2009 Annual Regional Report

2009 Annual Regional Report

Friday, 09 January 2009

Round Rock • Pflugerville	Northwest Austin	Southwest Austin
Georgetown • Hutto • Taylor	Leander • Cedar Park	Central Austin

by Amy Stansbury

Round Rock In November, the Round Rock City Council approved a 937-acre planned unit development, part of the 1,400-acre mixed-use project called Avery Centre in northeast Round Rock.

Waterstone Development was hired about a year ago by the Avery family to manage and plan the large-scale project. Bob Wunsch, CEO of Waterstone Development, also worked with the Averys to develop Avery Ranch, an 1,800-acre residential community in north Austin between Round Rock and Cedar Park.

The master plan is a New Urban design with residential, retail, commercial and institutions, including universities, colleges and hospitals. Two types of housing will be built: apartments and townhomes.

“One of the ideas on the multifamily townhouses is to make them look like brownstones in New York, where you walk up steps, but they’re very near the street,” said Gary Newman, president of land development and operations at Waterstone Development.

The Averys have final approval on any proposed development of the land. Some design guidelines that have been established set standards for the appearance and design of buildings, such as a deed restriction requiring service stations’ gasoline pumps at the back of the building. Newman also said that any fast-food restaurants are not allowed to have drive-through windows.

“We want to make this a pedestrian-friendly development, so you park and walk,” he said.

Though portions of what is now included in Avery Centre have already been developed or planned, such as Seton Medical Center Williamson, Texas State University, Austin Community College and the Texas A&M Health Science Center, Newman said he is working closely with those existing entities to develop complementary plans for the area. For example, a privately owned medical office building is planned just south of Seton, and a book store, coffee shop and sandwich shop will likely be built near the Texas State and ACC campuses to serve students.

Full build out of the development is expected by 2018. Waterstone is looking for a developer of the town center that would buy the tract and work with retailers to bring them to the area.

“It would be similar to a developer of The Domain,” Newman said. “They would go out and recruit the retailers.”

by Amy Stansbury

Pflugerville Best Buy and SuperTarget will be open by early March to anchor Stone Hill Town Center, along with The Home Depot, which opened in May. The new retail shopping center at the southwest corner of Toll 45 and Toll 130 also features Verizon Wireless and Mattress Firm, both of which opened in December.

Houston-based NewQuest Properties broke ground on the million sq. ft. shopping center in October 2007. David Meyers, senior vice president of brokerage and leasing, estimates that at least 525,000 sq. ft. of retail will be open at Stone Hill by the end of the year.

“Nationally, this type of project just isn’t being built right now,” Meyers said. “The good news is we’re going to get this amount of square footage open in 2009. Pflugerville’s going to get the benefit of a brand-new center this year, which clearly may be our lowest point in the downturn of the economy.”

Bealls is also expected to open in March.

A multi-tenant building on the south side of SuperTarget will feature GNC, Quiznos Sub Shop, Sport Clips and a nail salon and spa by this spring. Rack Room Shoes, teenage specialty retailer rue21 and maurices women’s apparel will be located in another multi-tenant building on the north side of SuperTarget.

Chick-fil-A is anticipated to open this spring, and construction is underway on Dick’s Sporting Goods and PETCO, which are expected to open in July. Office Depot plans to open in the fall of 2009.

Meyers said he is hoping to add more restaurants to Stone Hill, but Chili’s Grill & Bar, once planned for the development, is no longer planning to open there because of nationwide cutbacks.

“In terms of what our needsare right now, there’s a high demand for sit-down restaurants,” he said. “The fast-casual category of restaurants has been really struggling because with the economy, people are opting not to go out and eat. But we’re expecting to see some new, fresh concepts start to enter the Texas market.”

24 Hour Fitness and a Cinemark theater were once anticipated for Stone Hill, but are no longer planning to open there either. Meyers said openings like these have been scaled back, but they may eventually reconsider as the economy improves.

“A gym is a component we’d like to see in the center for the whole live, work and play mentality,” Meyers said. “We envision a theater there, if not Cinemark, then another.”

by Beth Wade

Georgetown The City of Georgetown’s Main Street Program was named one of the 52 National Main Street Cities in Texas at the Texas Downtown Association/Texas Main Street Conference in Temple in November.

The Texas Main Street Program promotes historic preservation and economic revitalization in communities, Georgetown Main Street Program Manager Shelly Hargrove said. The program assists commercial property owners in downtown districts.

Through the program, business owners are able to apply for façade reimbursement grants up to $10,000. In fiscal year 2008/09, the program’s incentive fund has $43,320 to award.

In 2006/07, Steve and Kyra Quenan received a $10,000 façade grant. Since that time, the couple rebuilt a building at 700 S. Austin Ave. and opened Quenan’s Jewelry on the first floor. Other businesses that have received grants include RunTex, Sweet Serendipity and Novita Spa.

The program became part of the city’s economic development department in October.

The switch from the tourism department allows the program to focus on economic development, including new market opportunities for the downtown area, Hargrove said.

In the FY 2008/09 budget, Hargrove said the program received $20,000 in funding to hire a downtown retail consultant.

Hargrove is also working with Georgetown Art Works, a nonprofit that supports the arts in Georgetown, to convert the interior courtyard located behind the storefronts on Eighth Street into a multipurpose art space. The proposal divides the space into three zones with room for sculptures or instillation art, an artist display and sales area, and a restaurant and winery seating area.

Benefiting from the city’s membership, downtown building and business owners can receive onsite evaluations by a historic preservation architect and consultations about visual merchandising and window displays.

Georgetown has been involved with Texas Main Street since 1982, spending more than $120 million in downtown revitalization in the past 26 years.

Funding for Main Street comes primarily from the city. Additional funding comes from fundraisers, such as Main Street’s annual Red Poppy Festival, and donations.

by Teresa Pione

Hutto Developers of The Crossings of Carmel Creek have delayed construction on the 466-acre mixed-use project in Hutto. Atlantic Coast Developers President Bill Sulzbacher said they are dealing with a difficult economy and are not sure when construction will begin. The project’s ground breaking was originally set for fall 2008.

When complete, the mixed-use retail, residential and commercial development is expected to increase connectivity and walkability in the city — a concept defined as New Urbanism.

“This brings to Hutto the New Urbanism concepts that communities, such as Hutto and Taylor, embraced 100 years ago,” Hutto City Manager Ed Broussard said. “You had the combination of downtown businesses and residential. [In recent years] we’ve separated residential from business, dividing our communities. We’re bringing those elements back.”

The City of Hutto announced the project in 2005 as a response to a spike in population growth. One factor in the city’s decision to pursue this project is the strategic location of The Crossings — within the Austin-metro area and at the intersection of Toll 130, Hwy. 79 and FM 685.

Despite changes in the developer’s timeline, the city feels confident the project will proceed, said Matthew Lewis, Hutto director of community development. Meanwhile, the city can work toward other goals, he said.

“In the economic times that we are currently faced with, staff has been focusing on long-range planning for the ultimate build out of the city. This is the first time the city has had an opportunity to address the long-term goals of the community since the explosion of growth in 2004,” Lewis said.

In courting development, the city offered tax rebate incentives to the project’s developers. The sales tax rebate stipulates that 25 percent of the total sales tax accrued by the development from Jan. 1, 2010, to Dec. 31, 2029, will be rebated to the developer, and that 30 percent of the total hotel occupancy taxes accrued by hotels within the development during that timeframe will also be rebated to the developer.

Rebate timelines will not change with the delays, Broussard said.

Atlantic Coast Developers, LLC, a Jacksonville, Fla.-based group, and New York-based Glenmont Capital Management, LLC are the project’s developers. Austin-based TBG Partners and Atlanta-based Phillips Partnership, P.C. are in charge of design.

by Tiffany Young

Northwest Austin A hospital in Northwest Austin is expecting to deliver more than 5,000 babies this year, about 1,200 more than in 2008.

In December, the first phase of an $83 million women’s hospital, St. David’s Women’s Center of Texas, opened at St. David’s North Austin Medical Center. The first phase includes labor and delivery rooms, Cesarean-section surgical suites, a women’s diagnostic imaging center and the Breast Cancer Resource Center.

Connected by a sky bridge to the second floor of St. David’s North Austin Medical Center, the facility will increase its capacity for labor, delivery and recovery from 13 to 37 rooms, and will feature 61 postpartum rooms, up from 27.

The idea for the women’s center blossomed a few years ago after Austin Area OBGYN approached St. David’s about moving its practice from central Austin to north Austin. With the growth of Renaissance Women’s Group, Austin Diagnostic Clinic OB/GYN and OB/GYN North, St. David’s had already planned to expand its women’s services and realized with AAOBGYN’s help, it had greater possibilities.

“When AAOBGYN approached us and indicated that they wanted to move up here, we knew that that took us to a new place in terms of how we would look at developing the women’s services expansion at this facility, and that led us to create or develop the plans for what we now refer to as the St. David’s Women’s Center of Central Texas,” said Donald Wilkerson, CEO of St. David’s North Austin Medical Center.

The rest of the 121,000 sq. ft. project, which will be three stories and could later be expanded up to eight stories, will open this spring. It will include physician offices of various specialties for women’s services and 6,000 sq. ft. of retail space dedicated to women’s needs.

“The St. David’s Women’s Center of Texas is quickly taking shape to be a place where women from across the region will come to receive the highest level of care at all stages of their lives,” Wilkerson said. “The facility will provide the latest in healthcare technology while also providing a new standard in hospitality.”

St. David’s North Austin Medical Center has a level III neonatal intensive care unit that allows it to provide care for women giving birth as early as 24 weeks.

Wilkerson expects to hire 100 more nurses and supporting staff to accommodate the new space and services.

by Candace Birkelbach

Northwest Austin Phase I of The Domain, which includes high-end retailers, restaurants, office space and apartments, was completed in March 2007 and is owned by Simon Property Group. Phase II, which has projects from both Simon and Endeavor Real Estate Group, started in June and is estimated to be complete by November 2009. With the failure of Proposition 2 in November, Simon’s tax incentives of more than $64 million remained intact. These incentives apply only to Phase I and not Phase II, which is currently underway.

Simon’s Phase II began in December with the ground breaking of the 340-room Westin Hotel, a joint venture with White Lodging. The hotel is scheduled to be complete by March 2010 and includes an indoor pool, fitness center, full-service restaurant and more than 13,000 sq. ft. of meeting space. Dillards, Dick’s Sporting Goods, Maggiano’s, BJ’s Restaurant and Brewhouse, 411 residential units and 75,000 sq. ft. of class A office space are also a part of Simon’s Phase II. Village Road Show Gold Class Cinema will open its first Texas location at The Domain. The upscale theater will have eight auditoriums with approximately 40 reclining seats each and a personal gourmet food and cocktails service.

Of the 176 acres Endeavor owns, only about 5 percent has been developed. The Domain Gateway — a five-story, 188,000 sq. ft., class A office building — is still under construction, and buildings two and five were once a part of the IBM campus. Convio, a company that provides technology to nonprofits, recently expanded by approximately 22,000 sq. ft. on the second floor of building five. KingsIsle, a software gaming company, has leased about 19,000 sq. ft. on the first floor of building five and hopes to move in by January. The Texas Culinary Academy is in building two, where video game producer Midway Games was until closing in December.

Endeavor is in the process of clearing ground on its remaining property to make way for new development, including a retail district with a 138,000 sq. ft. Nordstrom, an 80,000 sq. ft. Saks Fifth Avenue and a 70,000 sq. ft. Whole Foods. Road and utility construction for this project is underway, and vertical construction is expected to begin in 2010. In December, Endeavor announced the opening of these stores would be delayed until 2012 due to the struggling economy.

Since The Domain opened, two businesses — Oakville Grocery and Nestle Toll House — have closed; new tenants have yet to open in those spaces.

by Robert Bell

Cedar Park The Cedar Park Center went vertical Dec. 1, when workers raised the metal beams that will support the structure’s walls. The $55 million, 181,000 sq. ft. stadium will be the home of the Texas Stars — AHL affiliate of the Dallas Stars — and will host a range of events, from concerts to graduation ceremonies. The primary resident of the center will be the Texas Stars. Much like the Round Rock Express, the Texas Stars will provide a farm system for the NHL’s Dallas Stars. Professional players may spend time in the minors to recover from an injury, and up-and-coming minor league players may get called up for a chance to play in the big leagues.

Developers expect to be finished by September 2009. As of mid-December, the project was on schedule, said Phil Brewer, economic development director.

Crews broke ground on the center in June at the corner of Toll 183A and New Hope Drive. For hockey games, the center will seat 6,800 fans. Capacity for other events will be up to 8,700.

“It will not only enhance the quality of life for our residents in terms of providing quality entertainment opportunities, but it will also be an asset for Williamson County and for this region to have a facility of that kind up and running,” Brewer said.

Cedar Park had been considering building a large event center for several years, but did not find the right fit for the project until Jim Lites, president of Hicks Sports Marketing, expressed interest in partnering with the city.

The city will pay for 78 percent, or $43 million, of the project. Cedar Park’s 4A Board proposed funding its share with 4A bonds. Voters approved this in late 2006. Funding for the center does not involve property tax increases. Hicks will cover the remaining $12 million of the project cost.

Hicks will also pay rent of $2 million over the next 25 years, with the first five years being rent-free. It will fund capital repairs solely for the first eight years.

The next eight years will be co-funded by Cedar Park and Hicks, with repairs in the final years of the agreement being the responsibility of the city. Proceeds from events will be split evenly between Hicks and the city.

Hicks affiliate Center Operating Company, which operates the American Airlines Center in Dallas, will manage the center, book acts and staff the facility.

by Kara Vaught

Leander Phase one construction of the Texas X-Park Skate and Bike Park, a $35 million extreme sports complex on the northwest corner of Bagdad Road and Halsey Drive, is expected to begin this summer, said Tommy LeVasseur, a project team member.

“We’re trying to move forward in our financing, which will put the finishing touches on the development stage,” he said. “We hope to be financed by early spring.”

Biff Johnson, Leander city manager, said another development agreement is in the works between the city and X-Park partners. The city council has already approved several X-Park propositions, including a development agreement on June 2, 2006.

Phase one of the park will include motocross and supercross facilities, a flat track, paintball venue, an overnight instructional action sports camp, BMX jump, BMX track, climbing wall, water spray park and a skateboard park and plaza. An amphitheater with 2,500 fixed seats and a 52,000-sq. ft. clubhouse with 12,000 sq. ft. of extreme sports-related retail space, food and an exhibition area round out phase one.

Once work begins, construction should be complete in eight to 10 months, LeVasseur said.

Development of phase two is expected to occur in two to three years and includes retail, commercial and lodging space on the land surrounding the sports venues.

The X-Park property was annexed into the City of Leander in March 2006. The city’s director of community development at the time, Jim Bechtol, said he worked with developers for 10 months to create an agreement to make the park compatible with the surrounding properties.

“It’s a growing, expanding area,” LeVasseur said. “We have good relationships with [the school district] and Benbrook Ranch.”

LeVasseur said a county road project, the extension of San Gabriel Parkway from Halsey Drive to Bagdad Road, would help the X-Park by providing a more direct route to it from the east.

Connie Watson, Williamson County public information officer, said the road extension is in the design phase. A timeline for road construction has not been developed.

“In this environment, the city and the county both have been doing their best to work with us,” LeVasseur said.

by Eric Pulsifer

Southwest Austin While the thought of condo living in Austin may bring to mind costly towers overlooking the capitol, on South Congress Avenue south of Hwy. 71 urban living options are available at a fraction of the cost. With prices starting in the low $100,000s, condos in south Austin are near downtown, but far enough out to be more affordable than their skyscraper counterparts to the north.

“One of the keys that we see with the developments south of Hwy. 71 is that it’s almost like it’s becoming the new 78704 ZIP code,” Realtor Simon Cawley said. “People have a choice between being a little closer with less square footage or being a little farther out where their money goes further.”

Cawley handles sales for Bel Air, a development on South Congress Avenue with available lofts starting in the $200,000s. In this buyers’ market, he said, many condos are being offered at a discount.

“There are some incentives in place to be attractive for people that are in a position to close sooner rather than later,” he said. “The current incentives we have range from $25,000 to $75,000, depending on the floor plan and the price.”

Other developments in the 78745 ZIP code are offering similar discounts of $10,000 to $25,000.

Realtor Will Steakley handles sales for the Village on Congress, a development with flats starting at $120,000. He said the 78745 ZIP code is now targeted as an entry-level market. While he does not expect it to stay that way for long, he has seen a 20 to 40 percent price cut on housing from one side of Ben White Boulevard, or Hwy. 71, to the other.

“The buyers are going to get a direct benefit of the developers buying it at a third or a quarter of what the land costs north of 71.”

For the Village on Congress, Steakley said developer Richard Coons purchased the property around two years ago. When it was appraised recently, it was worth two-and-a-half times what he paid for it.

“You are seeing land values are going up,” Steakley said. “What these buyers are getting is a direct benefit of what the developer got.”

This month, construction is scheduled to begin on SkyBridge, a development with condos and townhomes starting at $130,000. Phase one (of four) and the amenities center are planned to be completed in the summer, with other phases coming online as they are sold.

by Eric Pulsifer

Southwest Austin Construction is set to begin this year on a trail connecting 34 miles of Travis and Hays counties from Barton Springs Pool to the Onion Creek Preserve. The Walk for a Day project will run mostly through city property and will be the longest contiguous trail in Central Texas.

Hill Country Conservancy, a nonprofit preservation group, has spearheaded the project and first announced its development in 2007. George Cofer, HCC executive director, is currently working with local entities on the necessary legal agreements to make the trail a reality. Construction is slated to begin as early as March or April.

“Everybody is still fully on board,” he said. “It’s just now trying to document the details and get that blessed by all the jurisdictions.”

Although HCC has been coordinating the project with all the different entities involved, including private landowners, Hays County and the cities of Austin and Sunset Valley, Cofer said he thinks the City of Austin will ultimately manage the trail.

Initial building costs are estimated between $5 million and $10 million with project completion tentatively scheduled to take place in five to 10 years. Before construction can begin, an agreement will also need to be made with the Texas Department of Transportation, as the trail will cross a state road, Hwy. 290.

Austin Parks Foundation Executive Director Charlie McCabe has also been involved with and supported the Walk for a Day project. He said it is what residents have said they wanted, pointing to surveys conducted every five years by the City of Austin and Travis County concerning park uses. Since 1995, the answer has been the same.

“No. 1 for all three surveys is basically trails or the equivalent, meaning it could be sidewalks, it could be bike lanes, places to walk, hike, bike, throw your kid in the stroller and jog behind him — the No. 1 amenity,” McCabe said.

He points to 1995 as the year when regional trail interest began to grow. Several park groups got together and created a vision map, which would encompass not only Austin and Travis County, but all of Central Texas, including Bastrop, Hays and Williamson counties.

“I think that is the bigger picture that I get excited about,” Cofer said. “The Walk for a Day trail is one piece of the regional trail vision.”

by Patrick Brendel

Central Austin Residents of the Hancock Neighborhood in Central Austin recognize the ramifications of transforming the 23-acre former campus of Concordia University into a $750 million urban center with buildings rising more than 100 feet above the ground. However, a conciliatory approach by developers has neighbors looking forward to the creation of new shopping, restaurant and office space within walking distance of their homes.

In early 2007, neighbors protested initial East Avenue development plans, calling for several buildings of nearly 300 feet in height on nine blocks just north of the University of Texas, said Bart Whatley, retiring president of the Hancock Neighborhood Association.

“It was a pretty bold request,” said Whatley, an architect.

After a mediation process, East Avenue Investment Group scaled down the project and placed the largest buildings away from existing homes. Lead developer Andy Sarwal said his group follows the “3 Cs”: culture, community and conservation. The neighbors seemed to notice.

“I think they came up with something more responsible to the community and the surroundings,” Whatley said.

Green building practices helped developers win over neighbors. The old Concordia University buildings on site were dismantled, rather than demolished, and developers encouraged neighbors to retrieve old bricks to reuse in their homes.

They also donated building materials to local schools and nonprofits like Habitat for Humanity and reused materials in the new development. Sarwal said 85 percent of the building materials that made up Concordia have been recycled.

Developers preserved all the site’s trees greater than 19 inches in diameter.

“In the age we live in, it’s increasingly more important not to take for granted things like that. We aren’t trying to fill up the landfill,” he said.

Though a national recession is holding back some Austin projects, the 2.5 million sq. ft. East Avenue development is progressing on schedule, Sarwal said, citing its proximity to UT, St. David’s Medical Center and state government — three entities expected to thrive, despite the downturn.

The entire development should be complete by summer 2010, he said. When finished, East Avenue will have 1,450 residential units, 210 hotel rooms, 600,000 sq. ft. of office space, 325,000 sq. ft. of retail space and two parks. The whole site will be LEED-certified green.

Construction has already begun on Andaz, a 17-story, Hyatt-brand hotel; a nine-story office building that will be the new home for Texas Monthly magazine and a 64-foot, 315-unit AMLI apartment complex.

East Avenue also will have a bank, small movie theater, specialty grocery store, coffee house and several restaurants with outdoor dining.

by Mark Collins

Central Austin The most talked about housing market in Austin is currently heads and shoulders above the rest — literally and figuratively. As downtown condominiums rise hundreds of feet in the air, experts say the condo market is not only doing well, it is exceeding expectations with supply trying to stay ahead of demand.

“If people are waiting for the crash to come and for people to give away condos downtown, it’s not going to happen,” Spring developer Perry Lorenz said. “People love to say that the condo market downtown is overbuilt. The ones that are built are sold. There aren’t empty condos hanging over the market.”

Mark Sprague of Residential Strategies said Austin currently has a 30-month supply of condominiums. A 24-month supply is ideal, Sprague said, as that is roughly the time it takes to get a new project approved and ready for presales.

Kevin Burns, founder of urbanspace Realtors, LLP, said the market is getting stronger as more housing options become available downtown. Condos are selling for $120,000 to $8 million. Buyers range from the stereotypical young, single crowd (27 percent of buyers are under 30 years old) to empty nesters (26 percent are 45 to 59 years old) to young families (35 percent of buyers are 30 to 44 years old).

Despite increasing interest in a downtown lifestyle, lending constraints are making the transition difficult for developers and prospective condo buyers. Funding for projects more than $100 million, which includes most proposed condo buildings, are extremely difficult to acquire, said Taylor Andrews, developer of 360.

Individuals are also experiencing difficulty in acquiring funding. Sprague said the number of qualified buyers has been reduced by 35 to 50 percent since last year due to the loss of the jumbo financing market and more difficult qualifying marks.

Construction information on the downtown condos