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Archive for January 2012

New water restrictions in works/ Big Multifamily Projects back from Dead (ABJ)

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Cody Lyon
Staff writer – Austin Business Journal
Businesses are being asked to come up with new ways to conserve water, long term, to avoid stifling Stage Three water restrictions.
A Dec. 13 public workshop will kick off a months-long process that aims to revise current drought restriction language or code.
The drought has put commercial property owners in a pinch — limiting landscaping, devaluing property, putting buildings at risk of deterioration and hindering some development. And that’s under the current Stage Two water restrictions.
If Austin Water goes to Stage Three — which could happen by spring — even more drastic measures would be taken. Car washes would be limited to running five hours a day; property owners would not be able to use their sprinklers at all; and landscapers would be forced to resort to options that are drought-tolerant.
The city hopes business and civic leaders will help it come up with less drastic conservation measures to cope with a long-term drought; some are calling it “Stage 2.5.”
“We propose opening up the code, doing some housecleaning and perhaps putting in place some of the conservation measures [the Austin City Council] has recommended,” said Drema Gross, water conservation manager for the city of Austin.
The most significant of those would be mandatory irrigation audits for large commercial and multifamily properties, Austin Water spokeswoman Jill Mayfield said.
“It would be basically an assessment, making certain that large property owners are conserving,” Mayfield said.
Conservation is key. Under current code, when combined levels at lakes Travis and Buchanan reach 681,000 acre-square feet, the city manager would decide whether to implement Stage Three. But those restrictions were written for sudden disasters, such as a water treatment plant’s failure or some other immediate threat. The mandates that come with Stage Three were never meant to last long-term.
“We’re looking at the entire code, and hope to get input on variances, landscaping and other issues, such as whether or not single-family home landscaping should be treated the same as commercial property,” Gross said.
Already, businesspeople are paying attention, and many are eager to share their ideas for the long term.
“Commercial property owners have a vested interest in professional landscaping maintenance,” said Jody McDaniel, manager of Greater Texas Landscapes Inc. and chairman of Building Owners and Managers Association-Austin’s water sustainability task force.
An owner’s inability to water landscaping could lead to a 20 percent drop in value, he said.
Developer Rance Clouse, president at Fortis Realty Services LLC, has already seen the impact of Stage Two. He’d been planning to use a new drought-friendly habiturf grass at his new Pease Place multifamily development in West Austin.
But, in order to get the plant to take hold, he would have to irrigate it intensely for three to four weeks, so mulch is his only option for the foreseeable future — and not an ideal one for builders trying to sell or lease properties.
He’s not alone. City officials have asked developers and contractors to delay planting until April, Big Red Dog Engineering President Will Schnier said. In the meantime, mulch and dirt will reign.
Land planner and landscape architect Mitchell Wright, president at Vista Planning and Design, suggested that Austin make better use of so-called gray water. A tremendous amount of water gets lost through showering, laundering, car washes and doing dishes. Such water re-use systems are expensive to install, however.
Water experts said now would be a good time to implement regional water conservation measures. There are dozens of cities, municipal utility districts and water supply corporations in Central Texas, and each has its own way of dealing with the drought. That creates an uneven playing field, economically.
“If three out of four cities have strict rules, it gives a leg up to cities that have the less restrictive policy,” said Tom Mason, a partner at law firm Graves Dougherty Hearon & Moody PC and the former director of the Lower Colorado River Authority, the entity that regulates much of the water flow in Central Texas.
The Dec. 13 public workshop to discuss new conservation measures will be from 7-8:30 p.m. in Room 104 of the Waller Creek Center, 625 E. 10th St. END

1/27/2012 Projects back from the dead

By Cody Lyon

Several multifamily and mixed-use projects that were put to sleep by the downturn are coming slowly back to life as lending
markets thaw and the demand for rental housing grows.

Before the downturn in 2008, the Austin area had about 12,000 units that were aggressively seeking construction financing, said
Charles Heimsath, president at housing research firm Capitol Market Research.

When the markets crashed, most of those projects were put on ice. Since then, Austin weathered the economic storm better than
most, but global and national economic woes still slowed construction here. About 4,800 rental units are under construction here
today, and about half of them are projects that were put on hold three or four years ago, Heimsath said.

Projects that are dusting off plans or already under construction include the following:

The 336-unit Genesee, a mixed-use development under construction at 3715 S. First St.
Phase one of the Lakeshore project, which will yield 236 apartments at 2220 Elmont Dr. just south of Lady Bird Lake
The 250-unit District at SoCo at 501 E. Oltorf St. in South Austin
District at SoCo is being developed by Houston-based Kaplan Management Co. The company secured the site in 2006, but by the
time it obtained development entitlements the financial world had started to implode, Kaplan Partner and Chief Financial Officer
Geoff Simpson said.

“Unfortunately, we’d already demolished the existing building on the site,” Simpson said. But recognizing the potential, Simpson held on.

“In early 2011, we decided the demand for apartments in Austin, as well as financing markets, was starting to come back,” he said.

Eventually, Kaplan teamed with American National Insurance Co. for financing. With apartment occupancy averaging about 97
percent citywide, Simpson wishes the units were ready to lease.

“We should have our clubhouse in April and our first units soon after,” said Simpson, who is scouting Austin for another site.
Executives at Cypress Real Estate Advisors Inc., which is developing Lakeshore, said they started seeing market recovery in 2010.
The Lakeshore project was put on hold about four years ago.

Long-planned downtown projects such as the Seaholm mixed-use project are also inching forward and are in talks with tenants for office and retail space.

“We are very close to having our site plan approval. We are moving ahead and are in schematic design,” said Danny Roth of
Southwest Strategies. He said the developers have equity in place and are finalizing their financing.

Executives at Big Red Dog Engineering and Consulting — which is working on the Lakeshore, District at SoCo and Genesee projects — said the company has seen an uptick in retail clients picking up where they left off and that multifamily has been the most active revival market for the firm.

“The multifamily market is in some ways better now than it was in 2007,” Big Red Dog President Will Schnier said.
The biggest surge of revived projects have been in or near the city’s core. Some developers said that lenders have been making
Central Austin projects easier to bring back to life.

“Institutional money has been focused on the urban core, while suburban deals are being driven primarily by private capital,” said John Burnham, managing director of multifamily development at Cypress Real Estate Advisors.

Meanwhile other forms of capital are also enabling projects beyond Central Austin to move forward.

“Some of the alternative capital is coming from high-net worth individuals and families, and also from companies that have
continued to make money in other industries, such as oil and gas, that have decided to diversify their risk,” said Monte Lee-Wen,
president and CEO at PPA Group.

Developers seeking to revive dormant projects need to be creative when banks and other financial institutions become more
conservative, he said.

“These sites that have been asleep produce no cash flow until they are developed; therefore, the owners are motivated to revive them as long as there is some sort of demand,” Lee-Wen said.


Written by codylyonreporter

January 31, 2012 at 2:34 am

Posted in Uncategorized

AUSTIN BUSINESS JOURNAL- City Hall Overwhelmed- and The Bastrop County Fires

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City Hall overwhelmed
Backlog in planning dept. frustrates many
Premium content from Austin Business Journal by Cody Lyon, Staff writer
Date: Friday, January 20, 2012, 5:00am CST

Cody Lyon
Staff writer- Austin Business Journal
Planners at Austin City Hall are buried under construction permit applications, and the delays are angering commercial real estate professionals as their clients worry whether they’ll be able to move into new space on their timeline.
The slow process is particularly worrisome for tenants that need to finish out existing space in a short time frame.
“I’ve been in this business for 30 years, and I’d say it’s the slowest I’ve seen it,” said Jim Knight, chief development officer at engineering firm Bury + Partners Inc.
He said his company recently worked on a project that should have been permitted in August, but it was held up until December.
The backlog is traced to a shortage of staff that’s been trying to juggle an increasingly heavy workload as the recession eases.
Chief Planning Examiner J.B. Meir said the city reviewed 4,800 projects equaling more than 60 million square feet in 2010. In 2011, the city reviewed 5,234 new projects equaling 70,000 million square feet, a 12 percent square-footage increase.
“We did all that with the same amount of staff,” he said.
Meir called the work of planning officials a juggling act, where staff not only spend time reviewing the thin lines and the complex numbers of project drawings but also thousands of hours consulting with customers.
“Next year will likely be even more busy. We’ve got big projects in the pipeline that include buildings as high as 50 stories,” he said.
In early January, the commercial review department was 69 projects behind, while the fire department was 55 projects past due.
Austin has 17 people reviewing permits. Ten of them review plumbing, building, mechanical and electrical plans and seven work with the Fire Department to ensure proposals meet fire codes.
Fire officials have requested two additional engineers to help with the backlog, and Planning and Development Review Department Assistant Director Don Birkner said he has requested additional personnel, too — even if they’re temporary.
“We’ve been meeting down at City Hall, trying to figure out what to do, hoping to get some money so we can hire some more folks to help with the situation,” Birkner said.
During one phone call made to an engineer who reviews commercial drawings for new projects, a voicemail message warned that calls would likely not be returned soon due to what he called an extreme backlog of project submissions. He was never reached for comment.
In an ideal world, staff review plans within the stipulated seven business days and return with initial comment for interior build-out projects. Twenty-one days is normal for standard building permits.
From start to finish, building consultants expect to obtain an interior permit in three weeks.
“Instead, it’s taking up to two months for an interior-build-out permit,” said architect Joe La Rocca of GSC Architects.
He said a client recently told him they would have passed on a projected move to downtown Austin if they had known the time it takes to get a build-out permit approved. La Rocca added that the client was forced into a state of location limbo, where one lease was ending yet it couldn’t move into new space.
Flynn Construction Inc. CEO and President Patrick Flynn is seeing much of the same.
“We have a group out of California that submitted for a permit. They’re taking 40,000 square feet at Walnut Creek Business Park. We started the permit process in mid-December and haven’t even gotten our first comments back yet,” he said.
Flynn said he understood the permit department was overwhelmed, but he said the harsh reality is that architects, engineers and construction firms are getting fed up; and if something doesn’t change, job growth will slow because companies may start shying away from Austin.
Another group of businesses being hurt by the slow review process: building owners and managers.
Pat Groener of the Building Owners and Managers Association is chairing a permit task force that’s working with the city to improve the situation.
“A solution needs to happen sooner rather than later if Austin is to avoid losing these businesses to surrounding communities,” Groener said.
Assistant City Manager Sue Edwards is currently looking at options to add more staff, spokesman Kyle Carville said.

Bastrop’s land values decimated

‘Vulture investors’ on the hunt for fire sales

Premium content from Austin Business Journal by Cody Lyon, ABJ Staff

Date: Friday, September 23, 2011, 5:00am CDT


Banking & Financial ServicesCommercial Real EstateResidential Real Estate

The wildfires that destroyed most of Bastrop County could drop property values by as much as 60 percent, one firm estimates. Land is already starting to trade hands and more transactions are expected as the smoke clears.
Nick Simonite

The wildfires that destroyed most of Bastrop County could drop property values by as much as 60 percent, one firm estimates. Land is already starting to trade hands and more transactions are expected as the smoke clears.

Bastrop County land values could be cut in half as the real estate market faces dramatic ups and downs resulting from the wildfires that scorched almost 35,000 acres.

Dramatic value dips would be problematic for many landowners, but they could yield opportunities for investors looking to employ a patient buy-hold strategy while this patch of Texas recovers.

“We’re confident there will be some devaluation in the acreage charred by the fires,” said Cameron Boone, director of research at Lewis Realty Advisors Inc. Lewis Realty estimates the value of land directly impacted by wildfires could drop by up to 60 percent.

This might open the door for what some call vulture investors, who swoop in and offer pennies on the dollar for damaged properties, Boone said.

Bastrop County will reappraise land values of affected properties soon, said Mark Boehnke, the Bastrop Central Appraisal District’s chief appraiser. He said the discounted tax bills would last for a quarter of the year, ending Jan. 1.

About 82 percent of the land that was burned is forested, according to the Texas Forest Service.

“If you include low-density housing areas that have trees, the percentage would creep up to 88 percent,” said Holly Huffman, spokeswoman at The Texas Forest Service.

The pine trees in Bastrop County — Loblolly trees — were a major contributor to land values. They’re the westernmost Loblollies in the United States, Texas Forest Service foresterDaniel Lewis said.

Experts are confident the trees will recover relatively soon.

“Pine trees generally thrive in fire-prone environments,” said Professor Charles LaFon, an associate professor in Texas A&M University’s geography department and a member of the Association for Fire Ecology. Pine seedlings usually establish soon after a fire, so he expects a “rapid recovery.”

Living or working in the shade of the big pines has been part of Bastrop County’s draw, along with its proximity to Austin.

“Trees add value to the land. That’s why there will be an impact on many of Bastrop County’s values,” said Charles Gilliland, rural land specialist at The Real Estate Center at Texas A&M University.

Still, until there is a market reading on what people are paying, “you’re just going to be speculating on what the impact is going to be,” he said.

Phones at some real estate brokerages have gone temporarily silent.

“The phone hasn’t been ringing for any of my listings,” said Brady Moore, broker at Big League Ranches LLC. None of the small ranches he was marketing in Bastrop were burned by the wildfires. He said those who might be looking to sell would probably not be able to do so quickly.

On the other hand, Moore said, “Bastrop County just shrunk by around 35,000 acres.”

Once some sense of normalcy returns to the area, demand may actually increase for Bastrop properties. Some are already seeing it.

“Based on the economics of supply and demand, I would predict that decreased supply and increased demand would result in higher prices. We have already seen increased activity in the area,” said Mishell Kneeland, principal at Moxie Realty Group who has done business in the Bastrop area.

Kneeland said 35 new Bastrop County properties have gone on the market in the last 10 days. Of those, seven are already under contract.

It might be difficult to predict whether property in Bastrop County will lose significant value, said Kenneth Klein, an associate professor at California Western School of Law and a Texas native.

“You would think that land values would initially drop,” said Klein, who teaches a class about legal lessons learned from Hurricane Katrina and other natural disasters.

Property values in post-Katrina New Orleans increased, he said.

“The nature of speculative investment is just that — speculative,” he said. “And land values in the wake of the fires are speculative.”

Despite the emotion of losing a home or property, those who were impacted by the fires need to treat dealings with banks, builders and insurers as a business matter, Klein said.

“Go slowly and carefully, and find good resources guidance and be willing to accept help,” he said.

Meanwhile, a few other issues might prove more complicated, he said.

For example, insurance does not cover mortgage debt, which means insurance money to rebuild may be held by the homeowner’s lender.

And for many — about 80 percent of homeowners, Klein estimates — insurance won’t cover the full cost of rebuilding.

Iraq’s Hydrocarbon law and what it says about the War

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What Does Iraq’s New Oil Law Say About an Invasion?
Critics charge Iraq’s new hydrocarbon law is unfair to Iraqi people
Cody Lyon (shelby)     Email Article   Print Article
Published 2007-04-08 13:00 (KST)
Amman, Jordan, is set to play host to a three-day economic trade show, a corporate meet and greet between powerful, well-moneyed investors and those who the guard the gates of vital decision-making government ministries in perilous but oil-rich Iraq.On its Web site, loosely defined organizer Iraq Development Program (IDP) calls the Jordan gathering a “historic landmark event” Officially titled the Iraq Oil, Gas, Petrochemical and Electricity Summit, the three days of face to face meetings that begins on May 28 could impact Iraq’s economic future for years to come.

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Efforts to contact IDP directly and understand the origin of their funding and purpose were not successful. But the group’s stated mission is to “aid Iraq as an economic force.”

“Following declaration of new foreign investment laws for the extractive industries,” the IDP’s Web page says, “the [Iraqi] government is now finalizing its new hydrocarbon laws” — to which promoters of the summit say the timing “could not be better.”

Iraq’s new oil-hydrocarbon law, and the push to see it quickly passed, has begun to raise serious questions among observers and critics.

The Iraqi cabinet approved the hydrocarbon law on Feb. 26 and sent it on to parliament where it now sits. If fully approved, Iraq’s oil reserves would be opened to investment from foreign multinational oil companies. The current legislation would also provide oil companies the option for long-term contracts of up to 30 years. The laws would set up Profit Sharing Agreements, or PSAs, where revenue is based on the profit after oil companies’ deduct their production costs. Reportedly, the remaining profits would then be divided among the Iraqi provinces.


UT getting 16-story tower

Deal deemed ‘novel’ by former UT dean

Premium content from Austin Business Journal by Cody Lyon, Staff writer

Date: Friday, October 21, 2011, 5:00am CDT


EducationResidential Real Estate

This 16-story student housing complex with retail at the bottom is being built near 24th and Nueces streets near the University of Texas campus.

This 16-story student housing complex with retail at the bottom is being built near 24th and Nueces streets near the University of Texas campus.

Cody Lyon
Staff writer – Austin Business Journal

A 16-story student housing and retail building is about to rise just west of the University of Texas at 2400 Nueces St., the site of the old Wooldridge Hall.

The demolition of Wooldridge Hall was finished in September, and a notice to proceed was issued in the first week of October. The 380,000-square-foot project is scheduled to be ready for occupancy by fall 2013.

When finished, the $64 million building will include studio and one-, two-, three- and four-bedroom apartments for students and faculty. On lower floors, the building will house the university’s international office and retail.

Educational Realty Trust Inc. of Memphis, Tenn., is developing the project. Austin-based Page Southerland Page Architects, led by Larry Speck, is the project architect. Educational Realty Trust named Hensel Phelps Construction Co. general contractor.

At the height of construction, the build is expected to involve 30 to 35 subcontractors and employ up to 300 craftsmen.

The project was made possible through a 60-year ground lease agreement with the University of Texas. The university is not paying any of the cost to develop the project.

“For the first time, we are ground leasing a significant piece of property,” said Amy Wanamaker, campus director of real estate at UT.

The project was spawned by Austin’s university neighborhood overlay zoning, which includes a density bonus based on the provision of affordable housing. The zoning overlay is designed to encourage denser building just west of the university.

University officials and developers hope students and faculty members living in the building will walk or bike to class. The project will ease slightly the increasingly congested roads surrounding the university, they said.

“It’s impossible to find parking around campus these days,” Speck said.

The university’s lease and the private development partnership are novel for this area, said Speck, who is a former dean of UT’s School of Architecture.

Speck called the partnership between the university and Educational Realty “highly innovative” and predicted it will lead to a dense urban neighborhood immediately adjacent to the school and the Central Business District.

“When people see this thing going up, they’re going to say ‘whoa’ because of how huge it is,” he said. “This building is going to make a huge difference in how we see that area.”

Written by codylyonreporter

January 30, 2012 at 5:13 pm

New Tenants for Second St. Downtown Austin/ PROFILE PIECE on Austin’s Queen of Rainey Street

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New tenants for Second Street signal different direction

Austin Business Journal by Cody Lyon, Staff writer

Date: Thursday, December 22, 2011, 9:00am CST – Last Modified: Friday, December 23, 2011, 1:03pm CST

Rance Wilemon
Submitted by PLAT.FORM

Rance Wilemon, a broker with PLAT.FORM, hopes to make the Second Street District a retail destination where shoppers come for the full experience.

Cody Lyon
Staff writer – Austin Business Journal

Downtown Austin’s Second Street District is set to add eight to 10 new tenants to the retail, entertainment and residential corridor.

Luxe Apothetique, a boutique, apothecary and salon, is taking 2,750 square feet at 201 W. Second St.; Strut, a young women’s fashion boutique, will open its fourth Austin location in a 1,200-square-foot store at 215 Lavaca St.; Austin-based Daily Juice is taking 1,325 square feet at 209 W. Third St.; and Hemline, a women’s apparel store out of New Orleans, is opening up a 1,200-square-foot store at 233 W. Second St.

The creators of Royal Blue are opening The Liquor Shop at 241 W. Third St. The store will have a European cafe feel serving charcutrie, cheese, wine, liquor and house-ware needs.

Milk + Honey, located at 204 Colorado St., is expanding.

Also coming to the district, restaurant Nosh is taking 5,500 square feet at 416 Cesar Chavez St.

The Second Street district will be approximately 93 percent occupied with the new leases.

The landlord for the deals is AMLI Residential   .

The new retailers come at a time when the district still appears to be searching for the successful blend of retail and entertainment. Recent store closures left some blocks vacant, while others flourished. And at night, café’s, restaurants, music and tourists from the W Hotel fill sidewalks.

“With the recession, we went through some challenges, “ said Craig Brockman, development manager at AMLI.

Sales in the district this year were significantly higher than in 2010. The area gained the attention of some national retailers with the addition of the W Hotel and international attention from Austin City Limits PBS broadcast at the Moody Theatre, Brockman said.

“We’re actually not looking for nationals,” he said.

The district should maintain a retail mix that is 30 percent local, according to a city agreement. Brockman said the district is actually 65 percent local.

“We just like the local community,” he said.

AMLI recently brought on broker Rance Wilemon from PLAT.FORM, a new real estate brokerage co-founded by Wilemon and Susan Wasserman.

“Rance has the experience to position the retail mix to a more sophisticated and local clientele,” said attorney Kareem Hajar, who works with retailers and bars in the district.

Wilemon said the hope is to make the area a retail destination where shoppers come for the full experience: shopping, drinks, dinner then perhaps a movie or show.

Wilemon said Austin has numerous talented and savvy retail and restaurant operators that he plans to reach out to when searching for tenants. Landlord AMLI plans to be patience and do research to see if the tenants are the correct fit for the district.

“I’m not tooting our own horns here but we [at AMLI] were sort of guinea pigs when the Second Street district idea first came to be,” Brockman said. “The challenge with retail is you have to have density. Now that the area has gentrified, you can do all these different things and that diversity has made this area much more attractive.”

The area is still in its infancy, but will reach another milestone with the completion of the Greenwater Treatment Plant, Seaholm and the Central Library, Brockman said.


Journal Profile: Bridget Dunlap, Lustre Pearl, Clive Bar, Bar 96

Premium content from Austin Business Journal by Cody Lyon, ABJ Staff, ABJ Staff

Date: Friday, May 13, 2011, 5:00am CDT – Last Modified: Thursday, May 12, 2011, 3:22pm CDT

Bridget Dunlap
Lustre Pearl, Clive Bar, Bar 96

Bridget Dunlap Owner Lustre Pearl, Clive Bar, Bar 96

Bridget Dunlap


Lustre Pearl, Clive Bar, Bar 96

Bridget Dunlap said that for a very long time, she lived life with no rules, not really thinking about tomorrow. But one day that changed. “When I had my child, I knew I had responsibilities. I decided to focus and I learned I can do anything.”

After saying hello to, then buying drinks for, a couple visiting from Chicago who had gotten wind of her bars in Austin’s historic Rainey Street district, she said, “sometimes you have to go through the shitter to understand life and realize how hard you’ve got to work to get what you want.” With life lessons under her belt, Dunlap cautions: “I’m sweet as hell, but if you push me, you better watch out.”

On a recent cool Austin night, she was reigning supreme over her mini empire — a collection of three nightspots in formerly dilapidated houses — sitting, drinking and talking to some friends on the front porch of her first venture here, Lustre Pearl. It’s been just two years since the Houston native who’d traveled the world sowing wild oats turned into an Austin pioneer after spotting an old dilapidated house in what was then a rundown neighborhood. Almost immediately, she raised some capital and transformed the old house built at the turn of the 20th century into one of the area’s most talked about nightspots.

“I think it’s foxy,” she says of Lustre Pearl, which also happens to be the name of her self-descibed alter-personality. Soon after Lustre Pearl, Dunlap spied a couple of other houses, and turned them into Clive Bar, a place where hipsters can mix with suits, and Bar 96, Dunlap’s version of a sports bar.

Pretty soon, across the street from Clive Bar, a strange concept even for Austin’s innovative bar scene will rise — the Container Bar. It will be created from six metal recycled shipping containers.

She’ll once again bootstap the venture and do much of the work herself. “One night when I couldn’t sleep, I was Googling myself and I read I was a trust fund baby,” she said. Not true, she added, throwing in a quick story of once being deported from London for unsaid reasons, and her dad parting ways by saying “I got mine, you get yours.”

What did you want to be when you were a little girl?

I had no idea.

Are you more of a Saturday night or Sunday morning person?

It doesn’t matter to me. Every day is a weekend for me, although I do try to behave during the week because I have a stack of stuff to do and I like to do my Pilates.

What’s the longest you’ve stayed up?

I’ve stayed up for days on end. Sleeping is for dead people.

What’s the biggest misperception people might have about you?

That what you see is what you get.

Besides Austin, where might you live?

A beach in a third-world country. I’d go back to teaching Pilates and live in a hut.

What’s your biggest flaw?

Procrastination and a huge disdain for paperwork.

Talk radio or music in the car?

Loud music in the car, with all the windows and the sunroof open, driving real fast.

The last time you wore a costume, what was it, and what was it for?

[Singer-songwriter] Stevie Nicks. It was for myself a couple of weeks ago for a party I had in my closet.

Your favorite place to eat in Austin?

Vespaio’s Enoteca.

Any hobbies?

Traveling, beaches, riding my super-fancy tandem, rowing, reading, eating, drinking, driving fast, music and making cake (that’s money).

Favorite author?

George Sand. She was naughty and wrote all that erotica under a man’s name.

Written by codylyonreporter

January 30, 2012 at 1:41 am

Posted in Uncategorized

Downtown Hotels

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Downtown hotels a go

Nine are planned, only three deemed ‘ready’

Premium content from Austin Business Journal by Cody Lyon, Staff writer

Date: Friday, September 30, 2011, 5:00am CDT – Last Modified: Thursday, October 27, 2011, 9:24am CDT


Commercial Real EstateTravel

Cody Lyon
Staff writer – Austin Business Journal

Developers are moving forward with plans for three major hotel projects that could transform downtown Austin’s skyline and increase the Central Business District’s hotel room stock by 30 percent — from 7,674 rooms to about 10,000.

Indiana-based White Lodging Services Corp. is on the verge of building two hotels downtown. The first will be a 17-story, 296-room, 252,000-square-foot Hyatt Place at Third and San Jacinto streets. The company is also building a 28-floor, 1,003-room, 1.2 million-square-foot Marriott hotel at Second Street and Congress Avenue.

Meanwhile, Manchester Texas Financial Group said it’s moving forward on its planned 53-story, 1,078-room hotel at Cesar Chavez and Red River streets.

The three hotels will be within walking distance of the Austin Convention Center.

All financing is in place for the Hyatt Place, and project contractor Hunt Construction Group Inc. is mobilizing on site to break ground the first week of October, White Lodging CEO Deno Yiankes said. The project is expected to take 20 months to complete, and at its peak will yield 175 construction jobs.

When it opens, Hyatt Place will employ about 90 people, Yiankes said.

The project’s architect is PVFS Architects Inc.; Fink and Roberts & Petrie Inc. of Indianapolis is the structural engineer; and Austin-based Bury + Partners Inc. is the civil engineer.

Equity financing is also lined up for the much bigger Marriott project, Yiankes said. Plans there call for multiple food and beverage venues, 374 underground parking spaces and a 4,500-square-foot fitness center. The project’s architect is HKS Architects Inc., and Bury + Partners is the civil engineer. Seattle-based Magnusson Klemencic Associates is the structural engineer. That project should be complete by the first quarter of 2015.

The hotel’s plans are still being drawn, but construction should begin in July, Yiankes said. The Marriott will create at least 600 construction jobs at its peak and, once open, will employ 750 people.

Many hotels planned, few moving forward

Over the past few years, 12 hotel projects have been announced for downtown Austin, saidMichael Knox of the city’s Economic Growth and Redevelopment Office. Several, however, are considered dead, although no formal announcements stating so have been made.

Smith Travel Research Inc. lists nine hotel projects as active in downtown Austin. If they were all built, they would add 3,219 rooms to the area. But a lack of financing has many experts counting them out of the running.

“I would be very surprised if half the rumored projects in Austin actually get built over the next three years due to on-going difficulties in the debt markets and the increased levels of required equity that many developers are simply not capable of producing or committing to,” Yiankes said.

Douglas W. Manchester, president of Manchester Texas Financial Group, said his company has ample equity lined up, and is considering a variety of financial structures to build its 1.2 million-square-foot hotel. Like the Marriott, his hotel is planning to break ground in summer 2012 and is expected to take 20 months to complete.

Manchester said it will have 750 four-star rated rooms and 250 five-star suites.

Manchester Texas Financial Group, whose parent company is San Diego-based Manchester Financial Group, has narrowed its search to two finalists for a flag operator and general contractor.

Kenneth Satterlee — president of St. Croix Capital Corp. in Austin, which also has ties to San Diego — has been hired as a development consultant. The project’s architect is Gensler, and the structural engineer is Thornton Tomasetti Inc. The mechanical and plumbing engineer is Thompson Company Inc.

Too many rooms?

For more than two years the Austin Convention and Visitors Bureau, backed by a vocal MayorLee Leffingwell, has lamented the need for more hotel rooms downtown. Huge conferences, including one put on by Dell Inc., have gone to other cities because out-of-towners can’t stay close enough to the convention center.

The Convention and Visitors Bureau estimates it has lost more than 1.6 million room-nights to other destinations because of insufficient inventory.

A recent study of downtown numbers shows tight occupancy. PKF Consulting puts the average occupancy rate for downtown hotels at about 75 percent — strong for the industry.

“Downtown Austin is unbelievable,” said Randy McCaslin, vice president and practice leader at PKF in Houston. “The Austin market is driven by corporate, leisure and government business 24 hours a day, seven days a week,” McCaslin said.

Nevertheless, McCaslin is cautious about endorsing three hotel projects — especially the two convention center hotels being built at the same time and so close to each other.

But the developers behind the three solid projects said they’ve done their homework.

“We hired Hospitality Valuation Services to conduct an independent review of the market,” Manchester said. “HVS confirmed our belief that demand already exists to support two new [1,000-plus-room] hotels,” he said.

The Convention and Visitors Bureau is excited about the prospect of re-bidding on large conferences, spokeswoman Jennifer Walker said. Right now, it’s courting events that won’t happen until well after the new hotels open.

Written by codylyonreporter

January 29, 2012 at 7:04 pm

Posted in Uncategorized

Q&A; Satterlee; Mass Transit encourages Q&A Speck; Architecture inspires Lifestyle

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Satterlee: Mobility, mass transit essential for density (BELOW) See Speck Q&A

Austin Business Journal by Cody Lyon, Staff writer

Date: Thursday, December 8, 2011, 10:18am CST

Ken Satterlee, president of the brokerage division at TIG Real Estate Services.

Ken Satterlee, president of the brokerage division at TIG Real Estate Services.

Cody Lyon
Staff writer – Austin Business Journal

Ken Satterlee embodies Austin real estate and has the track record to prove it.

Satterlee started his career in 1977 with Coldwell Banker brokerage services — nowCBRE Group Inc.    By 1980, Ken moved to Burnham Real Estate, nowCushman & Wakefield    , where he became a significant owner of the company while building a highly successful brokerage practice. After 25 years with Burnham, he sold his interest in the firm and focused his full attention on his development and investment firm, St. Croix Capital Corporation    , which he founded in 1982. St. Croix Capital is a fully-integrated real estate company and a full-service provider of development, investment, construction management and asset management acquisitions. Now at TIG Real Estate Services    , Ken serves as president of the firm’s new brokerage division. I recently caught up with Ken to ask him a few questions about new projects, downtown office developments and what may stand in the way of Austin becoming a truly density-centric city.

ABJ: What projects are you working on now and why should we be excited to hear about them?

Satterlee: We are advising clients on a number of different projects. Among them are a new medical development that will feature individual free standing buildings for sale to doctors and groups out in the Bee Cave and Lakeway areas. We are also advising on the master planned Scottsdale Crossing project in Cedar Park. The first phase there will feature an office, flex and retail building with frontage on U.S. Highway 183A. Most recently, we assisted one of our institutional clients on the foreclosure of two office buildings in San Antonio, and will be handling the management, leasing, and rehabilitation of those properties. There are an unlimited number of opportunities out there.

ABJ: What types of financing patterns are you seeing for big projects these days?

Satterlee: Ground up development projects are still largely dependent on conventional bank debt and that is very difficult to obtain these days. Greater amounts of equity, and stronger and larger guarantees are prerequisites for bank loans. Pre-leasing or sales at percentages greater than in the past are also requirements. Acquisition debt is not as much in vogue. Most commercial property acquisitions are done on an all cash basis. Larger institutional buyers will bid with cash, and leverage later.

ABJ: Where are developers getting money these days?

Satterlee: For starters, they better have some of their own. Gone are the days of highly leveraged development deals. Institutional equity is still there for the right property, but the ownership structures are more highly tilted in favor of the cash.

ABJ: How easy is it for a developer to lure a joint partner to finance and develop large projects in Austin?

Satterlee: It’s good to be in Austin, isn’t it? It’s easier to be here than in many parts of the country. But to some of the larger equity entities — and lenders — Austin is still a second tier location. Those that are starting to look at it differently will benefit by getting here now, and getting some capital into some projects both to be built and existing. There are so many ingredients inherent in Austin to make it an international city. As our population grows, and our job growth hopefully grows with it, the magnifying glass will be focused here even more.

ABJ: When you look at the geopolitical landscape, are you concerned that events in Europe, for example, might impact Austin’s seemingly resilient economy?

Satterlee: Directly? I don’t see that. But indirectly, all of us, and our fair city are going to be impacted by events in Europe. Our banks are affected, and that affects us. We don’t need Europe to upset our financial markets though; we did that on our own.

ABJ: We’ve seen some significant trades in the suburban Austin office market this year. Is that a testament to Austin as an investment?

Satterlee: It’s a testament to Austin in general. It’s also an indication that our Central Business District is strong and getting stronger. Let’s face it, there aren’t a lot of high rise office buildings trading downtown. Many downtown landlords and property owners are watching to see what the state intends to do with their needs, along with the county, and to a lesser extent, the Austin Independent School District. All of those entities are located in the CDB, and they control or require large blocks of office space.

ABJ: Will we ever see new vertical office space construction in downtown Austin?

Satterlee: There’s no doubt in my mind and probably sooner than later. A number of deals are in the queue now.

ABJ: What is the biggest challenge to Austin becoming a density-centric city?

Satterlee: Mobility. Mass transit. The ability to get people in and out of the core in a timely way. I saw what happened in San Diego, first with the introduction of commuter rail, then the addition of light rail. The commuter rail will begin to work, when people can step off the train, and board another that will take them into the micro neighborhoods of downtown. I know it’s expensive, and I don’t have the answers on how it gets paid for, but I have seen it work, and I know what it can and — I predict will do — to center the city of Austin.

Speck: Architecture influences lifestyle

Austin Business Journal by Cody Lyon, Staff writer

Date: Thursday, October 27, 2011, 10:27am CDT

Cody Lyon
Staff writer – Austin Business Journal

The professional portfolio of architect Larry Speck, principal at PageSoutherlandPage, boasts several Texas landmarks, including the Austin-Bergstrom International Airport   , Austin Convention Center    and Discovery Green, a new 12-acre park in downtown Houston.

Over the last 25 years, his design work has won 33 national design awards, 21 state and regional design awards, and 63 local design awards. Speck has been a faculty member at the University of Texas    since 1975. I was able to catch up with him and ask about what goes on between developers and architects, and his thoughts on density.

ABJ: Do you agree with the theory that density-driven development is a smarter way to grow Austin?

Speck: I definitely believe this to be true. I would even go so far as to say this is not so much a theory as just a fact. Denser development, of course, consumes less land and creates less sprawl, leaving more of the natural ecosystem intact. It uses substantially less water because there are fewer lawns. That also means less fertilizers and other water pollutants. It creates less impervious cover, not only because of stacking in buildings, but also because there are less driveways, roads and highways to provide access to dense development rather than dispersed development. It means less public investment in longer and more inefficient utility runs for power, water, sewer etc. I could go on and on.

But, for me, one of the best things about density is the lifestyle it offers. There are many opportunities for convenience, efficiency, time saving and for a sense of community that are just not there at lower densities. I live on the 11th floor of a high-rise building downtown — just a few minutes from both my architecture office and my UT office. I can walk to the grocery store, dozens of restaurants, a growing assortment of retail stores, miles of hike and bike trails, many venues for film, music, theater, etc. There are excellent schools nearby at every level from kindergarten to university. I have great neighbors I have gotten to know much better than I ever got to know my neighbors before. I could never get all those assets at low density.

ABJ: Describe the process that takes place and how you arrive at a final vision when you work with a developer and others on a big project.

Speck: This is always a give-and-take process that requires real teamwork. The client is bringing their needs and requirements to the table, and we are trying to help them find the best solutions. We love to provide lots of alternatives at the beginning and let everyone around the table try them on for fit. On the 2400 Nueces project, for example, we looked at three radically different densities. They each implied a different structural system, a different parking solution and a different price per square foot. Each one generated a pro forma that had the potential for working. We evaluated all of them as a group to find the very best solution for this instance. When we had a general direction, then we could drill down to the next level and provide options again for unit types and layouts, kinds of public spaces, materials/finishes etc. At every step we are working with the client, contractors, engineers, and even marketing people to find the very best design with which to proceed.

ABJ: Do you believe architecture has the power to inspire? How much do skylines define a city?

Speck: Architecture certainly has the power to inspire, but it actually goes much deeper than that. Architecture has a profound influence on every aspect of our everyday lives. Our lifestyle, the patterns of our day, our relationships with the people around us, our success and satisfaction in our jobs are all shaped significantly by the physical environment. If a person works in an isolating cubicle in a rat-maze office, commutes on traffic–snarled freeways, eats most meals at anonymous fast-food joints and lives in a cookie-cutter subdivision that does nothing to promote neighborliness, then he or she may well be depressed and unhappy. If that same person works in a well-designed office with carefully managed places for privacy/teaming/communication, walks a few minutes on pedestrian-friendly streets to work, shops at friendly local stores, eats at distinctive cafes run by personable entrepreneurs and lives in a place that, by its arrangement of spaces, encourages casual encounters with neighbors, then they will have a very different life.

Even if we are unconscious of the degree to which architecture is affecting our lives, we are still operating under its power. How much money we spend on gasoline, electricity, other utilities and mortgage are all a result of what kind of architectural environment we inhabit. How much time we spend commuting, hauling friends and family from place to place, doing yard work, cleaning and maintaining our houses are also all a result of what kind of architectural environment we inhabit.

Winston Churchill said, “We shape our buildings; thereafter, our buildings shape us.” He was right.

The image of a building has the ability to inspire, but that is a very small fraction of the power of architecture. The skyline of a city has the ability to impress, but the city is defined far more by the way the streets, public spaces, buildings, offices, shops, entertainment spaces, residences, etc. work together to become an influential crucible for people’s lives.

ABJ: What are the biggest challenges for architects today?

Speck: True sustainability is a longstanding and continuing challenge for architects. About 50 percent of energy consumption in the U.S. is in buildings, and another big chunk of consumption comes from urban design that makes our lives very energy inefficient. We have a lot of work to do here, and it goes way beyond just getting LEED points. I am giving two different talks at the Texas Society of Architects Convention in Dallas at the end of this week that deal in different ways with sustainability — one on how to combine these issues with what has classically been termed good design and the other having to do with integration of alternative energy sources in buildings. This is a major issue for our profession these days.

Another big challenge is how to make good design more accessible and affordable for more people. Many people think of architecture as the making of expensive baubles they cannot afford. Unfortunately, the media has reinforced that notion by making heroes of star architects who often do produce flashy, very expensive object buildings. That is not actually what the field of architecture is about. It is a tiny fringe of a profession that is really about making large numbers of peoples’ everyday lives better through the built environment.

ABJ: Looking into your crystal ball, what sort of city do you see Austin becoming?

Speck: I love practicing architecture in Austin because I think the potential for creating a livable, sustainable city may be greater here than in almost any city in the country. In our downtown core we inherited an amazing confluence of natural beauty, a sensible relationship between the Central Business District, state government, the university and a ring of great supporting neighborhoods. These were all well-planned and executed in the first century of the city’s history.

In the last 25 years — since the Town Lake Comprehensive Plan kicked off a new generation of urban thinking in the mid-1980s — we have capitalized on Lady Bird Lake as a great urban asset, consolidated cultural venues and events in the core, established a great mixed-use district in downtown and maintained strong neighborhoods around the core enriched by funky incubators for weirdness like SoCo.

The next step will be to create a light rail that will reduce car dependence and traffic congestion, and a network of bikeways that will allow people to use alternative personal vehicles in a safe, healthy manner. The transformation of neighborhoods with mixed-use nodes of activity should spread out from the core to the next ring of the city making those communities modestly denser in the process. The periphery of the city will become more tight-knit and independent towns including Leander, Lake Travis, Round Rock and Kyle, that will each have their own centers of business and retail so that these are not just bedroom communities. If people do commute into central Austin on a daily basis, commuter rail will offer a better alternative than sitting in traffic on clogged up freeways.

In my crystal ball there are no whiz-bang gimmicky ideas, there is just a steady progression of creative, good sense solutions to very real problems that are currently deterring people from living the most pleasurable, productive and interesting lives possible.

Written by codylyonreporter

January 29, 2012 at 6:48 pm

Posted in Uncategorized

NYC’s White Elephants

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A herd of white elephants waits around

October 25, 2007
By Cody Lyon

Like a plaster wedding cake gathering dust in a bakery display case, the tiered Beaux-Arts mansion at 8 East 62nd Street languished on the market for seven years before going into contract this May for its most recent asking price, $35 million.

It was a long wait for the pedigreed property, just steps from Herm s. The six-floor, 23-room limestone home was built in 1902 by John Duncan, the architect of Grant’s Tomb. In 1992, the mansion was purchased for $3.2 million by architect Emilio Ambasz, but was put back on the market in 2000. Prospective buyers looked at the place — Madonna checked it out in March — then passed.

If there was a waiting room for extremely pricey properties on the market, the Duncan mansion would have had some company among the city’s most high-profile homes. While many luxury properties in Manhattan are selling very well, a subset of super-high-end homes can sit on the market longer for several reasons. Many are “white elephants.” Some are simply overpriced; in other cases, the rich don’t feel the need to sell right away and can afford to hold out for the price they feel is right.

For example, the Milbank mansion at 14-16 East 67th Street, made famous by a recent owner, Penthouse publisher Bob Guccione, has been sitting for over a year. In May, the New York Post reported that the broker for the listing, Corcoran Group agent Leighton Candler, had quit, seemingly out of frustration with current owner Laurus Funds, which was hanging on to the $59 million price tag.

Brown Harris Stevens broker Paula Del Nunzio picked up the listing in May for the 22,000-square-foot property. She wouldn’t comment on how often it is being shown, but she said “as the largest and most expensive mansion on the market, it gets a lot of attention,” thanks to its width and “utter grand scale.”

Del Nunzio said identifying potential buyers of these ultra-luxe properties requires a different skill set than brokering other listings — just because someone is interested doesn’t mean they get in the door. “Our job is to make sure buyers are qualified,” she said.

Then there’s the $35 million, 12,000-square-foot, 13-bedroom house built for sugar tycoon Thomas Howell in 1920. Located at 601-603 Park Avenue, it has been on and off the market since 1989. It is being marketed by Dolly Lenz at Prudential Douglas Elliman. Finally, there’s the most expensive of them all, the $70 million penthouse at the Pierre Hotel at 795 Fifth Avenue, on the market since 2004 and listed with Brown Harris Stevens’ Elizabeth Lee Sample and Brenda Powers.

In the very wealthiest sector of the Manhattan real estate market, finding the right buyer often wins out over any sense of urgency to sell. Yet the fact that some properties sit on the market for years, waiting for the right buyer, seems to strain the bounds of reason.

“The right buyer is someone who is very rich and has great taste,” said Lisa Simonsen, a broker at Corcoran who also worked with the $59 million Milbank mansion until recently. She calls that particular property one of the “most fabulous, magnificent houses ever.” But in spite of what she says was a lot of hard work, the house has yet to meet a buyer who has the deep pockets to pay for it.

White elephants that spend a year or more on the market are clearly in a class of their own, even when compared to other luxury properties. According to data from Miller Samuel, properties in the luxury market (representing the top 10 percent of all Manhattan condo and co-op sales with an average price of nearly $5 million) spent 128 days on the market in the second quarter. That’s down one day from the average in the first quarter and down 22 days from the year-ago quarter.

By comparison, for the overall market in Manhattan, the figure for average days on the market in the second quarter was 117, two weeks faster than last quarter and four weeks faster than the same period last year.

Currently, there are around 45 co-ops, condos and townhouses listed in Manhattan at over $20 million, representing 0.78 percent of available residential listings in the borough. They include 15 townhouses, 14 co-ops and 16 condos, according to Jonathan Miller, president of appraisal firm Miller Samuel.

The majority of the over-$20-million listings, 69 percent, are located on the East Side. Downtown follows with 20 percent, and the West Side is a distant third with 11 percent. On average, these properties have spent 209 days on the market.

Among these listings, 38 percent saw price increases, while another 38 percent held steady. Only 24 percent saw a reduction in price.

“Every time there’s a sale at a certain price range, it helps establish what that current value is for a similar property,” said Hall Willkie, president of Brown Harris Stevens. Willkie noted that when a penthouse at the Time Warner Center sold for $42.5 million in 2003, it created a new plateau in the very-high-end market.

It appears that some sellers believe you can always get what you want.

“Some exuberantly priced property sellers believe they can hold out and eventually get the price they want,” said George Van der Ploeg, a senior vice president at Prudential Douglas Elliman.

Kirk Henckels, executive vice president and director at Stribling Private Brokerage, added that in this segment of the real estate community, one rarely has sellers who are desperate to get rid of a co-op, townhouse or condominium.

“A lot of times these are global people. They have residences all over the world,” said Henckels, adding that the available liquidity — not just in New York, but on the global scale — allows for greater flexibility, but it can also contribute to greater languishing time.

Van der Ploeg noted that there simply aren’t that many buyers out there who can be matched with the small pool of very-high-end properties that are available.

Lee Summers, a senior vice president at Sotheby’s International and one of the brokers who handled the Duncan mansion contract, says that in the end, patience often pays off.

“The very-high-end properties may sit for a while, but they will get the full asking price if they have a good product,” said Summers.

Thanks to a weakened dollar, potential buyers from foreign countries see some of Manhattan’s priciest properties as a good buy.

“In the currency market, the dollar continues to decline in value against the euro and the pound, so high-end buyers from Britain, Italy, Ireland and Germany keep coming to the New York market,” noted Pablo Montes, vice president at the Corcoran Group.

But even though a buyer may have the necessary means to purchase one of New York’s priciest properties, other obstacles — like a picky co-op board — can stand in the way of a buyer’s desires, according to one broker who offers the Pierre penthouse as an example.

“At the Pierre, there is one person controlling the board, and all of us in the brokerage community know that,” said Jacky Teplitzky, an executive vice president with Prudential Douglas Elliman.

Teplitzky said that even a multibillionaire who is seriously interested in the “most wow apartment” can find himself being held up by a fussy co-op board, and this will ultimately result in the property sitting on the market.

“You have to find that one person,” she said.

Teplitzky and other brokers point out that very-high-end property owners will often exercise greater discretion when they decide to sell. This could be because the seller doesn’t want family or friends to know about their intentions.

“You have to do it hush-hush, so you can’t go to other brokers; instead, I have to go to my Rolodex and seek out prospective buyers quietly,” she said.

But “people can’t buy what they don’t know about,” said Henckels, who added that in particular, prewar co-ops (of which there is already a limited supply), usually appear on the market very quietly.

Henckels himself exercised discretion in describing two properties available at the moment in the Manhattan market for “let’s just say $60 million.”

Brown Harris Stevens’ Willkie concurred. “Some of the most desirable homes are many that you don’t know about,” he said. “They shy away from publicity, they don’t want it, so they are not really known to the public.”

An oft-repeated scenario is the property owner who might want to play the market with a wait-and-see attitude. They will sell, but only if they can get the number they want.

“There might be an owner who says, ‘I love my apartment. I bought it for $10 million, but if you can sell it for $50 million, I’ll consider selling,’” said Teplitzky.

Teplitzky said that most brokers understand when this game is being played. From the get-go, they sign an exclusive, not for just six months, but for a full year, because a sale will surely take longer to come to fruition.

“We want to make sure time is on our side,” she said.

Written by codylyonreporter

January 28, 2012 at 10:29 pm

Posted in Uncategorized