The Austin & San Antonio Deal Sheet

Austin’s office market has done it again: rental rates hit another all-time high. That’s according to Cushman & Wakefield/Oxford Commercial’s Q3 report. Those rates, which bottomed out in late 2011, rose dramatically throughout 2013, more tepidly in 2014, and have been skyrocketing in 2015. Overall office rental rates shot up to $33.02/SF translating to a 13.2% increase over this time last year, when the rate was $29.17.

Class-A CBD space experienced the highest rental rates at $48.07/SF up 11.5% from the same time last year. That’s coupled with tight vacancy rate of 9% amidst 3.1M SF of new office space either under construction or recently delivered. YTD absorption for the Q3 totaled 1.8M SF, which means the office market has already absorbed more space in 2015 than it did in all of 2014, when 1.7M SF was absorbed. Four notable Q3 leases are from companies with an existing presence that either renewed and/or expanded their footprint: Logitech’s 99k SF at Two Barton Skyway, Entertainment Art’s 99k SF at 7700 Parmer, RetailMeNot’s 96k SF at 301 Congress and Cirrus Logic’s 85k SF at Shoal Creek Walk. CWOC anticipates rentals to continue pushing new highs throughout the end of 2015 and beyond.

SALES

Stratford Land sold 16 acres at Estancia Hill Country in South Austin to JCI Residential under parent company The Journeyman Group to build Estancia Villas, a 312-unit, luxury multifamily community. CBRE’s Carter Breed repped the seller. JCI’s Brent Williamson repped the buyer. Estancia Hill Country is a 600-acre, master planned community at the intersection of I-35 and SH 45 in south Austin. 

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Hilco Real Estate sold a 17-acre development site in the 20600 Block of Stone Oak Parkway in the Stone Oak master planned community through an online auction. The site is near Loop 1604 and US-281 in northwest San Antonio. Hilco Real Estate in cooperation with Providence CRES repped the seller, Stone Oak TIC 2. The buyer was a local investment group repped by San Antonio real estate attorney Robert Braubach. The buyer/developer for the site is Ironwood Partners, which has not released its plans for the site. 

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Tryperion Partners and Goodstone acquired the 85k SF Network Tech Center three-building office park in the University Business Park along IH-10 near Loop 1604 in San Antonio. CBRE’s Todd Mills repped the seller. CBRE’s Lindsey Tucker and Carl Salvato were awarded project leasing services.

LEASES

Protect America renewed its 46k SF lease at 3800 Quick Hill Rd in Austin. AQUILA Commercial’s Jay Lamy and Leigh Ellis repped the tenant. ECR’s Jason Steinberg and Matt Levin repped the landlord.

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Fidelity Brokerage Services inked a 15k SF lease at 11501 Alterra Pkwy in Austin. CBRE/UCR’s Dean Vandergriff repped the tenant. Endeavor Real Estate Group’s Jonathan Tate repped the landlord, Domain Junction 7. 

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Regus signed an 18k SF lease at 38th Street and North Lamar Boulevard. The new office suite be Regus’ 10th location in Austin. Regus should open in the spring. Cushman & Wakefield/Oxford Commercial repped the landlord, Highland Resources. JLL’s John Childers and Jake Ragusa repped the tenant.

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Onnit Labs signed a 20k SF lease at 4401 Freidrich Lane in Austin from KBS Realty Advisors. CBRE’s Ace Schlameus repped the landlord. Ace also repped KBS in a 51k SF lease to Biomat USA in the same location.

THIS & THAT

This week, Cencor dedicated a pedestrian bridge as part of the Dominion Ridge mixed-use project at IH-10 and Dominion Drive. The bridge is dedicated to the memory of Randy Riedel, who was the Metropolitan Contracting Co project superintendent in charge of building the center. Randy died of cancer shortly after the completion of Dominion Ridge. Pictured is Metropolitan’s John Franklin, Cencor’s John Roy, Metropolitan’s Steve Schuetze, Cencor San Antonio’s city partner Michael Schoenbrun, and Randy’s son and wife Derek Riedel and Francine Riedel.

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Embrey Partners founder and CEO Walter M. Embrey Jr. made a $1M gift to The University of Texas at San Antonio College of Business in support of graduate student real estate education. In recognition of his gift, the college’s program will be named the Embrey Real Estate Finance and Development Program. His gift will support graduate student fellowship opportunities, externship stipends and graduate research funding for opportunities such as conferences and industry competitions. Side note: Walter received his finance degree from UTSA. He is a founding member and former chairman of the UTSA Real Estate Finance and Development Program Founders Council and was a charter member and co-chairman of the Real Estate Finance and Investment Center at the UT Austin McCombs School of Business.

EXECUTIVES

Marshall Davidson joined Avison Young as a principal and will be the managing director of the newly opened San Antonio office. He will focus on overseeing the growth and development of Avison Young’s presence in the San Antonio area, and managing the day-to-day operations of the office. He will also continue his brokerage and consulting services. He was most recently a partner and managing principal of McCombs Davidson Studley in San Antonio. 

FINANCING

Mark One Capital arranged $2M in non-recourse financing for a 60-unit multifamily property south of I-410 and west of Highway 281 in San Antonio. Chris Parker arranged the loan, which was structured with a 20-year term, amortizes over 30 years with a five-year fixed interest rate of 4.07%, and includes 12 months of interest only payments. The loan-to-value was 75%.

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HFF secured $30.6M in financing for Brackenridge at Midtown, a 282-unit, Class-A garden-style multi-housing community at 223 Brackenridge Ave in San Antonio. HFF worked for borrower Pure Multi-Family REIT to place the long-term, fixed-rate loan with TIAA-CREF.  Loan proceeds were used to acquire the property. The property is 91% leased. The HFF debt placement team repping the borrower was led by senior managing director John Brownlee and associate director Michael Cosby.

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Walker & Dunlop VP Alex Inman led a team that structured an $18M loan for the acquisition of Whispering Oaks Apartments in San Antonio. The borrower originally requested a floating-rate loan and signed a loan application for a Fannie Mae Structured Adjustable Rate Mortgage; however, during underwriting stages of the loan, market conditions changed dramatically, and it became clear a fixed-rate mortgage was more desirable based on the borrower’s investment strategy. The Walker & Dunlop team quickly responded and changed the loan structure over to Fannie Mae’s 10-year fixed-rate product to accommodate the borrower with no delays in closing. In addition, the loan included three years interest-only and utilized Fannie Mae’s Early Rate Lock program. Whispering Oaks Apartments maintains a 93% occupancy rate.

NEW CONSTRUCTION

Trammell Crow was appointed as master developer for the construction of a new 57k SF Class-A build-to-suit industrial building, Expo 12, for Excel Filters’ new satellite manufacturing facility in Expo Business Park in Southeast Austin. Trammell Crow and Clarion Partners recently sold the 6.78-acre site for Expo 12 to a private investment company, who is leasing the building to Excel Filters. Construction on the project has started and it will deliver in May.

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Weston Urban and KDC selected the internationally renowned architecture firm Pelli Clarke Pelli to lead the design of the Frost Tower (Frost Bank's new HQ) and San Antonio's first downtown office tower in three decades. The design of the approximately 400k SF office tower will be orchestrated by the architecture firm, based out of New Haven, CT. In addition to its expertise in modern, iconic towers, the firm's leadership has strong local ties to the San Antonio community. Leadership team members Fred Clarke and Bill Butler will lead the project. Fred, a senior principal of Pelli Clarke Pelli, was born in El Campo and is a graduate of the University of Texas. Bill, a principal of  the firm, was born and raised in San Antonio and is a graduate of Rice University. Alamo Architects will serve as the local consulting architects. Construction is slated to begin fall 2016 and is estimated to be complete by 2018 or 2019.

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Oden Hughes broke ground on a five-story, 339-unit luxury community in the East Riverside Corridor near Lady Bird Lake at the southwest corner of Pleasant Valley Road and Elmont Drive. Lenox Boardwalk will be built to LEED for Homes Silver Level standards and should deliver in 2017. Oden Hughes Taylor Construction will be the general contractor. Oden Hughes Management will lease and manage the community.