Kilroy halts construction on Stadium Tower in North Austin
https://www.bizjournals.com/austin/n...Pos=0#cxrecs_s
By Cody Baird – Staff Writer, Austin Business Journal
Oct 27, 2022
There’s a gaping hole at the site of North Austin’s planned Stadium Tower, where Los Angeles-based developer Kilroy Realty Corp. has halted construction on the project.
"We intend to hold off on the construction of Stadium Tower, our Austin development site, until the economy gives us more confidence or we pre-lease a substantial portion of the project," Bill Hutcheson, Kilroy’s senior vice president of investor relations and capital markets, told investors on an Oct. 26 earnings call. He did not specify any benchmarks for leasing or the economy to restart the project.
Kilroy (NYSE: KRC) did not immediately respond to requests for comment.
Stadium Tower — once called Arena Tower — is located beside Q2 Stadium on a 2.9-acre site at 10615 Burnet Road. Plans call for a 493,000-square-foot office tower, according to Kilroy’s Q3 report, where the project is now listed in the developer’s future pipeline.
The report stated that executing on the future pipeline would be "subject to market conditions."
"We have a proactive planning process by which we continually evaluate the size, timing, costs and scope of our development and redevelopment programs and, as necessary, scale activity to reflect the economic conditions and the real estate fundamentals that exist in our submarkets,” the report read. We expect to execute on our development and redevelopment programs with prudence.”
Kilroy's pause will surely stir discussions in the commercial real estate sector about how global economic conditions may affect local development. Atlanta-based Cousins Properties Inc., a major office owner and developer in The Domain, has plans for a 26-story office high-rise called Domain Central 1. Earlier this year, President and CEO Colin Connolly said construction might be delayed: "I think over time we need to see costs come down or rents go up for us to financially justify moving forward," he said at the time.
Yet there are other signs that developers remain bullish on this real estate cycle continuing: several high-rises have broken ground in recent weeks downtown, including on a 43-story apartment tower in the Rainey Street area.
Kilroy purchased the Stadium Tower site in March from Capella Partners for $40 million.
Pre-construction work on the site has already begun, which Hutcheson said "reduces the lead time to deliver a completed building."
Hutcheson noted that Kilroy also has the option to add more density to the project due to its proximity to a train line, a scenario the company will look at "in the coming months."
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