Seymour Fogel Mural
The Starr Building located at 107 West 6th Street, Austin Texas, has been sold. CB Richard Ellis represented the owner in the sale of the roughly 77,000 sq ft office and parking garage. The building has been around Austin some 55 years and houses a famous (to art and architecture folks mostly) mural by Seymour Fogel.
The mural itself is very pretty. I hope that the folks who purchased it try and make the finances work without plopping another high rise in a downtown that already has enough “towerage”.
Kemp Properties purchased the property and has previously restored other buildings like the Brown building. I think that’s a beautiful building so we ca assume that the Starr Building is in good hands.
Take a look at some of the photos from the listing agents at CB Richard Ellis. It looks like it would be a perfect set for Mad Men!
Starr Building Interior
Starr Building Exterior
It’s not difficult to find mixed-use developments in any large city; Austin is no exception to this. At this moment, there is a developer that wishes to add another mixed-use development near the capitol. The project is called Capitol Terrace, and it is situated on the south-west corner of 14th Street and Lavaca. There is another mixed-use development just blocks away.
downtown development with tree lined streets
The city council would need to approve a zoning change for this quarter-block development, because the proposed height of the building (12 stories, up to 163 feet tall) is higher than the maximum currently permitted in the area (120 feet).
To say that this development would have “a little of everything” would be accurate. It is projected to have 5 floors of office space, or about 61,000 square feet. It would have 30 higher-end apartments for those with business at the Capitol. That could be lobbyists, or legislators. It would have small shops such as gift shops, and a white-tablecloth restaurant. It is also slated to have 5 levels for parking, of which 2 would be under-ground levels. Currently, only one lease would be displaced by the new development.
Pedestrians would be treated to spacious, tree-lined sidewalks.
The proposed zoning change is expected to be heard on December 12, 2009. If approved, construction is expected to begin in the second quarter of 2010.
Downtown Austin thrives with incredible growth and opportunity. With the growth and development there comes constant conflict. The downtown historical locations are being lost by all of the development. At this time, not one building in downtown Austin has been submitted for historical protection or landmark status. Also perplexing, none of the local or national historic registers has listed the area, in whole or in part, as a place of value. One example of a future development that should concern local Austin historians is the recent permit obtained by what will become the Gables Republic Park, a 16 story apartment community. The demolition permit is intended to partially tear down the 1913 Nabisco warehouse. For the last fifteen years the location housed the Ginger Man company.
The local Preserve District Council has put forward some ideas and proposals to save at least part of Downtown Austin. The tools of the proposal made by the ROMA Design Group and HR & A advisers have created a significant and active debate among property owners and local groups like the Heritage Society of Austin and the Downtown Austin New Alliance. Also chiming in actively is the Central Texas Chapter of the Congress for the New Urbanism, the Downtown Austin Neighborhood Association and the city of Austin’s design and planning commissions. ROMA’s recommendations were then presented in public on July 23. Until now, this issue is in hot debate, as many of the supporters of the concept do not support the specific idea’s laid out here: www.cityofaustin.org/downtown It will be debated and discussed in council again on the 24th. Members will provide policy direction and a vote may occur to direct a draft of the density bonus and applicable ordinances with specific warehouse district rules.
There will be much debate on how to balance historic preservation while still allowing for development to progress as needed. Before the council votes on the measure, and before they determine exactly what tools will be used, the community will need to voice their opinion. The public meeting will be held Sept 24th
As companies downsize their budgets, commercial loans have defaulted by more than double over the last year. It is currently at 7% which is double the default rate from the previous year, but that does not stop there, the rate increases will harm small and regional sized banks. As the commercial side of mortgage loans defaults, the smaller banks find larger gaps to fill. Today it is nearly impossible to obtain a new commercial loan.
New construction options have been limited by lack of funding and many businesses are foregoing the commercial ownership prospects. This creates other options. For many businesses who are not ready to buy have options to rent, and finding a prime location that is available in their budget. This enables expansion options, even in an otherwise difficult market.
For companies who are ready to buy, with minimal or no loan, this is the time to do it. There will be no better time to find a deal on a commercial property, and there is no better city than Austin. Contact Joe Cline today to get started finding the best location for your business and budget.
For the last 4 years the Austin Starr Building, a large imposing building in downtown, has stood empty. All of this is no longer true. This 55 year old building is getting a face lift and a new resident. Kemp Properties is currently in the process of closing the deal to purchase the property. It is their intention to renovate and update the building while preserving the history of this large Austin landmark.
In 1954 the Starr building served as American National Bank, who included Austin’s first escalators and the first drive up banking center in the area. On the interior lobby wall is a mural that made Fortune magazine’s shortly list of distinguished national architectural paintings, this mural was designed by modern artist Seymour Fogel. These are just some of the historical attributes associated with the incredible building.
The goal of the Kemp renovation will be to preserve the historical value while bringing it into a green and energy efficient design. They will be leaving the renovation and planning to the capable and renowned company of McGarrah Jesse firm. Their plans and architectural expertise has been seen in several preservation and renovation projects around the city and the world. To their credit the list includes the Lady Bird Johnson Wildflower Center along with the LBJ School Renovation.
The example this acquisition makes for all of Austin is that commercial real estate is still a viable investment for any company. Finding the right commercial establishment, rich and full of history is an investment that can enhance any business, even in troubled times. This process will be made fair with the use of your commercial real estate agent.
Austin has been working intensely on creating a competitive downtown area that will encourage commercial and residential growth. A large contributor to this goal is the increase in mixed use properties downtown. Many have excellent prelease arrangements for retail space, office space, and apartments. While the nation struggles to maintain normalcy in a weakening economy, Austin has managed to stay above the curve in many respects. The real estate market has slowed here, but the area is not nearly as hard hit as most other comparable cities. Companies continue to seek out cities such as Austin for the potential to grow their business. Austin provides the perfect setting for employers and employees alike. The mixed use properties currently underway and pending offers even more incentive to help Austin grow.
Mixed use properties can evolve as the demands change. This is evidenced by the recent announcement by Stratus Properties, Inc President and CEO, Beau Armstrong that Austin’s Block 21 project may add up to 35,000 square feet to accommodate a potential new leaser. While many builders have decided to put new construction on hold while awaiting a change in the economy, Armstrong states his project will continue as planned. The property is about 44% leased, and should continue to fill as construction is underway. Armstrong is open for more changes if necessary. Sales have slowed in response to the economy, but Armstrong is confident that more will become interested as the property is built.
Austin is expected to fare much better than other cities during the economic crisis. More businesses are expected to take advantage of the healthier economy here. As businesses move in, employees will also filter in. The potential of increases will help Austin reach its goal of downtown growth.
Commercial Sale
Austin may be enduring the economic slowdown less than other cities, but it has felt it. Since September of last year, especially, the market has slowed dramatically. As the new year starts there is concern over a deepening recession across the nation. Austin is still a great location for business and investors are aware of this, proven by a sale of two buildings in downtown Austin. This is the first major commercial sale since September.
Barton Oaks Plaza 1 and 2 have been purchased by Austin-based HPI Real Estate Services and Investments and Dallas-based Sarofim Realty Advisors. These buildings house several businesses, including LifeSize Communications and TBG Partners. Barton Oaks 1 is currently fully leased, while Barton Oaks 2 is at 90% occupancy. The buyers were impressed by the buildings location on South MoPac Ave and its proximity to higher end residential communities. HPI has developed several buildings in Austin and has confidence in the city’s ability to keep the local economy strong. Since only a few of the current leases are up next year, this purchase should not adversely affect the investors. HPI did report that it was more difficult to find financing than in previous sales, a side effect of the credit crunch.
While the nation expects 2009 to be a slow year for real estate, Austin’s economy is expected to stay above the national rates. The city is expecting job growth in the next year with many mixed use properties currently underway. Most comparable cities are not looking so good. Austin is still considered one of the best investment locations in the nation.
Mark Dotzour, a chief economist at Texas A&M University, expects that the Austin economy will recover more quickly than the rest of the nation in the next year or so. Dr. Dotzour cites several anticipated factors that will drive this prediction: an expected additional 8,500 jobs between August of 2008 and 2009 and, with the influx of new workers, the demand for housing will increase. Dr. Dotzour expects to see a major drop in new home construction as developers labor under a tightened loan market. But he predicts that, by the fall of 2009, banks will once again loosen the purse strings and building will begin again.
Of the nine- to eleven-thousand apartment units that will become available next year, Dr. Dotzour expects that the occupancy will hover near 90 percent and landlords, desperate for tenants, will have no choice but to lower their rents drastically – to as much as 94 cents per square foot.
As far as the commercial markets goes, Dr. Dotzour predicts an 84.7 percent occupancy rate for office space, 82.4 for warehouse and industrial space, and retail space will lag as consumers reign in their spending. He expects rents to decrease in the coming year. He also predicts that commercial construction will trail off as costs rise and builders find they have empty inventory on their hands.
This all points to a market bringing itself under control and gearing up for a new period of growth in the coming years.
The Dallas based Trammell Crow Co. is heading a partnership to redevelop the five block area between Second Street and the Seaholm Power Plant and includes the Green Water Treatment Plant, right smack in the center of downtown Austin. Joining the partnership is Constructive Ventures Inc., based in Austin, and USAA Real Estate Company, from San Antonio.
This all-Texas team is looking at an ambitious project that will include 2.6 million square feet of office and retail space, for sale and for rent residential units, hotel and public spaces, as well as parking garage areas that will offer spaces for Austin Car Share and electric car recharge stations.
The partnership proposes major community improvements such as $500,000 toward improvements to Shoal Creek and a grant of public easement for completion of the trail running between Fourth and Fifth Streets. A pedestrian bridge is planned over Shoal Creek to connect the site with the Second Street District. Twenty-five percent of the rental residential units will be made affordable to lower income families. In addition, the group plans to fund public art and music programs and will create an endowment to fund a lunch time music series.
The project includes plans for local retail making up a bulk of the space in the Green Water Treatment Plant and Austin Energy sites. And the icing on this cake is that the firms are aiming for a sky high LEED Gold status for all the buildings, with designs that will reduce energy use up to 50 percent.
Construction is expected to begin in 2009.
Austin may have one of the most trend-defying markets in the country, growing steadily as the remainder of the nation declines, but that doesn’t mean you can assume success is inevitable. It’s not. You still have to put work into your commercial property before your investment can grow. If you don’t, your purchase won’t be an investment but a money pit, something that eats up your savings with no hope of return.
But what’s the smartest kind of work to do? You don’t want to waste valuable time and resources on projects that will net little to no profit. So think toward the future and features that appeal to the residents of your region.
Right now, the people of Austin are interested in commercial structures that combine their residential and business needs. They want businesses to hand it all to them, which is exactly what Stratus Properties Inc. and the Canyon Properties Urban Fund are doing. They’ve joined to create W. Austin Hotel & Residences, a building that will include condos for sale and hotels for rent nightly. The plan is ingenious, combining the city’s growing population with its even more rapidly advancing tourism and business markets.
Of course, if you can’t afford to do something like that or it simply doesn’t coincide with your business plan, think green instead. Austin is one of the most eco-conscious cities in the world. Consumers flock to green homes, green stores, green . . . anything. Whatever you can do to make your structure environmentally friendly will pay off in the long run. It will help keep that investment an investment.
The key to making your commercial property a smart move rather than a poor purchase is planning. Think about what the people around you want and give it to them. It’s the only way to get ahead.
