downtown Austin's real estate and neighborhood blog
Check out the Rue de Rainey Market on August 14th, from noon to 7pm.
This is the kick-off event for what is planned to be recurring every other Sunday in the Rainey District. Rue de Rainey Market will feature an array of local artisans, designers, and merchants.
The marketplace will be hosted at 604 Driskill, which is the parking lot to the across from Bar 96.
~Jude
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:
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.
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
For the past couple of years the east side of Rainey Street’s [already limited] sidewalks were barricaded for the construction of the Millennium Rainey apartments.
Today, those barricades came down! Woo hoo!!! The Millennium Rainey adds 326 downtown apartments to the rental inventory.
Some of you will remember that The Sutton Company assembled several Rainey Street parcels back in 2012 and planned this three story tower. Then, they sold the assemblage to Dinerstein and the intertubes pitched a fit about Lustre Pearl moving.
Now, Lustre Pearl is back, Millennium Rainey is completed, Sutton is focused on Waller Park Place, and the Rainey neighborhood has better sidewalks.
-Jude
As far as Rainey bars go, I really like The Drafting Room at 88 1/2 Rainey. Located on a plot of land right behind The Shore Condos in downtown Austin‘s Rainey Street District, and owned by inveterate downtown-er and Architect Craig Nasso since 1994 (read: WAY before Rainey Street was “cool”), the lot has evolved with the neighborhood and transformed what was an already a lovely home and office into two delightful, separate but intertwined (both are owned by Craig and Holly), pursuits of food and drink.
L’Estelle’s story on it’s website is actually much more eloquently written – check it out here.
If you don’t have time to read it all, here’s my favorite excerpt:
The architect of L’Estelle, then 26 years old, drove down Rainey Street in 1994 and spotted a little piece of “half-lot” that was merely a patch of dirt. The fact that this lot was on a street named Rainey was especially of interest since his mother’s maiden name was Estele Rainey. He bought it, nurtured it, planted every tree and bush and designed a plan for a long life on this little lot. Twenty years ago, he built the back house as a live work office and decided to wait to build a front house when he could design it with a wife if he got married one day.
The architect eventually got married, but during that period, Rainey Street changed from a residential historic neighborhood into a bustling night life district. So the architect changed plans but held sensitively to his dream. He designed and built a front house with his wife which would serve as a kitchen for the people and he converted his office into a quaint beer and wine bar – now the Drafting Room. Together, they open their yard and their hospitality to all who enter, offering a real and authentic connection to the district, its history, and the comfort casual style of gathering under the stars with good drinks, food, and folks. L’Estelle pays respect to their mother, Estele Rainey, the best cook in the family who serves as the advisor and contributor of many homestyle recipes for the preserves and sweets offered in the kitchen.
There’s truly a lot to love when it comes to what Craig and his wife Holly have carefully, tenderly created. Their story is unique and their tie to the neighborhood is genuine; the architecture (and, hence, the vibe) is elegant, modern and comfortable; but, most importantly, the wine is great and the food is TO DIE FOR.
Bottom line: Go there. You won’t regret it. And say hi to Holly and Craig when you visit; they are almost always there making sure things are running right.
p.s. – They are open for Sunday Brunch, too! Starts at 11am…
Drafting Room Facebook | L’estelle Facebook
Want a trip down memory lane? Check out our 2012 Mega Post on Rainey with pics of what the street looked like not but 5 years ago…
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.
