It’s not exactly a fan-favorite building, but we’re still quite fond of the concrete-heavy 1970s institutional architecture of the Teacher Retirement System of Texas headquarters in downtown Austin. A product of the city’s 1960s urban renewal, the two-building complex spanning two full blocks at 1000 Red River Street opened its original western structure in 1973, completing its near-identical eastern expansion by the same architects at Jessen Associates in 1990 — and now that TRS is executing its plans to relocate to a new building at Mueller by 2023, those two blocks are up for grabs in a fast-growing corner of downtown. Now offered for sale by real estate giants CBRE, the 3.83-acre site has been redubbed the Waterloo Innovation Center:
As seen in the marketing video above, TRS believes the highest and best use of the property is in its redevelopment — the agency’s current estimates of the deferred maintenance cost on the aging complex rings up to something like $50 million over the next 20 years, so it’s no wonder they’re skedaddling to Mueller. The property’s listing explains the agency’s expectations for the future of the site in exhausting detail:
Upon the sale of Waterloo Innovation Center, the Property’s current owner, the Teacher Retirement System of Texas, a public pension fund (“TRS” or “Fund”), plans to leaseback 100% of the Property for a period of two years. The leaseback will cover operating expenses and will allow for a new owner to initiate their design and permitting process to immediately start repositioning and redeveloping the Site upon TRS vacating the property. This offering is made unpriced, on an “as-is, where-is” basis.
TRS envisions development at the Site’s highest and best use and is seeking maximum value for the Site. TRS is interested in proposals that provide the most benefit to the Fund. TRS will consider offers encompassing a fee simple interest. Respondents may also propose other options as long as a fee simple offer is included as well. TRS requires respondents to first provide a fee-simple offer before contemplating alternate purchase mechanisms.
Following a review of initial qualifications and offers of value submitted by interested parties in Step 1 (“Statement of Qualifications” or “SOQ”) of a two-step process, TRS will contact a short-list of Respondents determined by the TRS Evaluation Team as the most qualified to acquire a fee simple (or perhaps leasehold interest) in the Site and offer the best value to TRS.
In Step 2 (“Refined Proposals”), TRS will request that shortlisted Respondents prepare a refined Project proposal for review and participate in an interview with the TRS Evaluation Team to be scheduled before a final selection is made.
TRS anticipates an agreement to be presented to the TRS Board of Trustees for approval in September 2022.
In the spirit of that classic real estate axiom about having to ask meaning you can’t afford something, the going rate for the TRS site is undisclosed, but the agency’s own facilities reports have previously mentioned an anticipated sale price of between $80 and $100 million. Though a two-block assembly in downtown is a pretty sweet redevelopment opportunity, keep in mind that this site is fully encumbered by our city’s beloved Capitol View Corridors, making any future project here equally low-rise compared with the existing buildings. Still, the enormous percentage of the site currently given up to surface parking could fit a much denser office complex.
The real draw here for a buyer is the massive potential of the property’s location, a corner of downtown that’s currently in “incredibly obvious future growth” mode — they call it the “Innovation District” these days, if you recall. Anchored by the reimagining of the 14.3-acre former Brackenridge hospital site into a mixed-use planned unit development by Central Health and the University of Texas Dell Medical School, the site’s centerpiece “Innovation Tower” is now nearing completion just across from the transformed Waterloo Park.
The Brackenridge redevelopment will rub elbows with more projects a stone’s throw from the TRS site, like the Aspen Heights Partners redevelopment of the 1.7-acre HealthSouth tract bringing two more towers to the area with residential and office uses. Then there’s the long-expected hotel replacing the shuttered Brick Oven Pizza at 1209 Red River Street, plus the potential redevelopment of another state pension office near here. The apartments at Alexan Waterloo are already open for business, and the Symphony Square mixed-use tower development is now under construction just across the intersection of 10th and Red River Streets from the TRS site. It’s a lot to follow, but a few years from now this area will be close to unrecognizable — so you’d better make TRS an offer now if you have the millions lying around.