September 7th, 2023 News Brief TLDR:

1. Class 'A' office space invades Leander; LEED certified. 🌿$250M mixed-use project breaks ground in suburban Austin. 🏗️

2. I-35 expansion could be UT Austin's game-changer. 🛣️

3. Soho House eyes U.S. expansion; Austin next? 🌆

4. Whitestone REIT optimistic with Q4 dividend.

COMMERCIAL REAT ESTATE & CONSTRUCTION TRENDS

Office building coming to Leander development

Source: Kxan.com

Summary: St. John Properties is planning to construct a first-of-its-kind, 120,000-square-foot Class ‘A’ office building in Leander as a part of the Northline development. This building will be the first commercial component of this urban-mixed-use development, 30 miles to the north of Austin. Along with a LEED certification goal, it plans to offer ground floor retail and restaurant space, with anticipated completion by the first half of 2025. Supported by testimonies from regional partners, the company suggests this development will meet the emerging demand for such an office footprint, contributing to a thriving mixed-use downtown hub. Northline's completion is projected by 2031 with residents moving in later in 2023.

Why this matters: This expansion in Leander offers commercial real estate professionals in central Texas the opportunity to leverage and propose a budding office complex largely appealing to companies and business owners eyeing premium facilities closer to home.

Investor Opportunities in the Housing Sector

Source: Fool.com

Summary: Lennar, one of the country's major homebuilders, has partnered up with a real estate invest firm, Centerbridge, to shift their focus to build-to-rent rather than build-to-sell properties. Anticipating a potential shift in the housing market to see more Americans renting, they are developing several communities, known as Upward America Venture's projects . The venture aims to provide a disciplined and efficiency-driven scaling of the horizontal rental product, thus contributing greatly to solving the current single-family rental supply restraints.

Why this matters: The shift towards build-to-rent communities by major homebuilders may mark an important potential trend in the property market. Understanding this shift can help Central Texas commercial real estate professionals to meet the possible increased demands for rental properties and advise their clients on market focused investments amid potential future changes.

Vladislav Doronin: Exploring the Explosion in Second-Tier City Demand

Source: OceanBeachBulletin.com

Summary: The prominence of second-tier cities in real estate markets is rapidly increasing, driven by factors such as cost-effectiveness, lesser crowd, job growth, and demographic enrichments. These cities, including Austin, are offering similar amenities as major cities but on a less daunting scale, making them increasing attractive for businesses and residents seeking cost-living benefits. Growth rates in such cities outstrip overall U.S average population growth, as put forth by a report from JLL, with a significant part of it attributed to pandemic-induced relocation. These growth patterns are noticeably advancing the recovery trajectory for such cities in the post-pandemic period.

Why this matters: Austin, being tagged as one of these "second-tier" cities, is experiencing robust growth due to its relative affordability and balanced lifestyle. Commercial real estate professionals can leverage this trending city classification and related population shift to advantageously position their client's properties in the Austin market.

Office pain, multifamily gain: One million units built in three years, another million before 2025

Source: Rejournals.com

Summary: The U.S. is undergoing the largest construction boom since the ‘70s, with 1.2 million apartments delivered since 2020 and 460,000 more expected to be completed by the end of this year according to RentCafe. Key cities cited include New York, Austin, and Dallas, with Chicago at 13th place, delivering over 25,323 new apartments between 2020 and 2022. Despite companies' efforts to return to in-office models, the demand for quality spaces for remote work persists, driving further apartment construction.

Why this matters: With Austin being listed among the leading cities in apartment construction, Central Texas commercial real estate professionals can leverage this data to highlight the increased residential demand and promising growth in this sector to lure their clients and investors.

Global 3D printing competition kicks off with focus on affordable housing

Source: ConstructionCanada.com

Summary: ICON, a construction technology company, has announced Initiative 99, a global architecture competition for 3D-printed affordable housing, aiming to deliver houses for less than $99,000 each. Architects worldwide - firms, university students, and individuals - are invited to submit their designs. Prize money totalling $1 million will be awarded, and ICON commits to build the winning homes at several locations to showcase potential future housing solutions. Policymakers, academic leaders, non-profit organizations, and architectural practitioners comprise the Initiative 99 jury, which includes several professionals from Austin and the University of Texas.

Why this matters: With Austin being listed among the leading cities in apartment construction, Central Texas commercial real estate professionals can leverage this data to highlight the increased residential demand and promising growth in this sector to lure their clients and investors.

URBAN DEVELOPMENT & COMMUNITY SPACES

How I-35's expansion could provide 'once in a lifetime opportunity' to UT

Source: Kxan.com

Summary: The Texas Department of Transport (TxDOT) will start construction on a $4.5 billion, eight-mile expansion project on I-35 next year aiming at reducing interstate congestion. To further the project, there are measures to introduce deck plazas aimed at improving connectivity between Downtown East Austin and the University of Texas' (UT) campus. Additionally, these plazas could play a vital role in facilitating access to UT's athletic facilities and facilitate coincide with ongoing expansion and student housing investment effort.

Why this matters: This transportation project serves a dual purpose - improving general infrastructure and highway accessibility, which are critical in enhancing commercial real estate attractiveness, and provides a considerable chance for mall, entertainment venue, and student residential property developers due to the forecasted population inflow to UT's plaza enriched East Austin location. Read more

Brush Square’s Back in Downtown Austin

Source: AustinTowers.net

Summary: The Brush Square in downtown Austin has now reopened after a year-long course of renovations. The upgraded space includes new seating, an event lawn, funded by the 2019 Brush Square Vision Plan conceived for the purpose of making the space a more vibrant public space. To unveil these renovations, officials will host an official ribbon cutting on September 17 with the intention of increasing footfall, promoting sustenance of public spaces, and potentially making it a viable dock for several events.

Why this matters: The renovations to Brush Square, located near the Austin Convention Center, could bring another influx of activity to the downtown area and represent further growth opportunity for commercial lease spaces or premises aimed at an increased pedestrian demographic.

Can YIMBYs ease the global housing crunch?

Source: Economist.com

Summary: The article draws attention to the growing "Yimbyism" (Yes, in my backyard) movement against Nimbyism (Not In My Backyard), calling for a comprehensive strategy to tackle global housing shortages. It paints a stark picture of restrictive planning and zoning laws and its direct impact on land and housing prices, notably in areas like San Francisco and other major metropolitan areas worldwide. In the battle between deregulation for development and conservative zoning, positions differ widely but converge on the common belief that more housing, particularly in big and costly cities, needs to be built, considering spiking home prices globally. This tug of war between libertarian-leaning tech moguls and grassroots socialist movements encapsulate various sectors pushing for strategies aligning towards the growth of urban areas and optimisation of housing. Drawing on the example of New Zealand's city, Auckland's upzoning, the article delineates the resultant increase in building and consequential reduction in rental costs for a single home.

Why this matters: The insight gathered from the worldwide concern of housing shortages underlines for the Texans realtor the importance of informed advocacy position on regulations when dealing with zoning authorities; leveraging on the demonstrated positive results seen globally will afford them a stronger rationale when expanding or developing in highly sought-after or low-supply areas in Central Texas.

Loneliness is a design flaw

Source: BusinessInsider.com

Summary: The article discusses the decline of third spaces, important public gathering spots beyond home and workplace, due to numerous societal and economic factors including overwork, higher living costs, digital socialization, declining communal investment, and construction favoring cars. It posits that this decline is strongly linked to the growing issue of widespread loneliness and proposes that the concept of designing spaces that foster connection and community interactions is the key to addressing the epidemic of loneliness. For real estate developers and towns, this revitalized perspective requires designs that prioritize walking, connection, and interaction. Culdesac, a $170million standalone car-free community near Phoenix, is set as the example of this new trend favoring shared spaces, local activities, and overall community engagement. The community, one of the US's first attempts at a 15-minute city concept, houses 1,000 residents with amenities varying from a restaurant and coworking space to public gardens, establishing the prospects for further nationwide implementation of such concepts.

Why this matters: An understanding of the shift towards community-driven and interactive spaces can allow central Texas commercial real estate professionals to design, promote, and invest in properties that cater to increasing demand for such shared environments, aiding not just the business, but also the steps towards more socially connected communities.

FINANCIAL STRATEGIES & MARKET OPPORTUNITIES

Whitestone REIT Declares Fourth Quarter 2023 Dividend

Source: GlobeNewsWire.com

Summary: Whitestone REIT has declared a fourth quarter dividend of $0.04 per share on its common shares and operating partnership units for 2023, which annually totals $0.48 per share. The announcement by CEO Dave Holeman indicates a quarter with robust growth and positive optimism regarding leasing spreads and near-record occupancy, reflecting on successful execution of growth strategy and maintaining the company's focus on FFO per share. Whitestone encompasses real estate operations spread across prominent growth markets like Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio, with a portfolio of open-air, retail centers.

Why this matters: As Whitestone REIT operates in thriving markets including Austin, keeping an eye on its growth performance and distribution strategy can present potential investment opportunities to Central Texas commercial real estate professionals and their clients.

Exclusive: Soho House’s founder and CEO reveals major North American expansion plans

Source: ThePointsGuy.com

Summary: Soho House, a renowned global brand under Soho House & Co., seeks to continue expanding its North American footprint. There are already more Soho Houses in North America than there are in the U.K. with profitable ventures in significant U.S. cities like New York, L.A., Miami, Austin, and Nashville. Further Houses are in the pipeline even as COVID-19-shuttered existing ones recover. With considerable diversity and creative appeal coupled with effective membership pricing strategies, Soho Houses have managed to stay balanced - exclusively apropos yet growing - despite increased social anxieties regarding overcrowding.

Why this matters: Given the Soho House CEO's reference to finding success in Austin, residential and especially commercial realtors serving Central Texas should anticipate and prepare for potential opportunities associated with the establishment of such lux spaces, serving their clients with relevant luxury-type properties or offering input on suitable locations or suitable tie-ins.

TODAYS PERMIT RUNDOWN

Let's dive right into the most exciting permits happening around Central Texas in the construction and commercial real estate sectors!

First up, we have "The Arc of Texas" taking flight in the Walnut Creek Business park! The boys at NEWTON Architecture have their hands on this grand project, renovating and altering around 2,045 square feet of this 1-story shell building into versatile office spaces. With an investment of $255,000 from the owners, The Arc of Texas, we're keen to see this transformation at 8001 Center Park Drive Suite 100, Austin!

Hold onto your hard hats for the next one - the CCRM Fertility and IVF Clinic at Uplands II! With a whopping budget of $6,725,447 funded by Drawbridge Realty, the design gurus at Perkins&Will are turning 16,242 sq ft of space into an IVF clinic and ambulatory surgery center. Keep an eye out for high-end medical facilities popping up at 5301 Southwest Parkway, Suite 350, Austin!

For all shops and retails enthusiasts, Discount Tire store at 2623 WEST BRAKER LANE, Austin is in for a revamp - inside and out! HALLE PROPERTIES are spending a cool $497,500 on this renovation with each brick placed carefully by the expert hands of DESIGN FORUM. Expect a brand-new store layout, complete with shiny new doors and windows, all covering a snug 1,992 sq ft.

Last but not least, the Colorado Tower will see some action thanks to Actis and their $755,400 investment! With no design firm announced yet, we're all on the edge of our seats waiting to see who will transform these office interiors. The drama unfolds at 303 Colorado Street Suite 1950, Austin.

There you have it, folks! From chic new offices to modernized retail and advanced medical facilities to interior office renovations, Central Texas is thrumming with construction activity. Stay connected to catch all the exciting developments in the construction and commercial real estate world!