Windfall – Villas on Town Lake is being sold

Windfall – Villas on Town Lake is being sold

Downtown Austin’s Villas on Town Lake condos home owners’ association (HOA) will agree to sell the entire property – comprised of 57 individually owned condos – to The Sutton Company, who beat out a handful of bidders.  More than one source close to the deal has rumored the amount of the offers [plural] were in the ballpark of $50,000,000.

This is exceptionally interesting because we normally expect to see development activity on surface parking lots, or on an assemblage of adjacent parcels.  The Villas is a fully occupied condominium!  This means there are multiple owners, strong personalities, and diverse motivations.  Corralling everyone into agreement is a herculean task.

What’s so special about the Villas?

Villas on Town Lake

Villas on Town Lake

Situated along Waller Creek, the Villas on Town Lake condominium is one of downtown Austin’s older mid-rise residential buildings.  Villas is a modest, courtyard-style, community, built long before the Rainey Street neighborhood became a “district.”

Most importantly, Villas On Town Lake is coveted for its location.

The site is one of downtown Austin’s most desirable.  With only city-owned park land between it and Lady Bird Lake, if Villas were to be razed and rebuilt as a tower, it would deliver views of the lake and hill country, with adjacent access to Waller Creek, Lady Bird Lake, and the hike & bike trail.  The site is not encumbered by Capitol View Corridors and has CBD zoning.

Villas vitals:

  • Located at 80 Red River Street, Austin, TX 78701
  • Built in 1982
  • Number of units = 57
  • Total Square Feet (private, conditioned) = 65,791
  • Total Square Feet (including Common) = 99,770
  • Average unit size = 1,154 ft
  • 80% of air-conditioned area = 52,631.2 ft (appox: 46 units)
  • 80% of Total Area = 79,816 ft

How does this happen?

Property rights in Texas are such that a condominium association can dissolve itself.  When this happens ownership reverts to a single parcel with tenancy in common, and proceeds from a hypothetical sale are distributed based on percentage of ownership.  The HOA can sign deeds of units that have not volunteered to sell.

(I welcome comments from real estate attorneys who can shed light on the mechanics of this.)

Years ago the Villas HOA had the foresight to realize the market would eventually grow to a point where the modest condo community was no longer the best use of the land.  In 2006, the Villas HOA revised their bylaws to allow 80 percent of the Villas ownership could vote to dissolve the entire HOA.  This change paved the way for a deep pocketed buyer to buy the whole shebang with only 80% of the owners needing to agree.

In September of last year, the Villas HOA issued a Request for Proposals from development groups.  Groups like World Class Capital are rumored to have been among the bidders.  The winning bidder, The Sutton Company, is one of Austin’s most prolific developers, responsible for several downtown Austin condo projects, including: Plaza Lofts, Avenue Lofts, Brazos Lofts, and the 5 Fifty Five.  They also assembled the land for the Millennium Rainey, and are developing the land adjacent to the Villas as Waller Park Place.

Is it a good deal?  

Yes, it is, for both buyer and seller.

If the rumored $50,000,000 is close to the purchase price, then the average price per foot of “saleable” space is $759/ft!!  Based on the average unit size, were someone to try and accumulate control of 46 units – the number I estimate required to gain 80% control of the Villas – would take approximately 14 years to do based on historic sales velocity.

Accelerating 14 years of effort requires offering a premium to market right now; however, the winning bidder also owns the adjacent property and can reasonably expect to recoup that premium.

Villas on Town Lake - History of Sales

Villas on Town Lake – History of Sales

 

Per the MLS, 63 units have sold at the Villas since the summer of 1997.  In 1997, market price for a typical condo at Villas on Town Lake was ~$100 per foot.  Now, imagine for a minute that you’re an owner at Villas back in 1997 and a someone approached you saying, “I will pay you double the market rate, $200 per foot!”  Most reasonable people would agree to less than double the market rate from an unsolicited offer.  If anyone wants to pay me twice market value for my place… I’m ready to talk!

The most recent sales record we have for a one bedroom at Villas was from March 2015, when a 675 sf condo sold for $279,000.  So, if the rumored amount of the winning bid – $50,000,000 – is close to accurate and proceeds are distributed by square foot, then that same built-in-1982 Villas one-bedroom may be closing for $512,325.  That’s a windfall.

Kudos to the Villas for getting it.

~ Jude

A Drive Through Austin – June 1996

A Drive Through Austin – June 1996

This is an amazing time capsule of a video.

Twenty years ago this video was shot by Pete Reid and his buddy, Brian.  Pete was a visiting student from Scotland at UT.

The video takes us from UT, down the Drag, along Guadalupe into downtown Austin.  The video quality isn’t great, but it is good enough for some good nostalgia to kick in. From Pete’s Youtube description:

“We drove down the Drag passing the Hole in the Wall, Tower Records, some drag rats, and Miami Subs. Then down Guadalupe passed the Dog and Duck, Liberty Lunch, an empty Austin skyline, and hardly any traffic. “

It starts off with shots of the Drag.  For me the most interesting part is about five minutes in when you can catch glimpses of how downtown Austin has evolved. Notably:

0:44 – Tower Records on the Drag

5:24 – on the left, Guadalupe @ 5th, that parking lot is where Plaza Lofts is now.

5:52 – on the left, Guadalupe @ 2nd, that white building is now where Austin City Hall is located.  The camera pans to the right to show Liberty Lunch.

6:27 – approaching and crossing Cesar Chavez

7:01 – shots of downtown Austin from 1st Street Bridge

Thanks to Pete Reid for sharing this on Youtube, and to Chris James putting it on my radar.

~ Jude

New downtown Austin train station making room for pedestrian plaza

New downtown Austin train station making room for pedestrian plaza

The downtown Austin “Red Line” train station is about to undergo a significant makeover, that will add room for two more trains at the station.  The capacity upgrade is expected to double the people (from >400 to 800) to commute to downtown from north Austin during rush hour.

However, the final design seems to be departure from any of the proposed concepts.

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Downtown Thriving as a Live-Work-Play Community

Downtown Thriving as a Live-Work-Play Community

greenofficebuilding2

Artist’s rendering of the office tower now going up at the site of the former Thomas C. Green Water Treatment Plant in downtown Austin where Google will take more than 200,000-sf. CREDIT: Gensler Austin

Nice story in The Statesman about the vibrant community that continues to grow downtown – not just in terms of nightlife, but also new economy jobs and associated residents:  Austin’s Tech Scene Heats Up Downtown.

It’s worth pointing out however that all this has not “just happened” by itself.

It has been 15+ years in the making with great purpose by the likes of the Downtown Austin Alliance (DAA), the Downtown Austin Neighborhood Association (DANA), Mayors Kirk Watson, Will Wynn, Lee Leffingwell and their City Councils, the Downtown Austin Plan, and many more driving forces.

Except for weekday lunchtime and weekend nights on East 6th, it was a veritable ghost town when my team first opened an expanded Wild About Music down here in 1995, then started living here in 1999.

There’s still a ton of work to be done around issues of homelessness and vagrancy (two different matters), affordability (having only $50/ft rents and million dollar condos is not sustainable), traffic (a car-free zone?), and that IH-35 east-west barrier.

Dave Sullivan, longtime Austin civic leader during this big growth period, also just told me: “When I joined the City Planning Commission in 1994, software development was a prohibited use Downtown. I remember voting to change that in the late 90s. Seems incredible.

Incredible indeed, Dave.


And a worthy update:  After this story published I received a note from a longtime steward of Downtown Austin’s evolution, Michael Knox, of the City’s Economic Development Department.  He filled in another 10 years of preparation that went into the creation of today’s Downtown before my timeline even picks up.  Mike says:

“I started working on downtown in 1988, when it was part of AustinPlan’s Sector 1.  Of course AustinPlan, the comprehensive plan update to replace Austin Tomorrow, was never adopted.

“In 1989 we (Jose Martinez and I) started working with the Downtown Commission, actively promoting a thing called R/UDAT.  The 1990 R/UDAT application we co-wrote was accepted, and in 1991 we got the R/UDAT team visit and report, followed in 1992 by “A Call to Action: R/UDAT Implementation” that, in 1993 gave birth to the Downtown Austin Alliance and the Austin Downton PID.  These efforts involved hundreds of dedicated Austinites.

“Downtown initiatives were kicked up a notch in 1997 when Kirk Watson became Mayor, and Assistant City Manager Jim Smith (now Aviation Director) and I put together Kirk’s first six downtown initiatives, including the Waller Creek tunnel, Downtown Design Guidelines and the Poleyard and AMLI developments.”

So there you go…another of Downtown Austin’s many unsung heroes.  We thank you, Michael Knox.

~Fred

Chill Out

Chill Out

Leave no stone unturned. Check out how Austin Energy wants to use a sliver of downtown land, next to Gables Park Tower, for a new chilling station.

The site dimensions make the site pretty much unusable for intense development, so it is great to see a municipal use.  AE has engaged Cotera Reed to handle the design.  The project is being presented to the City of Austin Design Commission on the 25th.

Many downtown buildings are connected to the the City’s “chilled water loop”.  One of the existing chilling stations is at 5th & Sabine (that blue tile “box” connected to the ACVB parking garage).

-Jude

potential "skin" of the station

potential “skin” of the station

Chilling Station design by Cotera Reed

Chilling Station design by Cotera Reed

Chilling Station design by Cotera Reed

Chilling Station design by Cotera Reed

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