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Kanye West Purchasing Austin Loft? Perhaps, But Not The Austonian Penthouse

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The Austonian

I love to see effective guerrilla marketing in action.

Earlier this month it seemed as if every Austinite on twitter was sharing rumors that hip-hop fashionista Kanye West purchased the top floor of the Austonian. Skeptical, as is my nature, I was doubtful – I had just toured the top floors. The Austonian is the furthest you’ll get from a proper “Austin loft“. The rumor propagated with Kanye’s lyric “New crib-LOFT IN- where its at-AUSTIN-where is that-Texas!!!”

I was scratching my head, and thinking “really?”. Pushing down my gullible pride, I bashfully confirmed with the Austonian. The rumor, of course, is 100% false, but it resulted in discussion and intrigue. This was cunning guerrilla marketing. 🙂

Think about it. Eventually, perhaps this year, a buyer will emerge for the Austonian penthouse. There are a handful of buyers that have their eye on this space, but are biding their time, waiting to see if the fierce competition among the luxury towers will further soften prices across the board. These towers are already negotiating, very discretely, behind closed doors. But, for the buyer that has their eye on a product with no substitutes, one day soon, they could wake up to real news that what they desire is no longer available.

Below, I’m reposting a comment I shared in another thread

Jude Galligan wrote:

The current market for these buildings [Spring, W, Four Seasons, Austonian] works like this: There are buyers right now paying for a specific view, or floorplan, or the flexibility of combining units. We’re negotiating hard, and seeing deals with 10-15% discounts from asking. More or less depending on the specific space and the buyer’s desire for customizations. At this level, buyers often just want a shell space and the ability to bring their architect into the discussion. There are other buyers waiting patiently for better negotiating posture in a softer market – they are less concerned about having a specific space.

Until each building receives a certificate of occupancy, and we can observe the velocity of closings on the existing contracts, it’s challenging to gauge a market for a product that Austin is unfamiliar with (i.e. luxury urban condos).

I don’t expect they will sell out before they open, unless they soften their prices in a blanket fashion come springtime. However, I don’t expect you will see auctions (with the possible exception of the attainably priced Sabine) as the financing for the Austonian, W, and Spring give them a couple of years from construction completion before they need to repay the debt.

Grapevine stories:
http://austinist.com/2009/11/04/kanye_probably_wont_be_at_the_runwa.php
http://modernmanmusic.wordpress.com/2009/04/13/gotta-loft-inaustin

Reltated posts about penthouse living:
https://downtownaustinblog.org/2009/10/09/pros-and-cons-of-living-on-the-top-floor/
https://downtownaustinblog.org/2009/06/12/the-downtown-austin-penthouse-part-one-economics/

Downtown Austin Facts

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downtown-austin-facts

Do you believe downtown Austin is overbuilt?   If you do, I don’t blame you for thinking that.  Over the past two years, the traditional local media outlets have delivered an array of sensational headlines, like “Condos Caught By Crisis At Last“.  But, dig a little deeper and you could find a new perspective based on data, rather than some columnist leading a band wagon.

At the Downtown Austin Blog, we are passionate about downtown and urban Austin real estate, but we can recognize that prices have softened.  In fact, we think that’s a good thing – more people can afford to move here!  As much as I’ve railed against certain Statesman columnists for their curmudgeon style sensationalism, ironically, perhaps it was those stories that drove this summer’s buying spree.  If you advertise a sale, then you expect buyers to come.  That’s what happened.

We’ve written about the auctions and discounts.  We’ve observed how an average 25% – 30% discount will clear out a building quickly – like 90 minutes quick. We’ve seen this at Brazos Place, at 360, and at the Shore where residences which had been trading at upwards of $400 per foot in 2007 are for all intents and purposes gone.

NOW WHAT?

Recently, you might have heard former Austin Mayor Will Wynn’s radio ad for downtown living.  I’ve only heard this ad on KGSR, but it could be playing elsewhere.  Click below to listen to it.

This advertisement directs you to a website called downtownaustinfacts.com.  The goal of this website is to combat mis-information about downtown Austin being over built.  To quote the website…

While many people believe that the Downtown Austin condo market is overbuilt, the fact is only about 400 new condos remain for sale downtown. With the economic downturn and continuing tight credit markets it is very unlikely that any more new condos will be built downtown for at least another 5 years. That means there are only 400 new downtown condos for sale for the next 5 years.

By my count this number is low.  If you only count Spring, W Hotel, Four Seasons, and the Austonian, then 400 units is close to accurate.  If you include the remaining units at the Sabine and 904west, (those are rehabs, not new construction) then the number is closer to 475.  Those extra 75 don’t make a big dent in the argument, however.

THE INVENTORY IS LOCKED IN.  You will not see any new projects come out of the ground until at least 2013, perhaps longer.

Here are more facts that DAB has come up with.

1) # of downtown Austin condos available for sale and ready for immediate occupancy = 284, approximately (156 in MLS + 128 Spring units, not including 44 units at Sabine)
2) # of downtown Austin condos under $300 per foot = 42 (from MLS, not including the 44 units at Sabine)

By and large, the new product under construction in downtown Austin is considered luxury product.  Downtownaustinfacts.com makes this point salient, even if not overtly.  Sabine will go to auction, soon, and then what is left that’s under $300 per foot?  The answer: only resales.  Over the next few years expect this shortage to drive demand for resales.

The past few years have been dominated by new construction.  That’s over.  The remaining inventory of new construction in downtown Austin happens to also be the most expensive.  We can speculate on pricing discounts, but until those buildings are complete, and we see contracts converting to closings, it’s too early to tell what the velocity of sales will be, and how aggressively they will negotiate with buyers.  What the data clearly shows is a shortage of attainably priced homes in downtown Austin.  There is no slowing the demand for downtown living.

-Jude

Riding With Walt

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Last week, we met up with Walt Tashnick at Third Base to watch Talladega Nights.  Walt is a rare breed: an OWANA and DANA member.  Over [more than] a couple of beers we got to talking about my trip to Montreal a couple of weeks ago.  I’ve been interested in buying bikes for us ever since returning from Montreal and experiencing a world-class bicycle sharing system called Bixi.  The unisex design of the Bixi bike is apparently quite unique and not something available directly to consumers.  I wanted something similar: a cruiser with gears, to be used for recreation rather than as a serious mode of transportation.

Bixi is a world-class shared bicycle system and something Id love to see in Austin
Bixi is a world-class shared bicycle system and something I’d love to see in Austin

Walt is an avid cyclist and generously invited us on a ride, wisely suggesting we should try his bikes to get a sense for what geometry works, or wouldn’t work best.   He promised we wouldn’t get too bored and that we should plan to stop for breakfast along the way – a well timed statement to keep my short attention span at ease :-).  It would be a casual ride where we could trade stories or inquiries about the properties and land surrounding the trail.

We arrived at Walt’s condo on Castle Hill and 12th at 8:30am, just as he was unloading the bikes from the garage.  To put a finer point on our experience level:  My girlfriend hadn’t ridden a bike in 15 years.  She had never ridden a bike with gears!  I on the other hand grew up riding Haros with pegs and gyros, when standing on the handlebars or doing tailwhips in some random parking lot was serious kid business.  Then I got my license and forgot about that ‘kid’ stuff.

Onward to Pease Park where we hopped on to the Shoal Creek trail.  We rode up to 3rd Street and continued to the Lady Bird Lake hike and bike trail.  As we rode past the Four Seasons and approached the Boat House I made a point to stop and share the unfortunate fact that the Austin Rowing Club has never paid the city a dime for the use of that facility, yet the Texas Rowing Center which is located down the river generates $750,000 per year for the city as a concessionaire.

We continued on past Milago enjoying the presence of other Austinites on the trail.  The crowd begins to really thin out as you’re heading east under I-35.  We continued on this part of the trail that I had never really explored.  I’m glad I finally did.  The trail east of I-35 is arguably the most serene park in all of Austin.  Stunning.

Along this part of the ride we stopped to take notice of the “For The Love Of Christi” memorial.  Walt shared his story about losing his wife, Marcia G. Tashnick, to cancer.  This is a subject that has recently been significant to other friends of ours and worth noting here.

For The Love Of Christi
For The Love Of Christi Memorial

We decided to grab breakfast at Cafe Mundi and circled back via Robert Martinez through the Holly district.  Cafe Mundi is one of those places I just don’t think about very often when wanting a good breakfast.  I’m glad Walt suggested it.  I suggested a couple of other coffee shops we enjoy and Walt’s response to those places was funnily “too antiseptic”.  He had a point.  Cafe Mundi was zen on a Sunday morning.

The ride back was exhausting, particularly after a large waffle breakfast, but there were some interesting moments along the way.  We took a more direct route back to Walt’s place, going down Congress through the front lawn of the Capitol to Guadalupe to 12th.  While we had primarily focused on trails on the first leg of our trip, it was neat to do a little “city” riding.  Keeping an alert eye on traffic while bicycling down a busy road will certainly get your senses piqued.  It made us realize the luxury (although some might call it a necessity) that a bike lane provides, not only for motorists, but for bicyclists as well.

I ended up making the same cavalier decisions while riding my bike that I usually curse other cyclists for.  Go figure, but the forthcoming “3 foot rule” should keep cyclists safer.

By the time we made it back to our vehicle, we were tired, but content.  We had gotten to see downtown Austin (and some surrounding areas) from a slightly different perspective, while enjoying good company.  Looking forward to more rides like this!

-Jude

Downtown Austin Retail Space

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One of the better trends in urban design is to include retail space below residential buildings.  I see downtown Austin’s retail offerings as overly homogeneous: salon, boutique, restaurant, or bar.  Feedback from DANA members, and urban-Austinites in general, is the desire to see more practical stores to serve the many thousands of people that live and work here.

After the jump are a few examples of the ground floor retail space currently available below some of downtown Austin’s luxury buildings.  You’ll see that space below these buildings is not cheap and ranges from $30-36 per foot plus NNN.  This could yield a monthly lease payment of $3,500-4,000 per month per 1,000 feet of retail space.

The Downtown Austin Alliance has a great list of retail vacancies you should check out, too.

[Read more…] about Downtown Austin Retail Space