development

Windfall – Villas on Town Lake is being sold

Jude Galligan | June 22, 2016 |

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?

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

Signals of progress at Waller Park Place

Jude Galligan | November 30, 2015 |

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

Proposed three-tower Waller Park Place at Red River & Cesar Chavez

How Much Convention Center Is Too Much Convention Center?

Jude Galligan | November 19, 2014 |

Block 8 sits in the southern shadow of the Four Seasons Residences, just west of the Austin Convention Center. There are signals that the City of Austin is posturing for another Convention Center eminent domain battle (à la the Whittington Saga Part 1 & Part 2, which we wrote about in 2008).

City Staff recently recommended that the City acquire the southern tracts of what’s known as Block 8 to be part of an expansion of the Austin Convention Center, the first step in a larger proposed expansion.

The Convention Center currently sprawls over six city blocks, and hosts 881,400 square feet of space. The City Memo states that there is “solid evidence” for expansion and is wanting up to 305,000 in additional square feet! No doubt the abundance of downtown hotel rooms recently built, and under-construction is part of that “evidence”.

You can view the memo in a recent report from the Austin Monitor, though talks about this have been going on behind closed doors for a while before this.

block-8-tcad-parcels — Plat map of the southern half of Block 8

Below is the breakdown of current ownership of the southern half of Block 8 that the city is intending to initially acquire:

101 E Cesar Chavez / 302 E Cesar Chavez – this is one of the most awkward buildings in downtown Austin. The tenant, Casa Chapala, recently closed its doors. Public records show the lot to be owned by Bloctavo Holdings LLC / John Calhoun Miller, a real estate attorney in Texas. May be a registered agent.

304 & 306 Cesar Chavez – downtown’s purveyor of Aprilias and Vespas, AF1 seems to hide in plain sight. Owned by Bandy Real Estate LLC, a family operated LLC located in Kingsland, TX.

316 & 316 1/2 Cesar Chavez – A lovely surface parking lot (sarcasm), adjacent to the Christian Science Reading Room. Public records indicated this is owned by Bloctavo Holdings / John Calhoun Miller, a real estate attorney in Texas. May be a registered agent.

the view of the lot looking to the north

102 / 104 Trinity – The Christian Science Reading Room, owned by the First Church of Christian Science.

front exterior of the Christian Science Reading Room

Southwest Strategies has been marketing the assemblage of the southern half of Block 8, hoping to get a developer to build with a long-term ground lease.

They describe Block 8 as follows:

The Block 8 Tracts are an assemblage of 4 smaller tracts. Currently, the western portion of the property along San Jacinto is improved with a two story building containing 6,103 sq. ft. currently leased to a restaurant on a short term basis. The central part of the assemblage is improved with a one story building containing 5,320 sq. ft. Tenant is on a month-to-month lease. The eastern portion of the assemblage consists of a paved parking lot utilized for contract parking and an owner occupied one story building consisting of 4,161 sq. ft.

It’s true that the block sits on a prime redevelopment location. It’s near the convention center, has CBD zoning, and “is unencumbered by any Capitol View Corridors.”

Per the Austin Business Journal, “City officials invested about $110 million to expand the convention center in 2002 by several city blocks.”

In their memo, the City states that it has already sent what’s called a Letter of Intent to Acquire to the property owners, and is also already throwing around eminent domain references (though the memo does state that the City will make a good faith attempt to acquire the properties at market value).

The above lots are just the first part of the plan. From the Austin Monitor: “Rizer suggests the city will need to acquire ‘the equivalent of three to four City blocks‘ to accumulate enough room for the additional space.”

As a resident of downtown, the prospect that an additional three to four blocks of CBD zoned downtown Austin land, currently occupied by thriving businesses, would be annexed by a sprawling Convention Center is alarming. This would divide downtown Austin using brute force malaise-era design principals. The City should instead be investing in sustainable design that enhances the preciously compact pedestrian experience our downtown currently affords to residents and visitors.

I call BS on the dogma that Convention Centers can only expand horizontally. City leadership should invite world class designers to show us a better path to expand vertically on the already significant Convention Center footprint.

-Jude

From Bail Bonds To Condominium

AG | November 3, 2014 |

12/10/2014: Updated rendering below!
09/15/2015: The project will be called Esquina Austin

While many of DAB’s friends will be sad to see Bail Bonds (777-7777) office go [sarcasm], we are interested in what is planned to replace it: 908 Nueces Condominiums.

908 Nueces LLC purchased the site in July. The address for 908 Nueces LLC on the deed records matches up to several entities, but it looks like the management of 908 Nueces LLC is a company called Scotia Western States Housing LLC, based in Tucson.

Through a little research, we’ve confirmed that a builder in Tucson, A.F. Sterling Homes, will be the company developing this project. While the company owns some single family rentals in Austin , this project will mark their first foray into developing dense housing in Austin.

Perales Engineering, who posted the below rendering of the project on their FB page in September, will be working with Urban Foundry Architecture on the project.

Here’s what we know so far:

Address = 908 Nueces
Lot = 0.29 Acres (~12,800 sf)
Proposed structure = (~34,000) sf
Number of stories = 4 + 1 level of parking
Number of residences = 32

908-Nueces-Today — Google Street View Image of 908 Nueces Today

A rendering of the northeast perspective, given to us on 12/10/2014. All renderings subject to change.

The Rainey Street House

AG | October 15, 2014 |

It looks like Rainey Street District will be getting a history center! The big question is: where will it go?

On June 12, 2014, Councilman Mike Martinez made a motion, which was amended by Councilman Chris Riley and passed a council vote to essentially read as follows:

Directs the City Manager to accept the donation of the structure formerly located at 93 Rainey St. from Austin Rainey St. D/E/P, LLC, a Delaware, LLC., for use as the Rainey Street History Center.

Here’s the house at 93 Rainey in 2012 (taken from my MEGA Rainey post from 2012) – standing on one of the sites where Dinerstein is building the Millenium Apartments.

The ~1600sf structure as it stands today:

This structure, which will be refurbished using funds from the Rainey Street District Fund, will be placed on a TBD location within the next 180 days.

Currently, these three locations are being considered:

64 Rainey, 700 Cummings, and East Avenue – all pictured below:

64 Rainey

700 Cummings

East Avenue Site

There are pros and cons to each of these sites, and the Rainey Neighbors Association will be discussing all the issues, and likely selecting the location THEY endorse (several other stakeholders may need to agree, including the MACC and the Waller Creek Conservancy) on 10/21 at 6:30pm at the Towers of Town Lake Library. If you are an RNA member – you’re welcome to come to the meeting! Otherwise, submit your thoughts on these sites in the comments below!

For more information, download the attached presentation by Austin Parks and Rec: Rainey-Street-House