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.

Tags: news

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


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."

Tags: news

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.

Tags: news

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.

Tags: news, austonian

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.

Tags: news

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

Tags: news

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.

Tags: new projects, news

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.

Tags: new projects, news

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.

Tags: new projects, news

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.

Tags: news

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.

Tags: news

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.

Tags: news

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.

Tags: news

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.

Tags: news

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)


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!

Tags: news, new projects

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.

Tags: news

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.

Tags: news

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.

Tags: news

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!

Tags: mls statistics, news

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.

Tags: news

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.

Tags: news

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.

Tags: news

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.



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:

Tags: news

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.

Tags: news

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.

Tags: news

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:











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

Tags: news

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.

Tags: news

It's been a long time since a new building was announced downtown. Today, Starwood announced plans to build a new 17-story concept hotel called Hotel 1 (Hotel One? One? 1? Hotel1?) on the southwest corner of 5th and Colorado across Colorado from Kenichi.

The new eco-luxury concept will feature 250 - 275 rooms and will be developed by Woodbine, the Dallas hotel developer that built the Hyatt Lost Pines just outside Austin and the Hyatt Hill Country and Westin Las Cantera in San Antonio.

The 210+ foot building will require a zoning change to allow for additional density. In the past, the City has council has typically approved these requests for non-lake front downtown properties in an effort to drive additional downtown density. The warehouse district, however, is an important low-rise neighborhood that will likely require a more careful review of the project.

The new project is one of the first Hotel 1 hotels to be developed in what will become a new Starwood franchise (Starwood operates W, Westin, Sheraton, Aloft, St. Regis, and a few other brands). Previous Hotel 1 projects have been announced for Washington DC, Seattle, and other markets. Recent reports, however, suggest that these other projects may now be on hold.

While every hotel will likely be uniquely designed, renderings of the planned 11-story Washington DC Hotel 1 provide hints of how they may develop the 5th and Colorado site:

Renderings of the Washington DC Hotel 1




This is the first hotel project to be announced in downtown Austin in two years. During that time, a number of major hotel projects have been put on hold including the much dreaded Congress Avenue Marriott (originally proposed as three hotels), the 290 room Hotel Van Zandt and a planned Westin in the warehouse district.

Tags: news

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

Tags: news

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.



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

Tags: news

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?

Tags: news

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:

Tags: 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.

Tags: news

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


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.

Tags: news

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

Tags: news

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.

Tags: news

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.

Tags: news

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.)

Tags: news

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. .

Tags: news

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

Tags: news

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.

Tags: news

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


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


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

Tags: news, austonian

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.

 

Tags: mls statistics, news

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.

Tags: news

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.

Tags: news

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.

Tags: news

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.

Tags: news

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.

Tags: news

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.

Tags: news

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.

Article Continues: Read More...

Tags: news

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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Tags: zoning, news

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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Tags: news

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...

Tags: news

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.



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.

Tags: news

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.

Tags: news

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.



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.

Tags: news

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.

Article Continues Here: Read More...

Tags: news

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

Tags: news

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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Tags: news

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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Tags: news

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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Tags: news

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.



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.

Tags: new projects, news

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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Tags: news

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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Tags: news

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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Tags: news

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.



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

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Tags: news

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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Tags: news

In spite of the difficult economy, the major downtown Austin condo projects continue to move toward completion. Lots of news updates this week:

- Tomorrow, Spring will celebrate its topping off. The 42-story building on 3rd and Bowie just east of Lamar has reached the top and is on track for completion in July. The 246 unit tower will be the first project delivered in 2009. According to the developers, an impressive 55% of units have already been pre-sold. With units starting around $300k, Spring is the most affordable downtown skyscraper currently under construction.

- 360, which was completed last year, has now officially sold 99% of its 430 units, making the project effectively sold out.

- The Four Seasons released a very detailed update of current sales and downtown market conditions including the news that they have now pre-sold nearly 50% of units:

"As we enter 2009, Four Seasons Residences Austin is nearly 50% sold. Understandably, the last quarter of 2008 was slow, but sales activity in 2009 has picked up considerably. In the last week we signed a new contract for a 2,700 square foot residence and have a number of additional contracts in process. We continue to see an influx of interest from people who love Austin and are exploring the opportunity to live at Four Seasons. . .

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Tags: Project Update, news, four seasons, 360

According to the developers, plans for Block 21 -- the large second street development featuring the W Hotel & Residences -- have been revised to include 35,000 feet of office space. Assuming that the size of the project remains the same, office space will account for about 3.5% of the planned one million square foot multi-use project. This is the first new office space to be added downtown in a few years

The project update also included the following new facts:

- The W Hotel & Condo plans remain unchanged.

- So far, 44% of condo units are accounted for -- a number virtually unchanged from the 45% under contract as of 12/1/09. According to the developers, sales have practically stopped since the beginning of the economic crisis in November. With delivery 2 years out, the developers believe they have plenty of time to sell the remaining units.

- The project is proceeding on schedule: the first floor should be poured within the next few weeks

- The size of the Austin City Limits theater may be increased from 2,200 to 2,500 square feet

The $295 million project, to be located directly behind City Hall, will be an important retail and entertainment anchor to the blossoming 2nd Street district.

Block 21 Rendering


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Tags: w hotel & residences, news, Project Update

Over the last year, there has been an amazing flow of rumors about the major downtown Austin condo projects. Most of these rumors have been false. In particular, both the Austonian and W have been plagued with gossip that the projects were facing cancellation. Even in the last month, when construction patterns changed during the normal building process, rumors again started that the project would not be completed.

We've carefully researched these rumors -- including meeting with one of the Austonian developers --and are very comfortable that they are not true. The source of the rumors, for the most part, have been innocent assumptions by people who have been made hyper sensitive by the current crisis. With the housing market struggling, observers take any change as a sign of impending disaster.

The problem has become so acute that the Austonian today announced plans to move an office trailer and remove a crane -- both part of normal operations. The announcement was made to avoid another round of false rumors.

Here is a summary from the Austin Business Journal:

Developers of The Austonian are again warding off rumors of changes to the luxury condo’s plans as the construction team prepares to remove its trailers and a crane.

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Tags: news, Project Update

Across the country, housing starts are down dramatically.

During 1998, Austin builders started construction on slightly more than 8,000 houses last year. This was the lowest number in 11 years.

According to Metrostudy, a Houston-based research firm, ustin has experienced a 66 percent decline in housing starts from its peak in the third quarter of 2006 to the end of 2008. This 2/3 drop represents a mammoth market shift. The drop, both in Austin and nationally, is the result of reduced demand for new units, restricted credit for buyers and developers, and falling prices which have made speculative projects unattractive.

Incredibly enough, this 66% drop ranks Austin #1 of the 81 markets studied by Metrostudy. Austin's relatively strong economy, continued inbound migration, steady home values, and lack of a bubble run up have helped to limit housing market erosion during the current credit and financial crisis.

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Tags: market analysis, news

An article published in Architectural Record, the leading national trade publication for architects, provides an extensive profile of the Austonian.

The article reveals new details about the projects green features including it's "Chilled water HVAC" and rainwater collection system. It also talks about the project's high-end touch screen controls for lighting, security, media, and climate which are included with every unit.

Here is the full story:

At 680 feet tall, the Austonian, designed by Houston-based firm Ziegler Cooper Architects, will be the tallest building in Austin when it’s completed in 2010.

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Tags: news, austonian

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.



You can get your free copy of the Guide here.

Tags: news

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.



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.

Tags: news, Project Update

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)


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Tags: news

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...

Tags: news, Project Update

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

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

Height of Building: 683 feet; 56 stories

Gross Area Square Feet: 850,000

Total Residential Area Square Feet: 600,000

Total Number of Units: 188

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

Shared Amenities: Over 40,000 square feet

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

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

The Austonian under Construction (D’Arcy)


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

Tags: Project Update, news, austonian

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...

Tags: news

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 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.

Tags: news

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

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

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

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

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

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

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

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

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

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

Tags: market analysis, news

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

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

Once complete, the 150,000-square-foot decommissioned power plant will be the centerpiece of the 7.8-acre property across Cesar Chavez Street from Lady Bird Lake. With offices, retail, and at least 3 acres of open space, Seaholm will shift the center of downtown activity to the west. While downtown life used to center around 6th street between Congress and red river, the warehouse district, 2nd street district, and Whole Foods have shifted the balance. With Seaholm, the downtown action will increasingly be centered between Congress, Lamar, 5th, and Town Lake.

The most exciting part of the project is the redevelopment of the Seaholm facility itself. When complete, the art deco structure will include nearly 100,000 square feet of retail and restaurants. Construction will begin 2009, with the final project scheduled for completion in 2011.



Here is a summary from the Austin Business Journal:

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

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

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

Tags: news, Project Update

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

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

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

View the 360 listings here.

Here are additional images from the listings:

Tags: 360, news

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.

Tags: news

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.

Tags: news

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


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.

Tags: new projects, news

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.

Tags: news

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.

Tags: news

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

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

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



According to the Austin Business Journal:

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

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

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

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

Tags: news

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:

Tags: news

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:

Tags: news, hotel van zandt

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.



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.

Tags: austonian, news

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

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

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

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





Here is a summary from the Statesman:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tags: news

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

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

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



Here are the details on the proposed project:

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

Here are additional details from the Austin Chronicle:

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

Tags: news, zoning

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

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



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

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

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

- 5,200 new parking spaces

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

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

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

Here is a summary from the Statesman:

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

Tags: new projects, news

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



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

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

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

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

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

Tags: new projects, news

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

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

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

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

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

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

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

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

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

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

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

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

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

The original article can be found here.

Tags: costs, news, market analysis

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

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

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

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

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

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

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

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

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

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

Tags: market analysis, news, 360

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

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

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

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

Tags: 360, news