What happened
City Council authorized the acquisition of two adjacent tracts March 21:
- Tokyo Electron's 46.79-acre office campus at 2400 Grove Blvd.
- A vacant 60.37-acre site at 5601 E. Riverside Drive, also owned by the company
The purchase comes as city officials and staff have been considering ways to move operations and employees out of leased space and into owned property, a strategy viewed as saving the city money long-term.
The approach
City staff began considering the purchase soon after Tokyo Electron put its campus on the market last September, Financial Services Department spokesperson Kimberly Moore said, given the potential for mixed-use, retail and residential development there.
Following the acquisition, Austin plans to lease the offices back to Tokyo Electron through at least the rest of 2024. Moore said the city expects to recoup $3.65 million from the company's rent payments this year and will review its plans for the campus before moving employees in.
"The exact number of staff that will move into the facility is to be determined. During the one-year leaseback period, the city will assess design and renovation needs for the CTECC space, associated costs and funding options. The office space is in excellent condition and will require minimal renovation," she said in an email.
Specific redevelopment plans for the proposed affordable housing and other development have not yet been determined. The land will be transferred to Austin Housing Finance Corp.—the nonprofit affordable housing entity overseen by City Council—for that initiative in the future.
What they're saying
Mayor Kirk Watson said the development could support significant workforce housing for area employees near the proposed Project Connect rail line that'd run down Riverside Drive.
"The vision is for a dense, transit-oriented neighborhood that could conservatively accommodate 1,100 living units. Think about something akin to the Mueller neighborhood—but intentionally built around public transit and with the benefit of the lessons learned about ensuring affordability and other challenges in a much-in-demand planned community," Watson said in a March newsletter.
Council member José Velásquez, who represents the surrounding District 3, called the purchase a "monumental opportunity" for his community and the city.
"One of the greatest aspects of this acquisition is that we are the drivers. And with intentionality, discipline, thoughtfulness and a focus on accessibility and inclusion, we can leverage this opportunity into creating a vibrant, affordable, transit-friendly community that sustainably serves the needs of many and works to mitigate the impacts of displacement," he said after council's March 21 vote.
The new property is also located across the street from about 18.5 acres of undeveloped land on Grove Boulevard also owned by the AHFC. Assistant City Manager Veronica Briseño said "extensive planning, feasibility assessments, and community engagement" will take place before any housing project gets underway.
"The site’s strategic location provides the city with a rare opportunity to acquire a remarkable quantity of contiguous acreage that can help address multiple community needs, create affordable housing alongside space for commercial and cultural endeavors, and all with exceptional access to public transit," she said in a memo.
The cost
The city plans to issue certifications of obligation to buy the existing office facility for $59.88 million, while $27.17 million of the city's anti-displacement funds tied to the Project Connect transit system will cover the remainder.
The land is located off the proposed rail corridor in an area identified by the city as being at risk of displacement given the presence of vulnerable communities, ongoing demographic shifts and a hot housing market.
As of 2023, the Travis Central Appraisal District valued the properties at a combined $49.38 million. Moore said the city's purchase price was based on a third-party appraisal completed in March.
Some context
Tokyo Electron's land sale comes as it's readying to relocate from its longtime home in southeast Austin to nearly 100,000 square feet of high-rise office space just south of downtown.
The Grove Boulevard campus served as the company's North American headquarters since the 1990s. Alongside the office move, Tokyo Electron is also looking to expand its Austin-area presence with about 100,000 additional square feet for research and development and training centers, and 40,000 square feet of offices in Taylor.
