to quickly catch-up.

- Projects designed for the rental market do not fare well in the condo market. Condo owners expect perfection -- buyers are always pickier than renters. Even with a discount, buyers tend to hold out for the perfect project.

- The project was a victim of bad timing. The credit markets imploded just weeks after they announced their intention to convert from rental to condo. While condo sales continue, the rate of sales was certainly much slower than they expected.

Together, these factors likely forced the developers of the Monarch into a very difficult position. With reports of strong pre-leasing at the new AMLI project on second street at rates of as much as $2.75 per square foot per month -- that's $2,750 / month for 1,000 SF -- Monarch must have concluded that the best shot of success was back in the rental market.

Here is the summary from the Austin Business Journal:

Burns says the decision to switch strategy wasn't at all a reflection of lack of demand for condo units downtown. "For us to have sold as many units as we did in the slowest selling season, I think says a lot," Burns says. "We simply didn't have the luxury of time on sales."The Monarch's units will range in size from 681 square feet to 3,530 square feet with lease rates starting at $1,650. The development will also feature more than 9,500 square feet of ground-floor retail space.Burns says taking Monarch out of the sales picture will likely make the downtown condo market rather tight in the near term. Developments that are near completion like The Shore and 360 are virtually sold out. And while a slew of new projects have been announced, and a few have broken ground, it will be late 2009 before the first of those comes to market.


While converting to rental is probably the best strategy given the market and their short time horizon, it was likely a very difficult decision. With approximately 60 units sold, they must now walk away from all of those contracts. While the rental market may be stronger by comparison, the project is likely looking for rents ranging from $1,650 to $7,000 or more per month. It will be hard to rent the high-end units as very few people are willing to pay those kind of dollars for downtown rental units.

While we've talked about overcapacity in the Austin condo market, the removal of 305 units in the Monarch from the market will have a dramatic effect. With the Monarch out of the picture, there will be very few new units hitting the market in the next year. With less competition, we should see strong sales at the remaining projects whose delivery will be staggered over the next three years -- at least they have plenty of time to sell out before their projects are completed.

Major Downtown Condo Project On Hold?

Rumors have been circling for months that AquaTerra, a 163 unit 20-story project planned for Barton Springs road between Congress Avenue and south First street, has been having trouble getting off the ground. In fact, the building was supposed to be complete by 2008 -- yet construction hasn't even broken ground.

While we have not received any confirmation from the developers, we have heard from other sources that the project is in fact on hold and is unlikely to ever be completed. If true, this represents the first major cancellation of a downtown condo project. While it is easy to blame the project's demise on the credit liquidity crisis, AquaTerra has been in trouble for many months due to weak demand. Competition is intense to market units to downtown buyers --- projects that are not attractively positioned and aggressively marketed will have trouble getting noticed.

Here is what the project would have looked like:

City Approves Plan for Second Downtown

The Austin City Council today approved the first phase of a plan to create a second "downtown" urban center in the region of north Austin near Braker and Mopac -- essentially the area surrounding the domain. As we have reported in the past, between now and 2015, one developer alone plans to build 50 new buildings with heights ranging from 2-26 stories (as tall as 310 feet). When complete, The Domain will form a second Austin "downtown" with as many as 82,000 residents and 50,000 daytime workers. To put these numbers in context, Mayor Will Wynn has working hard towards a big goal: getting 25,000 people to live in the real downtown by 2015, the same timeframe.

Here is the summary from the Austin Business Journal:

Austin's City Council gave final approval of phase 1 of the North Burnet/Gateway master land use plan, which will create a so-called second downtown in the area around the Domain luxury shopping center by 2035.The North Burnet/Gateway plan's vision is to ultimately create clusters of dense, mixed-use, pedestrian-friendly neighborhoods in the 2,300-acre area north of U.S. 183 bounded by Walnut Creek, Metric Boulevard, Braker Lane and MoPac Expressway.The final plan will allow developers to build denser than anywhere outside of downtown, as high as 15 stories or 180 feet, and up to 30 stories or 360 feet in areas closest to planned commuter rail stops.Phase 1 immediately designates a zoning overlay district in the area to allow vertical mixed uses and other urban design elements, and to preclude interim development not in concert with the plan.A draft plan of Phase 2 -- outlining ordinances implementing the plan -- is expected in six months, says Molly Scarbrough, a city senior planner. Final approval for the entire plan is expected in a year.

Second Austin Downtown at Domain by 2035

As we have reported in the past, developers and the city have announced ambitious plans for the second phase of the Domain: the new mini-city rising off Mopac just north of 183. Between now and 2015, one developer alone plans to build 50, yes FIFTY, new buildings with heights ranging from 2-26 stories (as tall as 310 feet). When complete, The Domain will form a second Austin "downtown" with as many as 82,000 residents and 50,000 daytime workers. To put these numbers in context, Mayor Will Wynn has working hard towards a big goal: getting 25,000 people to live in the real downtown by 2015, the same timeframe.

The Domain capitalizes on a an ongoing trend in large scale development: Pleaseantville-like mini-cities that blend ground-floor retail with rental, condo and commercial properties on the upper floors. The goal is to create a disneyesque main street development that becomes a destination for retail and entertainment while making the development an attractive place to live and work. Envision multiple city blocks with street-side parking (and plenty of garages).

Today, the City of Austin took a step forward by approving phase 1 of a master plan for the area which will officially strive to create a second downtown on a 2,300 acre parcel adjacent to the domain by 2035.

Domain Future Development Austin

Here is the summary from the Austin Business Journal:

City Council preliminarily approved phase 1 of the North Burnet/Gateway master landuse plan, which will create a so-called second downtown in the area around the Domain luxury shopping center by 2035.Final approval by City Council for Phase 1 is expected on Nov. 1.The North Burnet/Gateway plan's vision is to ultimately create clusters of dense, mixed-use, pedestrian-friendly neighborhoods in the 2,300-acre area north of U.S. 183 bounded by Walnut Creek, Metric Boulevard, Braker Lane and MoPac Expressway.The final plan will allow developers to build denser than anywhere outside of downtown and as high as 15 stories or 180 feet, and up to 30 stories or 360 feet in areas closest to planned commuter rail stops.Phase 1 immediately designates a zoning overlay district in the area to allow vertical mixed uses and other urban design elements, and to preclude interim development not in concert with the plan.



The initial Domain site consists of 57 acres and stands on the former site of Century Oaks Park, a multi-purpose recreational facility for IBM employees and their families. The park was so named for the century-old trees contained within. The land was purchased from IBM, and demolition of the park began in 2004.

Additional land for The Domain is being reclaimed from vacant IBM manufacturing and administrative buildings, as well as driveways and parking lots that were once part of the original IBM campus.

The developers were granted tax subsidies in 2003 from the City of Austin and Travis County. Total developer compensation from taxpayer money over the life of the agreement could reach $60 million. The developer keeps 80 percent of the city's sales tax for the first five years and 50 percent for the next 15 years. Plus, 25 percent of the property tax is rebated back to the developer for the entire 20-year period. The city of Austin expects to take in about $40 million in sales and property taxes over the 20 years of the incentive agreement.

Riverside Condo Proposal Rejected by Planning Commission

When it comes to Austin condo zoning, there is one holy grail: there will be no exceptions to the current zoning rules which prohibit new construction within 200 feet of the shore of Lady Bird Lake. This simple rule, however, made for a difficult decision for the Planning Commission and the City Council.

CWS Capital Partners has purchased a plot of land with existing buildings that sit as close as 20 feet from the lake. Under current rules, they can redevelop these buildings, but they can not build new structures within the 200 foot easement. So, CWS asked the city for what seemed like a fair compromise: they would demolish the buildings close to the lake and extend the hike and bike trail by 1/3 of a mile in exchange for permission to build their towers 150 feet from the lake. Virtually political forces agreed that it was bad idea to allow any exception to the 200 foot rule -- the likely fear being that it would set a precedent for other developers.

Here is the summary from the Austin Business Journal:

The city's planning commission unanimously rejected California-based CWS Capital Partners' plans to build three highrise condo buildings as close as 150 feet from the shore of Lady Bird Lake.CWS had requested a variance to the Waterfront Overlay Ordinance that prohibits CWS from building within 200 feet of the lakeshore. In exchange for being granted the variance, CWS proposed to donate nearly 2 acres of waterfront parkland and extend the hike-and-bike trail by one-third of a mile along Riverside Drive.CWS can appeal the decision to the City Council, but CWS attorney Richard Suttle says the company will likely not appeal, given that four council members have already publicly expressed their opposition to the variance.If the variance request remains denied, CWS plans to build two highrises -- one 200 feet, the other 120 feet -- and redevelop dozens of apartments that sit as close as 20 feet from the lake shore to sell them as townhomes. Those apartments pre-date the 200-foot rule.





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 www.downtownaustin.org/DLT.html.  Prices range from $15 for DANA members to $40 for non-members who attend the VIP party.

Jumbo Mortgage Rates Spike

The mortgage crisis is now front page news all across the United States. While conforming loans remain okay -- primary loans with values below $417K and full income documentation for buyers with solid credit - the investor market for everything else is in trouble. The result is a rapid rise in rates. As for the condo market, there will be very little effect for buyers of units that are less than $500K. For the high-end market, however, the market change is dramatic.

First, many buyers who qualified for loans a couple of weeks ago will not be able to get financing at all today. For those who can still get financing, rates have risen dramatically and are currently hovering between 7.5% and 8.0% for jumbo 30-year mortgages.

Bankrate.com reported today that:

Buyers of pricey houses are finding that money has suddenly become more expensive to borrow. Ditto for loan applicants who don't want to prove that they told the truth about their incomes.Rates on jumbo and Alt-A mortgages have zoomed upward since the last week of July, even as rates on conforming, fixed-rate mortgages slipped downward.The development is bad news for people who want to borrow more than $417,000 to buy a house or refinance a loan, or who can't or don't want to document their income. Rising jumbo rates make it more difficult to sell a house costing half a million dollars or more.



Over the last few months, hundreds of Austin buyers have put units under contract in new condo projects such as 360, the Four Seasons Residences, and the W Hotel & Residences. many of the buyers may no longer qualify for mortgages, or, may not be comfortable with the higher monthly payments now required. While every building is different, some projects do allow buyers to get 100% of their deposit back if rates climb over a certain threshold, one of the major buildings set this rate at 8%, or if buyers are unable to secure financing. With rates spiking, some buyers will be able to take advantage of these provisions.

For the majority of downtown units priced under $500K, including most of the units I buildings like 360, the current mortgage crisis is not catastrophic. While lending standards have tightened this week, most buyers with solid credit and documented income will still be able to qualify for the same traditional mortgage, just at a slightly higher rate.

For buyers who can afford the higher rates or our planning to pay cash, now might be a great time to negotiate with developers. If this crisis continues, it will be very difficult to sell many of the high-end units currently planned for downtown Austin.

Mortgage Crisis Hits Austin

Over the last two days, the Austin lending market has changed dramatically for the worse.

As the subprime lending crisis has evolved into a global problem—the bankruptcy of two large lenders seems to have tipped the scales — the market spotlight has turned a negative eye on every participant in the residential mortgage market. As the bad news has spread, lenders are dramatically cutting back on loans -- and rapidly raising rates at the same time.

The market changes in Austin over the last 48 hours are dramatic:

- A number of lenders, especially brand name lenders such as Wells Fargo and Bank of America have hiked jumbo (>$417K) mortgage rates from 6.8% to over 8.0%. Many other lenders seem to be following.

- Specialty loans -- especially loans that do not require income verification or documentation -- have quickly disappeared. These loans, which were commonplace a week ago, are now very difficult to come by. The same is true for loans that do not require a full 20% down payment.

- It has been reported that large loans (>$1.5M) are now very difficult to obtain, even for people in a very strong financial position.

These changes are bad news for buyers -- especially buyers who have placed deposits, are stretching their budget, and haven't locked in their final loan. We'll see how the marker evolves over the next few weeks. While anything could happen, most experts believe that the mortgage lending environment will get worse before it gets better.

Austin Crane Shortage

Austin's KXAN is reporting tonight that an acute shortage of cranes and crane operators is complicating high-rise construction in Austin. We've heard numerous reports from developers that a scarcity of construction labor -- and skilled general contractors and sub-contractors — is leading to escalating constructions costs, and higher condo prices in the end.

According to the story:

"There's no available operators in Austin right now," said construction worker Sam Buchanan. "They're all working." With a nationwide shortage, construction managers are paying more to keep cranes moving in Texas.



Over the last two decades, only a handful of tall buildings have been built downtown. As a result, local construction companies are only staffed to build a couple of major projects at one time. With more than 20 projects currently under construction or being planned, it is getting very difficult to find labor and equipment to build new projects. The result is simple: construction prices are going up and condo prices will likely follow.

W Austin Condo Update

The W Hotel & Residences continues to make progress. They are now actively selling units ad have completed nearly 200 meetings for the 206 planned units in the 36 story tower. Supposedly, they have taken firm reservations for somewhere between 20-35% of the units.

The W is offering 19 different floor plans ranging in size from 644 to 3,779 square feet. They have launched a new website which includes all of the floor plans: http://www.block21residences.com/plans.asp. The project is located in the heart of the second street district directly behind city hall. The modern W brand is popular and should fare well with a young, affluent audience.

Here is a new image of a model of the planned building:


Monarch Switches to Condos

As predicted, Monarch has officially announced that they are switching their project from all-rental to all-condo. This is big news, It's indicative of both the hot condo market and the weakness of the high-end downtown rental market. The 29-story building at 805 West fifth street, is located just a block from Whole Foods. The buidling, which is less than a year away from completion, will feature 305 units from 681 square feet to 3,530 square feet and priced from the low $200,000s to $1.65 million.



Here is the sumary from the Statesman:

Developers of the Monarch, a 305 unit residential tower under construction on West Fifth Street, have decided to switch the project from apartments to condominiums . . . Officials with ZOM Texas Inc. said their investors this week approved the decision to sell rather than rent the units in the 29-story building, based on what they say is continued strong demand for downtown condominium living. . .Some observers said the change renews questions about whether Austin's downtown residential market might be at risk of being overbuilt. But Charles Heimsath, whose consulting firm does research for many developers about demand for their proposed projects, says healthy sales and reservations at various projects are prompting him to raise his estimates on how many units the market can absorb annually, and he said he expects demand to remain strong for the next two to five years.



And the developer and broker seem very optimistic about the projects sales potential:

Kevin Burns, principal broker of Urbanspace Realtors LLP, the Monarch's exclusive listing agent, said that, without any marketing efforts until now, there already are prospective buyers for at least half the building. From the start, the Monarch's units were built to condominium standards and specifications — larger units with features such as hardwood floors, granite counters and wood cabinetry, for example, with the long-term goal being to sell them, said John Faulk, development manager for ZOM Texas Inc., a subsidiary of Orlando-based ZOM Inc.



The Monarch has a great advantage which is that they will beat many of the other planned projects to the market. With dozens of projects in the early phases of construction or still in the pre-construction planning phases, Monarch will have the advantage of marketing units that are very close to completion, and to target the pent-up demand for new projects.

Strong Pre-Sales for Austin Four Seasons Condos

This just in: we confirmed today with the developers that 80% of the Four Seasons Residences on floors 14-32 have already been reserved after just 6 weeks on the market. As a result, they have now opened the lower floors - floors 6 to 13 -- for reservations. Prices for the 166 unit-project start at $400K and top out at more than $4 million.

Four Seasons Condos Austin

This is great news for the downtown condo market. One of the big mysteries has been how strong the demand would be for super-luxury projects such as the Four Seasons and the Austonian. While they are only reservations, the high level of interest is very encouraging. This is especially amazing given that the project has not even broken ground!

As for the lower floor units, the sizes range from 806 to 1,815 square feet with prices starting in the $400s. Amenities include a roof-top pool and terrace, concierge service, and room service provided by the hotel. The project is designed by legendary architect Michael Graves. The full profile can be found here.

Waller Creek Project: An Important Investment in Downtown Infrastructure


In 1981, massive amounts of rain caused deadly and damaging flooding on Shoal Creek. According to experts, a similar flood could occur today on Waller Creek which passes through downtown just West of I-35. If this were to happen, there could be significant damage across more than 1 million square feet of prime downtown real estate bordering the waller creek flood plain. As recently as January, heavy rains have led to dangerous flooding on Waller Creek.



Recognizing this risk, developers and other downtown factions have been advocating for an elaborate downtown tunnel that would carry floodwaters 60-feet under the current creek banks, essentially eliminating the risk of a downtown flood on Waller Creek. In addition to lowering the risk of development on some prime lots, the City hopes that the tunnel will pen the way to the development of a San Antonio sytle Riverwalk with gondolas, restaurants, stores, and lots of free-spending tourists. Today, the City Council took the first step to make this happen.

Here is the summary from News 8 Austin:

Plans for the Waller Creek tunnel project are moving along. The Austin City Council unanimously approved the creation of the Waller Creek Tax-Increment Financing District at Thursday night's meeting.The decision allows for the redrawing of district lines so that political entities can fund the project. In this case, it allows for the city of Austin and Travis County to finance the project.The Waller Creek tunnel would carry water from the creek starting at Waterloo Park down to Town Lake and take out more than 1 million square feet of prime downtown land from the floodplain.Development plans also include beautification projects for Waterloo and Palm parks.Thursday's city council decision makes way to appoint the tax-increment financing district board, which will ultimately approve the final financing plan. The cost is now pushing $125 million.



While expensive, this project makes sense. The city wants developers to spend billions of dollars investing in downtown. For this to happen, the city needs to invest in infrastructure to support development and remove the risk of downtown flooding. The idea of a pedestrian-friendly riverwalk is a nice idea that would dramatically improve the somewhat dreary corridor on the west end of downtown. While this project will take years to complete, today's council decision is a step in the right direction.

East Avenue: $750M Development Near Downtown


A lot of money is being spent on downtown development -- more than $2 billion in condo projects alone at last count. And while it is technically outside of downtown, it seems another $750 million mixed use development is about to break ground. The project will develop 2.75 million square feet across 22 prime central acres near downtown Austin.

The project, East Avenue, will be on the former campus of Concordia University just North of the University of Texas on the West side of I-35. The goal is a new mixed-use "downtown" with residential, commercial, retail, parks, and a hotel. Here is the summary from the Austin Business Journal:

With a three to five-year build-out timeframe, the project will eventually include 1,450 residential units, 600,000 square feet of office space, 325,000 square feet of retail and a 250-room luxury hotel. Pocket parks, public spaces and an interconnected network of walkways will also be included in the layout of East Avenue, which developer Andy Sarwal hopes will become an entertainment and shopping hub, providing a dense, urban-living alternative to downtown.



As we have asked before, how many downtowns does one city need? It's hard to tell what is happening: the optimistic view is that responsible developers are working hard to create model mini-communities that represent a new sort of urbanism. I hope this is true -- and that Austin is becoming a leader in a new sort of urban or quasi-urban growth. Clearly, it's too early to know how these projects will fare --- my sense with all of these (the Domain, The Triangle, etc.) is that they don't really become interesting until after a few phases of development when they reach a scale that provides a critical mass for people to live, work, shop, and have fun. So far, only the Domain seems on track to reach this objective.

The following images, courtesy of East Avenue, show the site and renderings of the new neighborhood: