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Brass House to Open in Downtown Austin Convention Center District This Friday

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The little 100 block of San Jacinto has seen a little turn-over recently.  Hank’s Garage, which had been vacant for some time, was recently taken over by a concept called El Ceviche Grill, and the bar that was Skinny’s Ballroom – which closed not too long ago (and we here at DAB were pretty sad, we had been rooting for them) – has a new concept coming in called Brass House (website looks to be in progress).

I’ve been surprised at the lack of success at some of the places in the general area, considering the hotel & convention traffic coupled with nearby high-rises such as The Four Season’s Residences, The Austonian, and the Rainey Trio of The Shore Condos, The Milago, and Towers of Town Lake.  Perhaps sky-high rent and massive competition have been too much for many of these small operators.

Either way, I’m intrigued by Brass House.  Describing itself on its Facebook page as a Jazz House, Wine Bar, and Gastropub concept, the finish-out looks in keeping with catering to a higher-end clientele and they are touting that food such as “Dolmas, hummus, pickles, paninis, salads, charcuterie boards” will be “All made from scratch in house or bought from a local family owned source….”.

Here’s a picture of some of the decor that captures the general vibe of the place.

Brass House is supposed to open this Friday, February 8, at 4pm.  I’ll likely walk by to check it out and I’ll be sure to update this post with my thoughts!

Why Are Prices Surging At The Railyard Condos?

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The Railyard condos are unique.  The two low-rise buildings sit on two of the best sites in downtown Austin, and have usually been more affordable than the newer, sexier high-rises.  Part of the appeal is location: situated across from the Austin Convention Center, 100 feet from the MetroRail, one block from Congress Avenue, three blocks from competing luxury towers, the Austonian and Four Seasons.  The Railyard has enviable proximity to most anything in downtown Austin.

Remember last year’s NIMBY fury over Austin’s Short Term Rental ordinance (pdf)?

You would be in good company if you assumed that all of downtown Austin’s condos and apartments were making money on STRs.

You would be wrong, though.  

Downtown condos have home owners associations (HOAs).  HOAs have rules, and in downtown Austin those rules are usually antagonistic to short term rentals.  Breaking those rules could result in a $1000 per day fine by the HOAs.  Despite the fact that the STR ordinance does not regulate apartments and condominiums, last year’s fight with the City of Austin to regulate STRs wasn’t going to impact most of us living in downtown because of these HOA rules. [UPDATE: rules have been revised to cap STR permits in CBD multi-family buildings at 25%]

The Railyard condos are very, very unique.

This past November, just a month after Austin’s new Short Term Rental ordinance took effect, an enterprising Railyard owner recognized the Railyard’s bylaws did not forbid short term rentals and put together a fund to purchase several units.

The investment rationale is simple: opening up your condo as a vacation-rental-by-owner (aka. VRBO) during SXSW, ACL, F1 (just to name just the big opportunities, not to mention conventions) can yield more rent during those events than the total rent from a typical 12 month lease!  Same for Railyard owner-occupants who can lease their place out for a few nights, take a vacation, and make a couple thousand bucks.

The economics of Railyard ownership shifted overnight. Word quickly spread to the owners and a handful of Austin Realtors.  In the previous year (Nov 2011 – Nov 2012), 1bd/1ba units at the Railyard condos were trading at an average of $285/foot, and units with at least 2bd/2ba units were trading at an average of $275/foot. [UPDATE: one year after posting this article, the last recorded MLS sale at Railyard was a building record $415/foot]

Going forward, expect sale prices at the Railyard condos to be 20-25% more than last year, reflecting the new economics of embracing downtown short term rentals.  Owner-occupants are getting in on the action, too.

Offering the flexibility to lease your condo on a short term basis is a privilege that makes the Railyard unique among downtown condos.   This privilege has significant value.

STRs can be a win-win for owners and associations.  The key is balance and monitoring the impact on residents.

The Railyard HOA is smart to approach STRs with reasonableness and attach fees to the process.  These extra fees will help fund their operations, building improvements, and keep HOA dues low for homeowners.  Homeowners, who are also able to capitalize on their property.

I’ll stop short of advocating that all downtown buildings should permit STRs – I don’t agree with that.  However, there are several buildings that should be paying attention to what the Railyard is doing.  It seems reasonable for more HOAs to experiment with loosening their STR rules, monitor the process, use the money for building improvements, and course correct as needed.

-Jude

[updated 06/01/2014: It has been discovered that Brazos Place Condos at 8th Street & Brazos Street is doing something similar by permitting one-month minimum lease terms.]

BREAKING: Sales Of New Downtown Austin Condos Average More Than $1,000,000

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For the first time, the average sales price of a new condo in downtown Austin is more than $1,000,000.

It’s not news that residences cost more than $1,000,000.  It is news when we’re talking about averages!  To be clear, we are focusing on new construction only, not resales (which have also had a banner year, and we’ll cover that in a future post.)

In 2012, the Austonian, Four Seasons Residences, W Hotel Residences, and Spring Condos (which in 2012 closed out their sales), accounted for 124 sales.

According to builder reports assembled by Capitol Market Research for new construction condos sold during the past 12 months:

  • average price = $1,061,682
  • average size = 1,701 ft.
  • number new condos sold = 124

The data is provided to us monthly as an aggregate of the above four buildings.  Anonymizing individual building sales was the only way to convince the developers to share their sales data.  To qualify the average price, we can approximate a median price using the 12 monthly aggregate records we have.

  • median monthly average price = $1,044,181 (min $777,813 to max $1,687,857)

The refrain which began in 2010 continues: there are no new downtown Austin condos being built.  Nor have we seen any new site plans for downtown condos.  Inventories continue to decrease (by 124 units in 2012) and residences are selling quickly at prices close to the asking price.  An ancillary effect of this shrinking inventory is rising prices for resales.

By my estimation, when compared against TCAD records, only 115 new construction units remain.  If interest rates remain low, the downtown Austin real estate market is on a trajectory to complete sales of new construction condos in 2013.

I’ll continue to provide detailed analysis of 2012 results over the coming weeks, including resales and analysis of building-by-building performance.

-Jude

What’s Next For Agora?

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Agora is closed.

It was a rocky start and a quick ending to the sports bar on East Ave.  Agora’s massive footprint, copious parking, and out-of-place architecture raised questions about what the concept would be really be.  “Is it a strip club?” was an all-to-common refrain.

Turns out it really was just a sports bar, albeit one out of place in downtown Austin’s burgeoning Rainey Street neighborhood.

Perhaps the final blow to the struggling venue was last month’s decision by the City of Austin Music Division to revoke Agora’s Outdoor Music Venue permit, after receiving too many noise complaints.

What’s next?  Our intel has it that the 18,000 sf CBD-zoned site is now for sale.

Agora OMV permit was revoked in December (pdf)

 

 

This Hotel Looks Just Like That Hotel

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It’s deja vu all over again!

White Lodging is losing no time getting to work on their third active hotel construction project in downtown Austin.

In late December, about three months after news leaked about the deal, planners filed a site plan and based on other documents filed at the city a clearer picture is emerging about the 300-room luxury hotel at 5th & San Jacinto, abutting the 6th Street Entertainment District.

According to city documents, the project will climb to about 20 floors, with a roof terrace, totaling 215,000 square feet.

Atlanta-based PFVS Architects Inc. are the architects of record.  PFVS already has a few hotels in Austin with their stamp on them, including the Westin at the Domain and the Marriot South Austin, off of I-35.  PFVS is also designing White Lodging’s other two current downtown projects.  White Lodging broke ground on a JW Marriott convention hotel valued at $300 million across from the Austonian last year, which is expected to open in 2015, and is working on a 296-room Hyatt Place under construction at 3rd & San Jacinto, expected to open this year. (Note: White Lodging also runs the Residence Inn next to the Convention Center.)

What is a bit surprising is how eerily similar drawings of PFVS’s Hyatt Place project, on 3rd and San Jacinto, appears to the renderings submitted to the city for the other hotel on 5th and San Jacinto, two blocks north. They are both about 300 rooms, and though the final products will probably be different, on the drawing board there is no denying they look quite similar.

Where have I seen this rendering before?

 

The 5th Street project comes to us from no other than Harry Whittington, who in this case created a joint venture with REI Real Estate Services LLC in Carmel, Ind., and White Lodging.

Whittington told the Austin Business Journal that after being courted by many developers his family concluded that building a hotel with the veteran hospitality developers was the route to pursue. (Whittington owned the lot for a whopping 45 years and is not in the business of selling his land.)

The site had entitlements for an 8:1 floor to area ratio, and zoning was successfully changed to provide a 13:1 FAR.

Something else lacking in the design are renderings that show the the building with a 6th Street POV – arguably the most important perspective for this hotel to blend into the neighborhood fabric.  Will it be a giant Plaza Lofts style flat blank wall looming over 6th Street?  I know the developer has heard these concerns, but we are left wondering about the results.

Should we expect more thoughtful design from architects and developers?  Absolutely.

Is this hotel better than the suface lot it’s going to replace?  Absolutely.