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

Demolition Begins at Waller Park Place

Demolition Begins at Waller Park Place

More signals of progress at Waller Park Place.  Demolition of the site began this morning along the west side of Red River, and into Willow Street.

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Signals of progress at Waller Park Place

Signals of progress at Waller Park Place

Small signals are often precursors of BIG news.

This past weekend, fencing was observed being erected around the site of Waller Park Place, the largest private development ever proposed in downtown Austin.  Demolition permits were issued back in August for the vacant structures along Red River Street.  The new fencing is a sure sign that site prep is about to begin.

The 3 acre site in the Rainey Street District stretches from Cesar Chavez to Davis Street, hugging the eastern bank of Waller Creek along the way.

-Jude

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waller-park-place-demolition-signal1

 

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The Sabine Street Promenade: Don’t Call It A Comeback

The Sabine Street Promenade: Don’t Call It A Comeback

The Sabine Street Promenade project — between Fourth St. and Seventh St. — has always been a rough jewel I’ve been waiting to see cut. The project will transform a parked-car-congested design dinosaur from the 1980s into a modern, landscaped, walk/cycle through-way.

I’ve been a strong advocate of the project from day one.  Now, there are signals of progress behind the scenes.

Not only will the Sabine Street redevelopment be a great public space, but it will also create great connectivity along the Waller Creek redevelopment.

sabine street promenade

First approved back in 2011, the pace of urban progress is never a fast one, but we’ve finally got our first actual look at the layout between 4th and 6th Streets of the pedestrian/bikeway corridor.

It is still unclear when the redevelopment would take place, but the initial plan was sometime this year. It’s not uncommon for massive infrastructure projects to get delayed for one reason or another. Even still, those who spends time downtown, especially nearby residents at the 5 Fifty Five, Avenue Lofts, or The Sabine, should be excited to see it move from concept to an engineer’s plan.

sabine-street-promenade1

Based on the road redevelopment plans, submitted by the City of Austin last month, it looks like the nuts and bolts of traffic flow remains unchanged from what was announced a few years ago.

Back in 2012, city officials were quoted in the newspaper saying 60 percent of the corridor would be devoted to bikeways, sidewalks, and trees. The corridor will still have on-street parking — which is not a surprise — but drastically less than now.

The Sabine Street redevelopment runs parallel to the Waller Creek Corridor, and adjacent to a portion called “The Narrows” which will be focused on outdoor socializing, rather than transportation. (Think San Antonio Riverwalk but less campy.)

In 2013, the City Council picked Michael Van Valkenburgh Associates (MVVA) as the lead consultant for the Sabine Street project, which makes sense given that MVVA is the lead designer for Waller Creek.

Personally, I’m hoping the promenade has some MVVA flare, versus coming out a cookie-cutter image of other redeveloped downtown Austin streets. (Don’t get me wrong, I love cookies even if they are cookie-cut. I’m just saying, MVVA bring a lot to the table).

Waller Creek is envisioned as a chain of parks in the heart of Downtown Austin. Sabine Street will connect an envisioned year-round event park to the north (Refuge) and a reinvigorated Palm Park to the south.

sabine-street-promenade2

If you look at the architectural drawings below, you also notice the promenade is going to be enhanced by a good dose of trees, which are noted by the triangle symbols, and other shrub beds on the north side.

-Jude

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Downtown Austin News Bites

Downtown Austin News Bites

Signs of Progress for Waller Park Place

An application to re-subdivide the lots at 92-98 Red River, 504-505 Willow St., and 503 and 511 E Cesar Chavez was filed recently.  We’re eager to see Waller Park Place break ground.  This is notable as the largest private development ever proposed in downtown Austin, and when complete will be bring more daytime activity for the burgeoning Rainey Street District.

Bed & Breakfast Proposed for 1304 Rio Grande

A bed & breakfast concept could potentially breathe a little new life into a district of downtown mostly filled with older homes hosting small offices. Very little info exists on the project right now, but we’ll update you as we get additional details.

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A Walk in the Clouds in Downtown Austin

No, this isn’t the 2015 Downtown Austin Blog Prom Theme.  It’s another way of saying that downtown Austin is getting another really cool sky bridge concept, a la Fairmont to the Austin Convention Center.

Rendering of skybridge that will connect Fairmont to Austin Convention Center

Rendering of skybridge that will connect Fairmont to Austin Convention Center

This time, the “aerial right-of-way encroachment” (sky bridge is catchier, admittedly), is being proposed between West 5th and West 6th Street on Bowie street, and will connect slick new Bowie Apartments  Shoal Creek Walk (Class A office and ground floor retail, by Schlosser Development) to Whole Foods Headquarters, a development that has just started site work.

Per developer, this was REQUIRED by city code, since at least one of the buildings it will be connecting are in the flood plain.  An additional escape route was required to avoid a fire hazard. It’s our understanding that this concept is a go – as the time for objections has passed, and it’s a safety requirement.  We think it’s kind of neat.

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Millenium Rainey Restaurant Space Available for $36/sf NNN

Speaking of Rainey Street Happenings, the marketing for the commercial space at Millenium Rainey Apartments is in full force.  CBRE is marketing the property – take a look at the marketing packet they created:

(Click on the images for a larger view)

First Crane for Aspen Heights Apartments at 8th and Nueces

It’s alive!  Aspen Heights Apartments moving forward with construction, as evidenced by the massive crane recently erected on the site.

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