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REA
October 12, 2016  

Downtown Tower Among Big Austin Listings

Spire Realty is shopping a downtown Austin office building that could fetch $200 million, the latest in a recent flurry of big listings in the booming city.

The 390,000-square-foot Chase Tower, a Class-A property at 221 West 6th Street, is 99% leased. Dallas-based Spire has given the marketing assignment to CBRE.

Meanwhile, separate owners have given HFF two large office listings in Northwest Austin. One offering, for two buildings in the giant Domain mixed-use complex, could fetch $150 million. The other is valued at about $100 million (see article on Page 2).

The flow of Austin office listings has picked up again after a sluggish start to the year. Following a record $1.9 billion of trades in 2015, local pros expected a slow-down — and indeed, first-half sales volume was down 40% from the same period last year. But with a robust job market fueling sustained rent growth, property valuations are continuing to rise, prompting more owners to put assets on the block.

Investment sales for 2016 have now exceeded $1 billion for the fifth year in a row. The slow start makes it unlikely that last year’s record will be broken, but local pros say the uptick demonstrates the resiliency of the Austin market, which in recent years has gained appeal as a destination for institutional capital.

The rising valuations, along with construction and redevelopment, have contributed to another trend: bigger-ticket offerings that cater to those institutional investors. After just a dozen single-property office trades worth at least $100 million between 2001 and the start of 2015, there were six last year alone. Four such properties have already sold or gone under contract this year, and four more are on the block.

Last year also saw three office properties sell for more than $200 million apiece — a price point that had been reached only once before in a single-asset Austin trade. Chase Tower could be the next to clear that hurdle.

The 22-story building was completed in 1974 and renovated in 2007. Tenants include J.P. Morgan, which leases 14% of the space, and RGM, which occupies 12%. The private Headliners Club is on the 21st floor. The property has a seven-story garage with 747 spaces and a 2,900-sf fitness center.

Spire acquired Chase Tower during the downturn, paying $73.9 million in 2010. HFF advised the sellers, Grubb & Ellis Realty Investors and Endeavor Real Estate.