Five Years in, Domain living up to city developers’ urban village vision

Shonda Novak |
Source: Austin American Statesman

In March 2007, developers unveiled a first-of-its-kind shopping experience for Central Texas: a 700,000- square-foot “lifestyle” center that would lure new luxury retf!ilers to the area and introduce the urban village qoncept to the region.

The Domain was envisioned as a project that would help reshape Austin’s retail dynamic and slow the flow of sho’ppers to the suburbs – and by doing so add sales and property tax revenue to the city’s coffers.

The mix of shopping, dining, entertainment and office uses in a walkable outdoor environment was new to Austin, as was the city granting incentives to the Domain in 2003 – its first and only subsidy for a local retail project.

Five years after opening, city officials say their investment is paying off, with the development turning out exactly as intended.
The project, they say, has turned a former light-industrial tract into a regional shopping destination that generates millions in tax revenue, attracts key employers, spurs other development and draws people of all ages and walks of life.

The redevelopment of the Domain – a site once planned as a campus for dot-com companies – “has met all expectations positively,” said Kevin Johns, director of the city’s Economic Growth and Redevelopment Services Office.

“The overall development is driving growth in the area, generating sales tax” and furthering the city’s goal of creating a hub of dense development in the North Burnet Road area, Johns said. And he said the new development model the Domain ushered in – apartments over retail in a pedestrian-friendly, park-like setting – “is now being replicated in other areas of the city.

“The project has been extremely successful as a catalyst for high-quality, vertical, mixed-use redevelopment,” Johns said.

Since opening, the Domain’s first phase has generated nearly $12 million in sales and property tax revenue for Austin. After rebating $5. 7 million to Simon Property Group Inc. under the incentive agreement, the city had netted $6.2 million as of December.

When first pitched to the city, the Domain concept “was described as an innovative approach to the shopping and living experience that would help to retain retail sales and property tax base that had been leaving the city for suburban locations in Round Rock, Leander and Georgetown,” said Charles Heimsath, a local real estate expert and a consultant on the project in its early stages.

“This objective has been realized, since 1,117,000 square feet of retail, 828 apartment units and 168,464 square feet of office space has been built and occupied since the project began.”

Growth, development

As it has progressed, the Domain has become a signature project for Austin-based Endeavor Real Estate Group, which conceived of the development and lured marque retailer Neiman Marcus there and Simon, the nation’s largest mall developer. Simon partnered with Endeavor on the Domain’s first phase and owns the project, along with a second phase Simon developed that opened in 2009.

Kathy Shields, senior vice president of development with Simon, said the company’s investment in the Domain is about $410 million – $245 million in the first, 57-acre phase and $164 million in the second, 40-acre phase.

Though she wouldn’t disclose specific sales figures, Shields said the Domain is “one of the most productive” in sales-per-square-foot among Simon’s Texas portfolio of 32 retail properties. Sales in the center were up by double digits last year over 2010, she said.

“We have a great deal of momentum at the Domain,” Shields said, calling the project “really more of a true lifestyle center than most that bear that name.”

“It’s very unusual when you get a project where all the components are viewed as best in their class,” Shields said. “That’s what makes the project truly of distinction. It’s sort of a second downtown in northem’AL,Jstin. It’s its own little village.”

As the Domain has progressed, it has also spawned related development, including Simon’s second phase with specialty retail, dining, apartment and entertainment options.

East of Simon’s Domain, Endeavor is working on its own .mixed-use development- also called the Domain – on 175 acres that it owns with its capital partner in the project, RREEF. Endeavor’s Domain will include a 55,000-square-foot Whole Foods Market that’s due to open next year, plus 543 apartments and a 9-acre park.

Over time, Endeavor intends to develop 8.5 million square feet of housing, hotel rooms, offices and restaurants at its Domain. Endeavor currently is designing new office space and retail space for its project.

“We plan on developing part of the site to be North Austin’s restauranUentertainment hub with a mix of tenants that resemble South Congress, South Lamar and West Sixth Street,” said Chris Ellis, an Endeavor founder and managing principal. “There will also be new high-end retail that will be added as a direct result of the success” of the Domain’s first phase.

Across from the Domain, Endeavor has 39 acres under contract for another retail, apartment and hotel project, and new retail has, and continues, to sprout on the east side of Burnet Road in the Domain’s orbit.

Two hotels have located at the Domain, including a 340-room Westin, which was the first major full­service hotel to be built outside of downtown since the Renaissance hotel went up in the Arboretum area more than 20 years ago, Ellis said. In the piece Endeavor is working on, a 140-room Aloft hotel is open, and a third hotel, a 123-room Lone Star Court, is scheduled to break ground this month in Simon’s Domain.

In addition, the Domain “is beginning to effect positive changes in land use in the surrounding area,” Heimsath said.

Several of the largest office deals that have been done in the past few years have landed at the Domain, where the office space is fully occupied. That is “a testament to the appeal for companies to locate their employees in the project,” Ellis said, even though “in most every case it was not the most cost-efficient choice for the tenant.”

They include One West Bank, Convio, EA Sports and Hanger Orthopedics, the world’s leading provider of prosthetics and orthopedics, which moved its headquarters to Austin from Maryland.

Companies like being at the Domain, local office brokers said, because their employees enjoy being able to walk to its shops, restaurants and amenities.

‘Uptown Austin’

Some of those who do business – and live – at the Domain say the project is one in which Austin can take pride.

Amy March and Emily Morrison own the Steeping Room, a specialty cafe and bakery and one of the Domain’s original tenants.

March said locating at the Domain was a chance to be part of a development that would help form “uptown Austin.” She said her small business and Simon have a mutually supportive relationship.

“David and·Goliath joined hands and built a business. I needed Simon, and Simon needed me,” March said.

The Steepihg Room’s sales have increased 15 to 20 percent on average every year since opening, she said, with customers coming from “all over Austin,” including one who comes from Buda daily.

“We opened our doors, and the world walked in,” she said.

March said she likes the walkable environment of the Domain, the trees that were preserved and the natural elements such as limestone that were used in what she said is a “very thoughtful” development.

As a former New York resident, “I love it,” March said. “It’s not just a box with a parking lot. It mimics what people in dense cities are used to. There are people walking their dogs, reading their paper in the morning, taking their kids to school, and people who come to talk to me who need to blow off steam after being at their computers five hours straight. It’s a neighborhood of people who live and work here.”

Rick King lives at the Domain and is a hair stylist at Luxe Apothetique there. He said there’s a misperception that the Domain is only for the affluent.

“We have something for everyone,” King said. He said he has a “multicultural clientele” that includes professors, politicians, tech workers and lobbyists.

With its sidewalk cafes, playscape and rocking chairs around an outdoor fire pit, the Domain has fostered a real sense of community – a place where people bring their “dogs, children, grandmothers, husbands and wives,” he said.

Teresa Moses, another Domain resident who formerly lived in Chicago, with Michigan Avenue in her

“When I get home from work I love not having to get back in my car to go out, which reminds me so much of Chicago and just going outside to Michigan Avenue with all of the diverse shops, restaurants, people and parks right there outside. I love walking around the beautiful grounds and dining and shopping at the Domain, so it just seemed like the perfect place to live.”