Capital of Texas Hwy. office space snagged

Experts say the Westlake commercial boom will expand to the Lake Travis region next



Recent commercial property construction along Capital of Texas Hwy. is one indication West Austin is no longer just a collection of wooded Hill Country neighborhoods.



The commercial property vacancy rate in southwestern Austin—including along Capital of Texas Hwy., also known as Loop 360, between the Colorado River and Hwy. 290—is only 9 percent, said Richard Paddock, office leasing specialist at HPI Real Estate Services and



Investments.



HPI is developing San Clemente at Davenport, 3700 N. Capital of Texas Hwy., Austin, one of three remaining undeveloped available Class A office sites in the region.



According to the CoStar Group, Southwest Austin's local commercial property vacancy rate beats the national vacancy rate for office space that stands at 11.2 percent for the third quarter of 2014.



Transwestern, a real estate firm specializing in agency leasing and property management, reported July 31 the average Austin buyer pays $269 per square foot for commercial property, slightly more than a similar purchaser in Los Angeles who spends $262 per square foot on average for commercial property or a Miami buyer who forks over $231 per square foot for commercial property.



"If you just look at where the [commercial property] rates have gone in the last 16 to 18 months, they have continued to climb," Paddock said.



Last building sites



Tracts to accommodate big blocks of office space—10,000 square feet or greater—are hard to find, said Ralph Bistline, senior vice president of leasing at Brandywine Realty Trust. Brandywine manages the Cielo Center office complex, 1250 S. Capital of Texas Hwy., West Lake Hills.



At least 90 percent of Austin's available office markets—central, southwest and northwest—are leased, he said.



"That's a trend that has been going on for several months now," Bistline said. "[Of the] 3 million square feet of construction projects [underway in Austin], about 50 percent are preleased. In terms of potential tracts available—there aren't many."



San Clemente's 250,000-square-foot, five-story building is under construction with an opening planned for May, Paddock said. About 40 percent of the site is preleased to technology company Spiceworks, he said.



The San Clemente office complex includes three additional buildings, with two older facilities—90,000 square feet and 250,000 square feet—fully leased, Paddock said. The final building, slated to be 125,000 square feet, is on hold until the market conditions are right for preleasing and the site now under construction has tenants, he said.



Capital Ridge, a seven-story office building under construction at 320 S. Capital of Texas Hwy., Austin, is expected to be complete in April, said Riverside Resources team member Win Smith, who is developing the 216,000-square-foot project.



Although Smith said the environmentally sensitive area surrounding the Capital of Texas Hwy. limits adding office development to the area, Capital Ridge has turned this factor into a benefit.



"We are [located] across from Wild Basin Preserve, a benefit [because of] the views from our building," he said.



With the construction of a luxury, boutique hotel—Hotel Granduca Austin—underway on its adjoining tract, Capital Ridge presents a symbiotic situation for business, Smith said. Riverside Resources and the hotel's developer have agreed to work together on guest packages for executive visitors, he said.



"We envision Hotel Granduca jointly as a partner that will offer a unique amenity-based [hotel]," Smith said.



The last parcel along Capital of Texas Hwy. destined for commercial development—known as the Marshall Tract—lies within Lost Creek. Community residents are concerned about the effect of an office project on the surrounding residential neighborhood, Lost Creek Neighborhood Association president Jennifer Lamm said.



Cousins Properties purchased the Marshall Tract—a 37.25-acre parcel located at 1300 Lost Creek Blvd., Austin—to develop into an office complex, parking garage and possibly a fire station or senior living center, Senior Vice President Tim Hendricks said. The project is not in the permit stage yet, but a development assessment report was presented to Austin City Council on Nov. 20.



The height of the two proposed buildings will be about 100 feet for one and 74 feet for the other, Hendricks said.



"The proposed [project] would significantly impact the longstanding character of our neighborhood," Lamm said.



Finding the next real estate boom



During the past five to seven years, a number of commercial developments have sprouted up near RR 620 and Hwy. 183 in Northwest Austin, Paddock said. This location seems primed for continued growth in office space, he said.



However, given its close proximity to retail, amenities and a top school district, Paddock, Bistline and Hendricks agree Travis County's western areas—



Lakeway, Bee Cave and Hwy. 71—may be the next attraction for commercial real estate growth.



"[City planners] always contemplated [Capital of Texas Hwy.] would have substantial commercial development," said Hendricks, who is a board member of the Real Estate Council of Austin. "It has taken a substantial amount of time, but Austin has grown past [the Capital of Texas Hwy.]."



Hendricks said the Bee Cave area is very likely to be the next region of commercialization because residents desire to work closer to where they live.



"Each time a [commercial] market gets built out, Austin isn't going to quit growing," he said. "With congestion the way it is, who doesn't want to office closer to their residence?"



MOST RECENT

The widening project is on track to finish this fall and the bypass project by early next year. (Courtesy Texas Department of Transportation)
TxDOT projects near RM 2222 and RM 620 intersection approaching completion after delay

The southbound bypass lane connecting the two roads is on track to be complete later this fall, weather permitting. The northbound bypass lane opened over the summer.

Owners Billy-Joe and Suzanne Hunt opened The Gramercy in October 2020. (Photos by Greg Perliski/Community Impact Newspaper)
The Gramercy: Lakeway restaurant brings style of the big-city lounge to the Hill Country

Diners can choose from a variety of classic cocktails and entrees.

The Independent Citizens Redistricting Commission considered a finalized draft of an updated map for Austin's 10 City Council districts Sept. 15. (Ben Thompson/Community Impact Newspaper)
UPDATED: Draft map of Austin's redrawn City Council boundaries ready for community review

Volunteer city redistricting commissioners have unanimously passed an initial outline to update all 10 City Council districts set to go into effect next year.

Bee Cave City Council adopted a $10.92 million budget Sept 14. (Greg Perliski/Community Impact Newspaper)
Bee Cave City Council adopts FY 2021-22 budget

Sales taxes represent the largest revenue source for the city of Bee Cave.

The low-water crossing at Great Divide Drive was flooded by Little Barton Creek in May 2019. Following council action Sept. 14, city staff will now work with an engineering firm to finalize a bridge design. (Courtesy James Cooke)
Bee Cave City Council votes to hire engineering firm to design Great Divide Drive bridge crossing

Bridge construction would not begin until after public input and completed design.

The city Music Commission met Sept. 13 to consider final outlines for the Live Music Fund Event Program and Austin Music Disaster Relief Fund 3.0.
Austin moving closer to sending out millions for live music events, musician recovery

Two upcoming city funding opportunities are being designed to support music industry events and provide emergency stabilization for those in the music sector.

Photo of county commissioners and community nonprofit leaders at a press conference
Travis County commits $110 million in federal funding to combat homelessness

The allocation will fund 2,000 supportive housing units.

The court denied a motion for a preliminary injunction to stop construction of the Oak Hill Parkway on Sept. 13. (Courtesy Falcon Sky Photography)
Judge denies effort to stop Oak Hill Parkway construction

Judge Robert Pitman found that TxDOT did not violate the federal environmental review process.

Lakeway City Council is discussing the extension of Main Street to Lohmans Crossing with both Legend Communities and Stratus Properties. Main Street currently ends at Medical Drive near the H-E-B. (Courtesy Falcon Sky Photography)
Developer of The Square at Lohmans plans to pursue new zoning

Legend Communities plans to build mix of housing, retail and office structures at Lohmans Crossing and Wingreen Loop.

HAAM Day
How to watch, support Austin musicians on HAAM Day 2021

HAAM Day returns with more than 100 performances featuring local musicians scheduled throughout Sept. 14. Read here to see where to watch all of the sets.