Amid apartment boom, work starts on 36-story tower

Shonda Novak |
Source: Statesman

In the latest sign of the ongoing apartment building boom in Central Texas, developers broke ground this week on a 36- story tower that will add 358 luxury units downtown when it opens in 2014.

In addition, two other apartment projects are due to start soon downtown. And just south of downtown, two more multifamily projects recently started construction.

The apartment market has been the strongest sector of the region’s real estate market for some time, spurred by demand from the region’s job and population growth and a lag in supply as financing for projects dried up during the recession. 

But as lending loosened up somewhat within the past couple of years, developers revived stalled projects, or began planning and building new ones, with a number of them in or near downtown.

The newest downtown project to start is the Bowie, which is being developed by Austin-based Endeavor Real Estate Group and the Lynd Co., based in San Antonio. Along with apartments, the project — on Bowie Street near West Fifth — will include 40,985 square feet of office space and 3,890 square feet of restaurant space, said Jamil Alam, a managing principal with Endeavor.

Endeavor and Lynd are not disclosing a pricetag for the project, which Alam said is expected to open in the third quarter of 2014.

Other upscale apartment towers under construction downtown include a second phase of Gables Park Plaza (222 units in an 18-story tower); the Whitley, which will have 277 units in a 16-story tower; and SkyHouse, a $67 million project that will feature 320 apartments in a 23-story skyscraper on Rainey Street. 

Two projects due to break ground soon are a 24-story tower with 221 slated to rise at West Seventh and Rio Grande streets, and StreetLights at Barton Springs, 300 units in a 19-story tower to be built near the Hyatt hotel.

Tom Blakewell, chief financial officer with Dallas-based StreetLights Residential, said the company closed on the land purchase last week from Crescent Resources.

“We will be closing the construction loan within the next few days, with construction commencing by year end,” Blakewell said. The project will be built at a cost of about $70 million, he said.

Hundreds more apartment units are expected to be added in the next few years as part of redevelopment of the Seaholm Power Plant and Green Water Treatment Plant sites on downtown’s west side.

East of downtown, three projects are under way that transform the East Riverside Drive area with hundreds of new upscale apartments.

Just south of downtown on Barton Springs Road, Mill Creek Residential Trust has started moving dirt on the Zilker Park Lofts. The project, just west of Chuy’s restaurant, will have 213 apartments in a 5-story building that is due to open in the spring of 2014, said Nikelle Meade, an Austin attorney for Mill Creek.

East of Chuy’s restaurant, work is well under way on Coldwater, which will bring 225 apartments to market.

Nearby, on South Lamar Boulevard, the Hanover Co. has broken ground on a 340-unit luxury apartment project south of Uchi restaurant. Rents are expected to start in the $1,900 to $2,000 a month range. The first units should be ready by the late spring of 2014, with the project wrapping up that fall. 

Nearby, demolition work is ongoing at the former Lamar Square shopping center at Lamar and Treadwell to make way for a mixed-use project being developed by Greystar that will include 440 upscale apartments.

Some residents who live in neighborhoods around Barton Springs Road and South Lamar have expressed concerns about the increased traffic they say all the projects will generate.

Meade, however, said: “We’ve always said our target resident is a person who isn’t going to choose to use their car every day, and that’s why they’re willing to pay a premium to be in such close proximity to downtown.”

Additionally, the hope is that the projects will encourage alternative modes of transportation as well as enhanced bike lanes and road improvements to help with the flow of traffic and pedestrians in the area, Meade said. 

Austin area apartment rents and occupancies hit record highs this year, according to Capitol Market Research, an Austin-based real estate consulting firm.

Charles Heimsath, the firm’s president, said recently that the demand for apartments downtown is “extraordinary,” noting that downtown units were 97 percent occupied, and at rents that are more than twice the city average. The average rent downtown is $2,257 a month, Heimsath said.

Meade said she thinks apartment market demand will remain strong through 2013. “I’m not foreseeing it’s going to diminish at all,” she said.