There should be no doubt: It’s a tough time to be a downtown condo developer in Austin, Texas. While building costs have slipped from their peak, demand is soft and it remains a buyer’s market. For high-end projects in particular, supply remains plentiful and competition among sellers is fierce.
Yet, developers are once again thinking about the next wave of projects. Over the next year, the current non-luxury condo inventory is almost certain to be depleted. With a 2-4 year construction timeline, developers are thinking now about the next wave of demand.
Here is a summary of some of the projects currently on the drawing board:
– Aquaterra (condo): Originally envisioned as a 163 unit 20-floor condo tower at 210 Barton Springs Rd., this was one of the first projects cancelled. Now, the architects have been asked to update the project to be more competitive in the current environment as the developers look for a path to proceed. No funding has been lined up.
– 7Rio (Condo): Originally envisioned as a $50M 34-floor 160 unit condo project, 7Rio is also back on the drawing board and being actively rethought for development. Originally planned for completion in 2009, the building would be on the site of Ranch 616 which will be incorporated into the building. The project has been supported by the neighborhood Association and the developer has already successfully completed two other projects in Austin.
– 800 W 6th St (Office): Austin-based Cypress Real Estate Advisors plans a 120,000-square-foot, six-story, Class A office building on the site.
– Block 51 (Office + Condo): According to the Austin Business Journal, the stalled Ovation development, originally reported to be a 37-story condo tower on Block 51 by Atlanta-based Novare Group Inc. and Austin-based Andrews Urban LLC, is being revamped. It now involves a partnership with International Bank of Commerce and more office space than originally planned. The plan revisions are in the beginning stages, and specifics will be available in mid-2010, he said.
– Schlosser Tower (Office & Condo): Schlosser development plans to construct a new 27-story downtown condo and office tower. The developer is proposing to build a tower of up to 350 feet on the vacant lot between Whole Foods and Austin City Lofts. As proposed, the new building would include street level retail and parking on the lower floors, 16 stories of office space, and 90 condo units on the top seven floors. In addition, a companion building on the 2.7 acre site would include three levels of commercial office space with parking and street-level retail.
– 21c (Apartments): The developers are proposing — but have not found funding for — a 31-story 350 unit apartment tower near the corner of Red River and Cesar Chavez. Rents would start at $1.50 per square foot which would mean $1,000 / month for a 700 square foot unit or $1,500 for a 1,000 square foot unit. The goal would be to make the building 70% 1 bedroom / 1 bath units. As many as 10% of the units for be designated as affordable units with controlled rents. A second tower — which is more precarious in the current environment — would be a 12-story 200 room hotel, spa, and restaurant. The developers are hoping to put parking underground and include ground retail in the project. Although no specifics have been announced, the third tower could include condos if at some point it does get built.
While almost none of these projects have funding, the investment in new development is a strong sign that when the market stabilizes and commercial financing becomes more common, another building boom is likely. With projected population growth and one of the strongest economies in the country, Austin will likely be an attractive target for development as the markets improve.
7RIo Tower as originally Proposed