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Dirt may turn at Seaholm site next year

Mix of uses still in air; nearby land to change

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

Date: Friday, July 29, 2011, 5:00am CDT – Last Modified: Thursday, July 28, 2011, 3:20pm CDT

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Plans for two massive mixed-use projects and a bigger main public library are getting firmer and smaller it seems, providing more clarity to a string of projects that promise to reinvent the southwest corner of downtown Austin.

The Seaholm power plant redevelopment can proceed now that a major obstacle was removed, said John Rosato, a principal at Southwest Strategies Group and the spinoff it established for the project, Seaholm Power LLC. Now that Union Pacific Corp    . agreed to release an easement of less than 1 acre to the city, Rosato’s team hopes to complete its site plan with the city of Austin by year’s end. The new target date for the 7.8-acre project’s construction is mid-2012, he said.

The developers are “in due diligence mode” and “updating our plan,” Rosato said, adding that Seaholm’s height and scale will not change markedly. The Seaholm project was originally planned to have 80 condominiums, 160 hotel rooms, up to 60,000 square feet of retail and restaurant space, and 100,000 square feet of office space.

Meanwhile, east of Seaholm, redevelopment of the Green water site, formerly a water treatment plant, will apparently be scaled back. The project originally was to include 896,050 square feet of residential space for rent and sale, 150,000 square feet of hotel space, 134,514 square feet of retail space, 54,356 square feet of public space, more than 3,000 parking spaces and 543,089 square feet of office space. Gensler is the project’s architect.

Adam Nims, a principal at Trammell Crow    Co. who was brought from Dallas to Austin to oversee the site’s development, said his company has made great progress in its negotiations with the city. Although Nims declined to discuss that progress in detail, Assistant City ManagerSue Edwards thinks a master plan will be ready to present to the City Council by the end of the year.

Sandwiched between the Seaholm and Green sites is a planned 200,000-square-foot library. Plans call for a summer 2013 groundbreaking and an opening in 2015, said John Gillum, Austin Public Library facilities planning manager. The library’s architects are Lake | Flato Architects and Shepley Bulfinch.

Seaholm, Green and the library have been called key parts of a density-driven plan for downtown that started more than 10 years ago. Each stands to complement the other and cap a long-term vision that creates a livable, workable and walkable community along Lady Bird Lake’s northern shore.

Just 10 years ago, the southwest corner of downtown was filled with abandoned warehouses, surface parking lots and industrial assets such as the power and water plants.

The plans to replace all that are ambitious, and city and private planners have discovered they’re also extremely difficult to execute. As private and public partners try to get on the same page, other builders have changed the dynamics of what’s needed while the recession has altered what’s possible.

Market forces will dictate the exact mix at the sites of the old Seaholm power plant and Green water plant. Everything from office to hotel to housing is expected to pop up on the former industrial lots.

“The Green and Seaholm projects have the potential to radically transform the [Central Business District] and shift the center of downtown’s gravity to its southwest corner,” said Jeff Coddington, a principal at Oxford Commercial Realty.

Most real estate experts agree there’s great market demand for multifamily space in Austin, but there isn’t a consensus on whether Austin — even downtown — needs more large-scale office buildings in the foreseeable future.

Austin’s overall vacancy rate is at 19 percent, down from 21 percent a year prior, according to second-quarter data from Oxford Commercial. But the same report said the Central Business District was the only area where Class A vacancies increased, rising to 16 percent in the second quarter from 13 percent during the same period last year.

“The services business that traditionally generated most of the demand for downtown office space is still, on a net basis, in contraction mode,” said Jamil Alam, principal at Endeavor Real Estate Group    ’s corporate services unit.

He said technology companies have been signing the bulk of the leases lately. Their demands would likely spur new office development, but nothing on the scale of the Frost Bank Tower   on Congress Avenue.

On the other hand, projects as large as Green and Seaholm could attract demand, said Mike Kennedy, president of Commercial Texas    LLC.

“They might encourage companies from outside downtown, if not the city and state, to make a move to Austin,” he said.

Austin Chamber of Commerce    Senior Vice President of Economic Development Dave Porter said large tenants don’t have many — if any — options available downtown due to a lack of contiguous space.

Although Austin is doing well and attracting many, there are yellow flags that indicate caution is appropriate.

“A paucity of marquee corporations to anchor the city’s dynamic workforce remains an issue in Austin,” said Sam Chandan, a internationally recognized commercial real estate economist and president at Chandan Economics in New York.

“Pressure to develop on a large scale — a build-it-and-they-will-come strategy — is a threat to overall fundamentals, but one that may be curtailed by constraints on financing for speculative development,” said Chandan, former chief economist at Real Capital Analytics    . “Austin is well-positioned to capture new and migrating jobs, but still runs into chicken-and-egg issues with regard to the investment quality inventory” for attracting businesses.

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Written by codylyonreporter

January 28, 2012 at 1:34 am

Posted in Uncategorized

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