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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?

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

Filed Under: development, Downtown Austin Districts, Downtown Austin lofts, condos, apartments, Rainey Street District, Real Estate, waller creek

Learning About Austin’s Urban Cemeteries

AG | December 3, 2014 |

When I lived in downtown Atlanta, one of my favorite restaurants was a nearby pub and seafood place called Six Feet Under in Grant Park. The restaurant was right across the street from a cemetery, and, rather than being grossed out at the thought of eating so close to the many corpses buried across the street, I found the view rather peaceful and beautiful.  I enjoyed going to their rooftop deck, ordering a beer, and gazing upon all of the serene tombstones.  With a strange-in-a-good-way feeling, being in the presence of so many that had lived before me helped me feel part of something larger, and put the petty problems of the day in perspective – a reminder that I was part of something much more significant.

Cemeteries are, I believe, an important part of the urban landscape; but a part of the urban landscape that I don’t think many people living in dense urban cities actually think about.  Austin seems to be on the cutting edge of trying to leverage aging infrastructure (or, if you’re into puns like me – “dead weight”) into a modern productive asset, and the current discussions surrounding a cemetery “master plan” are part of that process.

oakwood-cemetery-entranceCemeteries do not just take care of themselves.  There’s an entire system and economy behind operating these pieces of land. There are privately owned cemeteries, and there are municipal cemeteries, which have a basic function of providing affordable burial and related services for those in the community. Here in Austin, Travis County is responsible for providing burials for the indigent population.

Of the ~300 known cemeteries in Travis County, the City of Austin only owns five of them: Austin Memorial Park, Evergreen, Oakwood, Oakwood Annex, and Plummers. The City of Austin Parks and Recreation Department took over maintenance of the cemeteries in 2013.  A 2006 article in the Austin Chronicle explains how these City cemeteries “work” and some of the inherent challenges of running a cemetery:

Part of the difficulty in maintaining Oakwood lies in the fact that, although the city owns the property, caring for individual plots is the responsibility of the families of the people buried in them. As Jay Stone, manager of Austin Parks and Recreation’s financial services division, put it, “It’s no different [from] when you purchase your home. You do the upkeep.” Oakwood – and the city’s four other cemeteries – are like their own neighborhoods within the city. Think of the plots as people’s lots, the graves and mausoleums as people’s houses, and the tombstones and other markers as fences (hence references to the cemetery in old newspapers as “The City of the Dead”). The hole in this rationale, says Dale Flatt, president and co-founder of Save Austin’s Cemeteries, is that many of the families of people buried in Oakwood have long since moved away. In terms of long-term care, those graves have essentially become abandoned houses.

The City of Austin has never had a plan regarding the management and upkeep of municipal cemeteries, and it was the recent announcement of gathering public input for the City’s inaugural Cemeteries Master Plan that got me thinking about the business and real estate of cemeteries.  The fifth and final public input meeting is on Saturday, January 24, 2015, from 10:30am-12:30pm at the Austin Public Library, Carver Branch, 1161 Angelina Street. At that meeting, the Master Plan team will present the draft plan.

The two nearest cemeteries to downtown Austin are

  1. Oakwood Cemetery at 1601 Navosota, 78702, and the Oakwood Annex, City-owned and managed
  2. The Texas State Cemetery at 909 Navasota, 78702.  This is the impeccably manicured burial site of Stephen F. Austin, General Albert Sidney Johnston, Governor Allan Shivers, Governor John Connally, and Lieutenant Governor Bob Bullock.

Oakwood and the Oakwood Annex rarely see new burials, and are deemed as historic sites.  Yet, the cheap chain-link fence that wraps the land has been an eyesore for years.  Between the two separate but adjacent sites rest over 35,000 buried bodies!  Oakwood is Austin’s oldest cemetery, established in 1839, when the City was originally platted.  Susanna Dickinson is among other notable Austinites buried there.

provided by Kim McKnight – City of Austin, Parks and Recreation
provided by Kim McKnight – City of Austin, Parks and Recreation

When I read articles online about the urban cemetery as a concept, the theme from the articles was that space for a traditional burials is becoming limited, and urban cemeteries and burial practices are evolving to take into account those needs.

Interestingly, “stacked” burial plots are actually NOT allowed in Austin (I guess the City is presenting obstacles to urban density even in death, wakka wakka).

A little “spooked” (I can’t help myself.) and looking for answers, I called up Kim McKnight (a City employee who is facilitating the discussions around the Austin Cemetery Master Plan, and who has a background in urban revitalization), and she assured me that there is not really a threat of that happening in Austin for the foreseeable future.  However, she did say that part of the purpose of the Master Plan was to find ways for the municipally-owned and operated cemeteries’ use to evolve and perhaps generate some revenue.  She was VERY quick to clarify that the City does not view cemeteries as being the same as other parks, and that they should not be used as traditional recreation spaces, instead stressing “we can do a better job of activating those cemeteries so that they have some relevancy.”

Right now, only two of the five city-owned cemeteries actually brings in revenue.  The master plan seeks to address funding issues to create a sustainable model to keep these historic sites beautiful and maintained as a part of the larger community.  With Oakwood in particular, the City is not only looking at ways to activate the space, but is also considering creating additional burial options like cremation.  The Oakwood Annex is being considered as a site to hold a columbarium.

provided by Kim McKnight - City of Austin, Parks and Recreation
Oakwood Chapel, photo provided by Kim McKnight – City of Austin, Parks and Recreation

The master plan also seeks to tackle the issue of restoration / renovation of the sites.  One interesting project in Oakwood is the planned restoration of the Oakwood Chapel, with the intention to use the space for programming once it is renovated.  Charles Page a significant local architect who also designed the bandstand at Wooldridge Square and whose sons were partners in the well known firm PageSoutherlandPage, built the chapel in 1914.  The master plan will also address how to properly maintain gravestones and monuments, and provide irrigation solutions.

Unique Grave Markers at Oakwood, photo by Taylor Martinez

Tree care is also vitally important, and the City has forked over major funds for a tree inventory and assessment study.  Interesting aside – apparently foxes live in the Oakwood Cemetery – who knew?!

-A

Resources:

  • Save Austin Cemeteries  is a non-profit dedicated to preservation efforts of Austin cemeteries through documentation and education, and to promoting historic cemeteries of Austin as local and state cultural resources.
  •  City of Austin Website for Cemetery Master Plan
  • Scope of Work for Cemetery Master Plan
  • City of Austin Burial Fee Schedule
  • List of Known Cemeteries in Travis County
  • Texas State Cemetery
  • Oakwood Cemetery Database Site

*A big thanks to Kim Mcknight for spending a good amount of time with me on the phone to talk about cemeteries and the Master Plan, and who also provided some of the pictures and resource links.

Filed Under: miscellaneous, Real Estate

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.

block-8 2

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.

af1
AF1 Racing

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
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
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.”

block-8-capitol-view-corridor

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

Filed Under: austin history, austin neighborhoods, austin news, city council, development, downtown austin, Real Estate

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.
A rendering of the northeast perspective, given to us on 12/10/2014. All renderings subject to change.
908 Nueces Rendering - Perales Engineering
Rendering of the future 908 Nueces Condos, posted by Perales Engineering on Facebook

Filed Under: around town, austin apartments, austin condos, austin lifestyle, austin lofts, austin neighborhoods, austin news, development, downtown austin, Real Estate

Fifth & West Residences: The Next Austin Condo Tower

Jude Galligan | October 14, 2014 |

The Statesman confirmed today what many of us have been expecting, the former offices of the Texas Press Association located at the corner of Fifth Street @ West Avenue, will be razed and construction to commence on a 39 story condominium.

Known officially as Fifth & West Residences, it is the first condo project in downtown Austin to reveal official plans to begin accepting reservations since Seaholm.  Seaholm Condos is notable as it was announced almost exactly one year ago, and was fully reserved within just a few days of that announcement.

We first learned about Fifth & West earlier this year when the project came before the Downtown Commission, and we observed just how compact a footprint the building will have.  So, maximizing FAR was crucial to developing the site.  One of the more notable pieces the developer offered for density bonuses was subsidized Car2Go, B-Cycle, and Shoal Creek Conservancy memberships for each residence.  It is to be determined if those commitments carried through the entitlement process.

Interior dog park
residence interior
building entrance
view from east
view from north

[Interior renderings by Michael Hsu Office of Architecture]

Tall and slender (think Spring Condos) because of the property’s small foot print, combined with the the impact of the Capitol View Corridor, the building’s architecture will be a unique triangular tower, with the longest plane facing southeast.  The surrounding businesses, notably Austin Urban Vet, Kung-Fu Saloon, Jerry Kunz design, and Molotov, will remain untouched by the vertical development.

Below is a summary of what we know about Fifth & West Residences:

  • Project name = Fifth + West Residences
  • Address = 501 West Avenue, Austin, TX 78701
  • Project type = condominium
  • Number of residences = ~154
  • Target pricing = ~$740 per foot, on average
  • Building height = 448ft
  • Unit sizes = average of 1,624 sf  (1, 2, 3 bedroom plans)
  • Developer = Riverside Resources
  • FAR = ~20:1
  • Architect = GDA Architects (Interior Michael Hsu)
  • Anticipated delivery = Autumn of 2017

It’s interesting to see how a large Capitol View Corridor impacts vertical development, forcing architects and developers to finesse the building envelope.

Capitol View Corridor
A large Capitol View Corridor cuts through downtown Austin, Fifth & West to the left

Pre-sales process will be announced soon.  Until then, if you’re interested in making a reservation, contact us for more details!

-Jude

Comparison of GDA Architect's rendering to what the corner of 5th & West looks like today
Comparison of GDA Architect’s rendering to what the corner of 5th & West looks like today

Filed Under: austin towers and high rises, Downtown Austin lofts, condos, apartments, Real Estate

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