Originally Posted by AustinGoesVertical
I personally enjoy the speculation an initial post like this sparks because it leads to broader discussions about companies, their activities nationwide, and how they *might* fit into Austin. I don’t mind open ended rumors as long as there are at least some legs for them to stand on.
I know I myself have delivered info in the past. For the most part it’s panned out, but take Magellan’s building for example. I had a source for years who had said it 100% would happen even during the period when it looked dead, and the info appeared flat because it took 4 years for it to actually occur, but then it did. But it may not have. And just because it doesn’t happen, doesn’t mean it wasn’t true/planned at one point before something else caused it to fall through.
Speaking of which, I had what I felt was solid info that the school for the deaf on SoCo was sold to a developer. I floated it on here like urbancore did to see if others had heard similar. Some had. That said, six months later there’s been no official announcement or public scoop that I’ve seen.
Sometimes it’s just difficult to provide more details without exposing yourself or comprising your source. I came about a ton of info on start dates and GC/financing updates about 2 years ago and shared those generally, but didn’t want to share the exact name of the GC or equity partner — sometimes it’s not even an explicit confidentiality thing but just respect for the source. And that’s likely where UrbanCore stands. He’s heard about a big employer going to make an announcement (that’s still good info in isolation) but can’t provide specifics.
My theories:
There’s the possibility this new employer goes to project catalyst. From what I’ve heard, they’d certainly prefer a big tenant to anchor, customize, and drive that development (akin to Oracle) rather than build it out piecemeal as spec. It was one of Austin’s submitted sites to Amazon. But urban campuses in existing CBDs are increasingly popular too for the live/work/play lifestyle and there’s shorter runway.
So companies... I’ll lay out the case for four.
Amazon could very well be the employer. Plenty of jobs to distribute after HQ2 fell through. I think Austin would have been the perfect fit for the jobs/innovation center Nashville got and while I think Nashville will get more jobs from the NYC fallout, I think Austin could serve as a bigger hub rather than just a satellite office. You’ve got the drivers like the vast talent pool, no state income taxes for employees, lower cost of living generally, UT Austin, the capital/incubator scene is growing more, and of course there’s the Whole Foods synergy. First the distribution center in San Marcos, THEN a near 4 million SF one in Plugerville. Things are happening. And with Google and Facebook putting in stakes in the CBD, hard to see Amazon remaining just at the domain. The 800 jobs added there were unrelated to the 25K slated for NYC. Not hard to envision them leasing up significant space at 6 X Guad and being the anchor tenant at The Republic with possible naming rights. Funny story, saw Jeff Bezos walk out of One Eleven Congress into the new courtyard about a year ago. One colleague and a massive body guard flanked on each side. Where there’s smoke, there’s fire.
Another is Salesforce. They’ve been employing a single tower strategy in a lot of cities. They outfit and convert existing ones or pre-lease on ground up projects. There’s a massive one that will support 2,800 jobs and is currently under construction in Chicago. Now they’re building an “HQ2” of sorts in Seattle after the Tableau acquisition, the HQ2 part said in jest by Marc Benioff. They already have their HQ in the iconic 1,000 ft Salesforce Tower, also in San Francisco and are building another high rise in the city that will house about 1,500 employees. While Salesforce really could make Seattle organically their HQ2 overtime, I think strategically, they could be in the market for a true central hub outside of the West Coast. At minimum, I think the Republic with brand rights should be in play given that Salesforce and the Austin ecosystem seem to fit like a glove. Tableau already has a presence here. Shocked Salesforce doesn’t have ANY physical presence in ATX. All 100 or so employees are supposedly remote. There’s some speculation founder Marc Benioff may be stepping away from his co-CEO role within a year or so. Who knows what type of restructuring could be in play at that point... would it involve the roll out of a new flagship urban campus somewhere like Austin? Maybe.
This is a longer shot but Charles Schwab. After the TD Ameritrade merger, they’re scaling back Omaha (TD’s HQ) and Schwab plans to vacate San Francisco significantly. Right now a new campus is planned for Westlake in the DFW area to house thousands of employees, but that fact is: Schwab likes Texas — for the no-state income tax and the cheaper office rent and the potent talent pool. They already have the 50-Acre Gracy Farms Campus in Austin, which supports about 2,000 employees. The thinking is that the scale-up in Westlake will take time but could balloon to 7,000 employees, but it doesn’t necessarily have to go all there. They maintain they’ll keep a sizeable presence in SF despite the official post-merger HQ being in the Dallas region. But this could all be a bluff. Austin may be a bit liberal for Chuck Schwab’s tastes (although 2K existing personnel already exist) and Dallas does have the leg-up in financial services reputation BUT business is fluid. Things change. Opportunities can become too good to pass on. San Fran rents and taxes are insane. Facebook, Uber, Lyft, Square, Twitter, Salesforce, Oracle, Airbnb, and Dropbox are all there. Schwab likes Texas. Not crazy to think more jobs flow away from California and south to Austin rather than just DFW as far as Texas strategy goes. Fun-tech is the future of that industry and Austin can cater to that much better than Dallas. I’m not sure it would eat up most existing inventory U/C and planned like the rumor purports, but it could at least be enough to support space in a planned tower... like maybe Tower 5c. It’s bet for sure but with semi reasonable odds.
Even longer shot: WeWork. SoftBank bailed them out. They will have a real shot to stabilize their core business and see if it can ever stave off natural adoption from developers who simply build co-working directly into their models and self-manage or use brokerage/management firms that specialize in STR (should see more and more of these shops start to pop up. WeWork could in theory morph into this vertical itself). In any case, WeWork is sitting on the Lord & Taylor building as an owned asset, which was once conceived as their crown jewel NYC HQ but could in theory be fully leased up to a big player (Amazon was interested) and then sold off out of their portfolio. I do think WeWork will eventually realize margins are better on ownership vs. sub-leasing strategy (Novel CoWorking has found relative success with this formula). But that’s capital intensive, and they already have significant lease commitments that the new raise will have to cover. There’s still a ton of projected cash burn here either way. So maybe they shift more toward data-driven space consulting and brokerage while building out upsell opportunities to monetize their community (which they were trying to pitch in the IPO roadshow but I don’t think they had a tangible roadmap for this. Neumann was too much of an abstract dreamer, not one to execute such a revenue mining structure out of an existing membership base). It’s not their “core business” per se, but I’m not sure their core business has longevity and SoftBank may realize that and pivot. If they’re smart, they will. But we’re talking about the same group who was valuing this thing at $47 Billion while global co-working firm Regus (also known as US-subsidiary “SPACES”) was more stable and already public with more members and more importantly had operational profit and was valued at just $4b. But you can blame Goldman Sachs too. And big time. Surprise, surprise. Anyway, how this relates to WeWork and Austin. Given what we know about Lincoln, Kairoi, and WeWork’s continued involvement on the Waller Creek parcels, maybe Austin could be their new HQ... for the most part leaving NYC — at least as a company base. And maybe space requirements for such a shift could also include supporting Lincoln Co’s Republic OR 6 X Guad as well. Essentially, they target Austin to maintain the core business initially but ultimately shift to a tech-model where they can scale and become some sort of platform solution. At a post-money valuation of around $8b after the latest infusion, SoftBank has to know that the core business as it’s currently structured will never lead to an exit over that threshold. WeWork needs to become a tech-powered full-stack office solution with a scalable cost structure (I.e. where revenue can grow at rates higher than expense rates) to be a winner. Austin could be the perfect place to rebrand and build out this broken, but still salvageable enterprise as a tech-centric complimentary service to office property owners. WeWork still has roughly 10K employees after their recent layoffs. How many come to Austin if this were to happen? Do they reposition the employee mix and do more layoffs in favor of redistributing and hiring local tech talent? This would certainly qualify as a BIG announcement.
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