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Austin's Next Wave of High-Rises
EDIT: The project list was updated as of 06/2018. The ones highlighted in green are underway, and the one highlighted in yellow is completed.
The discussion in a couple threads got me wondering what the next high rises (300'+) would be most likely to start. The list of 27 projects below shows how big our pipeline is for 300+ footers. All of the projects on the list have been mentioned in the Austin sub-forum at some point in time. The last project to get underway - 70 Rainey - barely got started due to financing. Since then there haven't been any announcements about projects (the 300+ footers) breaking ground with financing in place. Even though Austin continues to boom, financing nationwide seems to be harder to get. Of all the projects on the list, the only one I'm confident about is the 32-story Marriott. White Lodging has an excellent track record, and they can finance in house like they did with the Aloft. What are everyone's thoughts on the next big ones to break ground? https://i.imgur.com/BvbDGKS.png https://i.imgur.com/x3c9Qev.png |
This is a very impressive pipeline. If even 25-50% of this comes to fruition, the skyline will change dramatically. I feel good about the Marriot actually happening. Next is 3rd and Colorado because Riverside Resources put their money where their mouth was for 5th and West. The Avenue and 48 East look to be the next in line.
For more speculative projects, I'm bullish on the UT Block actually happening because looks like a lot of legwork has been done on the design end and we'be seen square footage numbers and I think unit numbers, etc. come out. 405 Colorado is a ? because the design is being overhauled. My hope is they keep some of the original components - the abstract shape, line lighting, and glass elevators, but reduce the podium. 5th and Brazos will continue to amaze me. Magellan is reputable in Chicago and the person I talk to over there keeps mentioning this as something that is definitely happening. I don't know why we haven't seen any movement. 99 Trinity is DEAD for me while Waller Park Place feels too much like a vision. The lack of high quality renderings or a website, pre-leasing, lack of hotel operator, etc. makes me think that is more like 5 years out. |
It's a sure bet that there are projects that we have no idea about as evidence by The_Genral's tantilizing post on the Independent thread. Of course without official verification or press releases it's simply juicy gossip, however with strong backing given the people he heard it from, there is likely something to it.
Also lets not beat around the bush, we have a couple of posters on here that know some things but for reasons that they cannot divulge what they know, they occasionally throw in little hints here and there and leave us speculating by what they meant. All in all it will ultimately come down to who has the financing to back up their project and the timeline as to which projects will be built going forward. |
Bump.
I started this thread back in March, and I just now updated the 300'+ project list in the OP. The project pipeline has gotten even larger since then, but we still haven't seen a significant number of large projects break ground since the summer of 2016. The Marriott did end up being the first 300'+ project to break ground - if the demo is considered to be breaking ground. But beyond the Marriott, which one is next? Austin is still booming, but financing appears harder get. Since the last post, a few of the big projects have gotten site plans approved: The Avenue Hotel Mirabeau 48 East But there is still no solid info about their groundbreaking. I think financing is becoming a problem. |
I have a feeling that we are entering a freeze period where little in the way of financing is going to take place. Midrise projects will move forward but we may be coming to the end of this building cycle for larger projects. The one building I'm pulling for is 608 Guadalupe but in general, I think it will be another year before we see the next wave really pick up. That of course will depend heavily on the state of the world economy.
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I don't have a good feeling about the three with approved site plans that I listed in my previous post starting any time soon. But Block 71 - and fortunately - 600 Guadalupe seem to have some momentum.
IIRC at last word, these three had December start dates: Hotel Mirabeau 48 East 3rd & Colorado But I don't have any confidence that they will break ground on schedule. |
In other words Austin will be taking a breather. :)
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What project is taking up the last lot from the water plant? The one at the southwest corner of the creek across from the library?
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The lack-of-financing theory is interesting. Any clue as to why that might be? Austin still seems like one of the better bets nationally. All things being equal, if I'm a big lender, I'd be pretty bullish on Austin projects.
EDIT: also, would landing a high profile project (like HQ2, say) make funding easier for everyone in the city? Interested in how funding generally works beyond individual (developer's) creditworthiness. |
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https://www.propertymetrics.com/blog...ruction-loans/ |
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That said, I just came across another ABJ article about our hot office market -- which is starting to match major market demand and pricing. https://www.bizjournals.com/austin/n...d-silicon.html Quote:
I'm a little amazed, with that kind of money to be made, that we're not seeing MORE projects with solid money cropping up. |
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Well if you look at the South Shore Central vision, DT can most certainly expand south, though not very far. Depending on how the area is developed, we could see a good amount of sq footage. It will come down to timing and market demand.
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It's time for a thread bump to see where we are at. I updated the list of 300'+ projects in the OP from from my next tallest projects list update.
Austin's economy and population continue to boom. But financing for large projects is getting much more difficult to obtain nationwide. The Marriott was the only large (300'+) project to break ground in 2017. So far in 2018, Block 71 is the only big project to get started. All of the 300'+ towers U/C are topped out or close to it. The cranes will be gone for a short period of time until late July when the Marriott cranes go up. Among the taller projects that I previously thought were a good bet to break ground was Hotel Mirabeau. I now think that one might be dead. Currently the best bets appear to be: 300 Colorado (Financing should be a no brainer for a 100% pre-leased project.) Alexan (Site plan is approved and Trammell Crow Residential is behind it) 405 Colorado (Site plan is approved and Brandywine doesn't seem to have an issue with financing a project like this.) |
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I hope 6th & Guadalupe gets started more so than any other project. But it's not financed as far as we know, and I'm not yet sold on Lincoln and Lynd/Kairoi's ability to get stuff built. I put a lot of emphasis on a developer's track record for predicting the success of their projects. White Lodging is #1 in my book when it comes to getting their proposals built. Trammell Crow is right behind them, and Block 185 would be #4 on my list of the next big ones to get started if it was further along in the approval process.
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When you say "stuff," are you referring only to high-rises? Lynd/Kairoi is quite active and successful in both Austin and San Antonio. Heck, they've quietly developed a massive, 300+ unit apartment complex on 620 near Hudson Bend (among several other big projects). |
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With so much construction in general happening in Austin and with the Independent, 3rd + Shoal, Austin Proper, and Fifth + West happening, I totally didn't realize that so few projects had started up until I read this. But you're right!
Alexan seems like a lock. I'm surprised it took so long for development to start in that area since everybody has known for years that Waterloo Park is going to be bad-ass once it's finished. Alexan is going to get the jump on other developers but it's still a late jump. I think all of your picks are logically sound, The_ATX. But what about The Avenue? Is that looking more like a 2019 timeline? |
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311 Bowie got built so I would say that is a good track record. Also even if financing has not been announced, that doesn't necessarily mean they are not close to securing financing. Usually that is kept under wraps until the deal is done and set. I agree that we need to see signs that the Extended Stay is about to close down, so far that hasn't happened yet. |
bump
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The next wave will be interesting. With the next recession looming, how many will actually come out of the ground?!?
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I won't answer for anyone else, but honestly...recessions are always looming. It's cyclical.
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I think there's the possibility of a recession plus one for construction -- not only the standard cycle finally coming back around, but the effect of tariffs on construction material.
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Well, maybe it's not exclusively Americans. Torontonians have been wringing their hands about an impending "bubble" for years. I mean YEARS. |
I'd be skeptical to layer the cyclical market onto Austin's development. It's a legitimate worry but realize there's several assumptions to be made to tie these things together and predict development tanking.
The biggest one is assuming that the regional economy will mirror that of the nation/world as a whole which is likely not going to be the case after seeing our growth during the 2008 Recession. For the time being our industries are still thriving and likely still will when the next cyclical recession hits, though I wouldn't expect as well as 2008, honestly. Another assumption would be that these investors would pull out funding during a recession, which could happen but would be unlikely as Austin and Texas as a whole is still a net-positive investment on their end. In addition smaller projects with tighter budgets and weaker investors are typically the ones that get hit the hardest. This leaves construction, engineering, and architect firms to lose some of their "filler jobs" and thus they usually take on these larger projects at a slight discount because they can't afford to lose all work. It gives these larger developments more incentive to get these projects rolling. tl; dr - Austin is weird, nuanced, and there's a lot of gears moving with cyclical recessions |
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Assuming whatever recession we enter in the next 4-5 years looks like is a more normal correction and not something that catastrophic there will be capital available for projects in off-cycle sectors or regions. The last recession (hopefully) isn't a useful predictor of normal downturns. Though, all out trade wars and protectionism is a fun thing was haven't really seen at scale since pre-WWII. So, hopefully we get away from this stupidity and get back to free trade. |
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The last time tech was the cause of a recession (the dot-com bubble), so much more of the money going through Silicon Valley was speculative and the entire industry itself was in its infancy. There had not yet been much proof of profitability. Even since the Great Recession, the tech industry has matured so much and seems to run on its own set of principles that preclude some of the more volatile aspects of the economy. We haven't yet seen how the tech industry would respond to a contraction of activity now that literally everyone has a smartphone, and Amazon and other online retailers are monumental money-printing machines. None of these companies are going anywhere this time, and Austin has firmly established itself as both a tech and tourism hub in the decade since 2008. Even if a recession causes the average American to keep the purse-strings tighter, phones, tablets, and the Alexas and Siris of the world aren't going anywhere. Also, it has already been stated that if anything will tip the US into a recession, it won't be a real estate bubble this time, but either the bubble of student and credit card debt, the current trade war or continued volatility in the federal government that will do it. These big new projects coming online have shown that they are going ahead with tenants and numbers that prove their viability, and honestly, the Texas economy itself is such a steamroller that it would take more than a normal cyclical correction to destabilize everything locally. I'm not so worried at the moment. Also N90, thank you for the new rundown, I'm weeping tears of joy at these towers. YAAS :cheers: |
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1) Interest rates rising will affect property values everywhere 2) The high current valuations and the new $10K SALT deduction limit may have an impact on property values 3) There is a small but increasing investment portion of the Austin housing market; high end second homes, investment properties, etc that are not employment driven. They are, in part, counting on the high appreciation. Once that slows or even reverses a little bit, there could be a snowball effect with many properties coming on the market. Especially those that have already seen big appreciation in the last few years -- investors will want to cash in on those gains rather than risk them evaporating. Although not directly related to Austin in particular, we are in a period where everything is on the high end of historic valuation -- Stocks, Real Estate, Bonds. And interest rates are still on the low end. It just doesn't seem sustainable without at least a moderate correction. |
Wouldn’t that only affect condo development? There have been very few condos delivered downtown in the last decade; most of the new towers are office, hotel, and apartment.
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Austin is also somewhat insulated because of the large base of jobs in City, County, State, and Federal government, as well as UT.
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Almost all of those buildings are mixed use, not all condos, hence why funding was easier.
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bump....
what are the next 6 we think will realistically break ground by summer 2019? |
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Others that are possible are 6th & Guad, Block 185, Alexan, 5th & Lavaca, and 405 Colorado. |
5th and Brazos is already UC.
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Looking back through the threads, the Travis (two towers, right across from the Van Zandt) seem like it's ready for demo. That's going to be a pretty amazing project when it finally gets revving.
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