AUSTIN | Projects & Construction II

[GoldenBoot]

Originally Posted by JGFrisco

I guess I'm not being very clear...but let me try something different. The cost of an odd-shaped building is much more than that of a crown or spire.

With a large multi-story building, you get advantages of scale by making the stories the same. It makes construction faster, simpler, and easier. Plus, when you start making odd shapes and changing floor shapes, you start affecting your leasable or salable space, and you start creating black holes, meaning spaces that are difficult or impossible to lease.

So odd shapes would cost far more, both in terms of construction and in terms of expected income, and are much harder to sell to a lender.

The Chicago Spire is odd...but if you will look, they have lost the tapered look, and instead will just have a tall cylinder that is the same size on each floor. So they will get the economy of scale.

PS Architects can get away with making the building look different with changing elevations by using setbacks. This changes the look, but not the overall design and layout. Sears Tower and Burj Dubai have this.

All of this bickering is for not...T.Stacy won't be seeking financial support for the office tower (the ~32-story building) for another 18-24 months. The hotel/condo tower won't need financing in place for another 2-3 years; at least. Additionally, I don't think anyone is going to be constructing anything new, in Austin, in the near-term. Costs, as you have mentioned, has skyrocketed and developers need to re-analyze their numbers and possibly make necessary adjustments to hit their margins.

A large number of developers in Austin (and the country, for that matter) are waiting until after the general election in November to make judgments on how to proceed with their developments (e.g., if Barak is elected, he may very well increase the taxes on capital gains which will have a huge affect on America's real estate industry).

[priller]

Latest Austonian pics. They're working on the 10th floor now, which is the top of the pedestal and also the pool deck, so I'm sure there's lots of extra tasks to do here.






You can see in the close-up they're already working on the core for the 10th floor. You can also see the notched support walls where the pool will go.



The latest Austonian construction report said the 10th floor concrete would be poured in 3 sections -- northwest, southwest, then east. It said this was done to facilitate the starting of the tower portion. Go tower!

[priller]

Originally Posted by GoldenBoot

Additionally, I don't think anyone is going to be constructing anything new, in Austin, in the near-term. Costs, as you have mentioned, has skyrocketed and developers need to re-analyze their numbers and possibly make necessary adjustments to hit their margins.

Grim outlook, but I suppose it's not surprising. It will be interesting to see what happens with the Ovation project, which is on the more "affordable" end of new condo prices. If costs are too high, will they raise unit prices or simply not build? And what about those who are just getting started (like W)? How are they adjusting?

(e.g., if Barak is elected, he may very well increase the taxes on capital gains which will have a huge affect on America's real estate industry).

The president, of course, cannot himself raise taxes. Congress would have to do that. But yes, I believe Obama has said he favors raising it from 15% to 20-25%.

[MichaelB]

Cycle..... it's all a cycle. Short term vs long term. Yes, we will always have slow downs.... even recessions. And then.... Ka boom! Another growth spurt.
And yes, at some point everyone, even corporations, will have to pay up to get us out of the debt/mess we are in. Guess that just goes in the calculations.

Perhaps it will make speculative developers more cautious. I am happy with our growth being more long term. Perhaps it means each project built will be more thought out and have to be more competitive in its design. I would be OK with Novare not putting up a near copy of 360. Pacing may serve us better in the long run.

[Xeelee]

looks really nice.

[GoldenBoot]

Originally Posted by priller

...The president, of course, cannot himself raise taxes. Congress would have to do that. But yes, I believe Obama has said he favors raising it from 15% to 20-25%.

Obviously. But, if you have a democrat as president with a democrat majority in both the house and senate; pretty much if the president wants to do or implement something, congress will ratify it.

GENERALLY SPEAKING:
The present cap. gains rates are based on the investment being a short-term (held for less than one year) or long-term (held for 366 of more days). Short-term capital gains rates are the same as your current income tax bracket rate, which can be as high as 35% (based on 2007 returns).

Currently, long-term capital gains may be taxed at 5%, 15%, 25% or 28%, or a combination of rates.

The long-term capital gain tax generally is much lower than what you pay on your regular income. In fact, it is a taxpayer's income level that generally determines which capital gains rate is owed. If your profit pushes you into a higher bracket, you could possibly be taxed at a combination of rates.

It has been assumed that if Barak is elected, we could see these rates increase dramatically – affecting the entire real estate industry!!!

[GoldenBoot]

Originally Posted by priller

Grim outlook, but I suppose it's not surprising. It will be interesting to see what happens with the Ovation project, which is on the more "affordable" end of new condo prices...

Ovation's site plan has expired and I'm not aware of a resubmittal at this time. Novare/Andrew's Urban probably will not even think about submitting a site plan for their post office site until Ovation gets underway - if ever. Additionally, they've, as far as I know, have pulled their plans on the TWELVE Domain project - at least for the short-term.

Yes, this new may be "grim" to some. But, it's the reality we're all living in and Austin is fairing much better than most of the country. Nonetheless, we are not immune to the affects of the falling dollar and weakening economy.

Originally Posted by priller

If costs are too high, will they raise unit prices or simply not build? And what about those who are just getting started (like W)? How are they adjusting?

They will probably do a number of things...re-design; see if raising the prices will still fit within their marketing strategy; to name just two. The biggest question, how can they proceed and still sell the number of units to meet their (and their capital partners') financial target margins. If not, then they may postpone or cancel a specific project.

Some of the projects we see under construction today have secured enough interim construction financing and pre-sale commitments to move forward with their respective developments. Also, these projects may have been lucky enough to lock-in pricing on materials a year or two ago.

[priller]

Thanks again for the info, GB! I wondered if material prices were contracted and fixed ahead of time. Makes sense to do so. Sucks for the material providers. Do they try to tack on "transportation surcharges" or anything like that?

[Apple][]

Originally Posted by priller

Thanks again for the info, GB! I wondered if material prices were contracted and fixed ahead of time. Makes sense to do so. Sucks for the material providers. Do they try to tack on "transportation surcharges" or anything like that?

As much as 80% of the project costs are locked in before construction even starts. In the event prices spike, the commodity provider may choose (threaten) to enter into a legal battle rather than honor the existing contract. At that point the developer may be forced to pony up some additional amount on the pre-negotiated rates rather than delay construction or endure legal fees. I've heard this has already happened on one project.

Steel prices have increased so much that many developers would be better off reselling the steel contract than continuing with a risky construction project!

[StoOgE]

Actually long term CGT is currently only two rates 15% or 5% for individuals.

[StoOgE]

GB there are only two individual LTCG rates, 5% and 15%.

The issue that dems have is that the number of people taking advantage of 5% is near zero. Most people in the lowest two tax brackets have almost all of their savings in tax advantages accounts that dont have anything that takes advantage of the lower LTCG tax.

While the people in the upper end of the tax bracket pay very little in income tax (proportionaly to investments) but have most of their money in investments that can take advantage of the lower tax bracket.

There is basically one group of people that can tax advantage of the lower LTCG tax and its essentially created a situation where people who *should* be in the highest tax brackets are paying less of a % of their income than people who *should* be paying less.

Like Warren Buffets challenge, he will give a million dollars to any CEO that can prove they pay a higher % of their income in taxes than their secretary does. The lower longterm CGT has worked disproportionatly for one group of people.

[priller]

Another Austonian construction report came online today. These things are coming fast lately. Here's the details

• Level 10 northwest corner scheduled to pour on July 15, 2008
• Level 10 southwest corner scheduled to pour July 21, 2008
• Level 10 east side including pool structure to begin forming operations on July 16, 2008
• Level 10 east side scheduled to pour on July 25, 2008
• Level 11 (the first level of the residential tower) to begin forming operations on July 22, 2008
• Man and material hoist installation for use on levels 1 to 10 complete
• Hoist operation for levels 1 to 7 will begin on July 15, 2008
• Additional man and material hoists will be added during the construction of the residential tower
• Initial cabinetry order for levels 11 to 24 to be sent to Scavolini in Pesaro, Italy on July 15, 2008
• Window wall fabrication for residential tower in progress
• Precast concrete panels for levels 3 to 10 in fabrication
• Stone for levels 1 to 3 ordered from Portugal
• Block masonry completed thru level 3 with level 4 starting July 14, 2008
• Mechanical, electrical, chilled water and plumbing rough-in continues at all levels
• Site utilities along Second Street 90% complete
• Galvanized structural steel for streetscape canopies delivered to site
• Individual homeowner meetings continue
• Scheduled site inspections conducted this week by our insurance carriers
• 3rd party crane inspections conducted by Balfour Beatty this week

[detmi7mile]

I agree its on point

[zx14]

when i come visit on the last couple days of this month the austonian will be starting on the 11th floor. when i come back in the middle of april what floor will it be on? MY guess is working in the 43rd floor. What about the others at that time mid april 09.

[GoldenBoot]

Originally Posted by StoOgE

GB there are only two individual LTCG rates, 5% and 15%.

Actually, no...

25-percent rate
This rate applies to part of the gain from selling real estate that depreciated. Basically, this keeps you from getting a double tax break. The Internal Revenue Service first wants to recapture some of the tax breaks you've been getting via depreciation throughout the years. You'll have to complete the work sheet in the instructions for Schedule D to figure your gain (and tax rate) for this asset, known as Section 1250 property. More details on this type of holding and its taxation are available in chapter three of IRS Publication 544, Sales and other Dispositions of Assets (this publication applies to 2006 returns, the IRS has yet to update it for 2007).


28-percent rate
Two categories of capital gains are subject to this rate: small business stock and collectibles.

If you realized a gain from qualified small business stock that you held more than five years, you generally can exclude one-half of your gain from income. The remainder is taxed at a 28-percent rate. If you've already hired a tax professional to help you sort out the 25-percent rate on depreciable property, she can help you figure this tax, too. Or you can get the specifics on gains on qualified small business stock in chapter 4 of IRS Publication 550, Investment Income and Expenses.

If your gains came from collectibles rather than a business sale, you'll still pay the 28-percent rate. This includes proceeds from the sale of a work of art, antiques, gems, stamps, coins, precious metals and even pricey wine or brandy collections.

*From BankRate.com*

[priller]

A few shots from today. First is the big hole that is the W. You can see the tractor with the big roller on it, so I assume they must be getting near the bottom if they're rolling it flat now.






Austonian pedestal:




Spring:



Spring is sporting big signage now, too:

[zx14]

Just got back from cedar point. Wow that is some amazing stuff. With the demise of Astroworld and given Austins economy could we support a quality roller coaster amusement park? Fiesta texas is near but it just will not that great. We need a giga coaster and maybe even a strata coaster which is 300 or 400 feet tall.

[StoOgE]

Originally Posted by GoldenBoot

Actually, no...

25-percent rate
This rate applies to part of the gain from selling real estate that depreciated. Basically, this keeps you from getting a double tax break. The Internal Revenue Service first wants to recapture some of the tax breaks you've been getting via depreciation throughout the years. You'll have to complete the work sheet in the instructions for Schedule D to figure your gain (and tax rate) for this asset, known as Section 1250 property. More details on this type of holding and its taxation are available in chapter three of IRS Publication 544, Sales and other Dispositions of Assets (this publication applies to 2006 returns, the IRS has yet to update it for 2007).


28-percent rate
Two categories of capital gains are subject to this rate: small business stock and collectibles.

If you realized a gain from qualified small business stock that you held more than five years, you generally can exclude one-half of your gain from income. The remainder is taxed at a 28-percent rate. If you've already hired a tax professional to help you sort out the 25-percent rate on depreciable property, she can help you figure this tax, too. Or you can get the specifics on gains on qualified small business stock in chapter 4 of IRS Publication 550, Investment Income and Expenses.

If your gains came from collectibles rather than a business sale, you'll still pay the 28-percent rate. This includes proceeds from the sale of a work of art, antiques, gems, stamps, coins, precious metals and even pricey wine or brandy collections.

*From BankRate.com*

I didnt know that. I'm not in real estate, I'm in investments, so the two we deal with are 5 and 15.

[StoOgE]

Originally Posted by zx14

Just got back from cedar point. Wow that is some amazing stuff. With the demise of Astroworld and given Austins economy could we support a quality roller coaster amusement park? Fiesta texas is near but it just will not that great. We need a giga coaster and maybe even a strata coaster which is 300 or 400 feet tall.

While Cedar Park does have alot of nice rides, just like the mega Six Flags (LA, Jersey) its really dirty and just not a fun place to be. I enjoy the rides, but I much prefer parks like Bush Gardens that are clean and well themed. Maybe I am just old and lame.

As far as Austin getting a theme park.. I always wanted us to get one, and we had a shot at Sea World back in the day.. but with San Antonio having two of them ,and Fiesta Texas (while having pretty lame rollercoasters other than Superman) is a pretty big one, I dont see it happening anytime soon.

I wouldnt mind a smaller park like a Kennywood in Pittsburgh, something with charachter and not a giant corporate theme park built on a parking lot. A park that is more like an old school boardwalk (well, in Kennywoods case its a hundred years old so it is an old school boardwalk) with a handfull of small (but good) rides.

Also, who is the smart guy that decided to give Fiesta Texas a "new" ride this year that is the exact same ride already at Seaworld and Six Flags in dallas (well, most six flags really?).

[Northcrossed]

This site (http://walkscore.com) calculates the walkability for any address based upon the availability of ammenities within walking distance. It rates 200 Congress, to pick an arbitrary address, as a "Walkers' Paradise".