Who controls Austin’s second downtown? These developers will take The Domain, surrounding area to new heights
The years have been kind to The Domain.
About two decades ago — before North Austin’s sprawling second downtown was filled with shopping centers, multifamily housing and increasingly tall office towers — it was nothing more than an abandoned IBM campus. Purchased by Endeavor Real Estate Group in the late 1990s, the site was originally set to become a tech office campus. But then the dot-com bubble burst and forced Endeavor and their partners to switch the focus to retail.
“If you asked somebody 15 years ago, ‘What’s The Domain?’ they probably would have answered that it’s a really expensive shopping mall,” said Jonathan Tate, principal at Endeavor’s office and industrial division.
Indeed, The Domain’s early development phases brought to light a Tiffany’s store, Nordstrom, H&M and the like. It wasn’t really “Austin,” many locals agreed. But in the past 10 years or so, The Domain has diversified — added local flavor — to become so hot it has earned the reputation for being Austin’s second downtown.
Since Austin-based Endeavor and its partners, Indiana-based Simon Property Group LP and Northwood Retail LLC out of Dallas, first built The Domain, Endeavor has mostly sold off its stake in the submarket. Now, development there has shifted from retail-centric with some multifamily to retail, multifamily and those towering office buildings. Below it all, the bars and restaurants that line Rock Rose Avenue are giving Austin’s famous Sixth Street a run for its money.
The developers that purchased Endeavor’s land and properties, alongside those developing sites surrounding The Domain, are shaping the submarket into an urban center with a different vibe and clientele than downtown Austin — although some downtown Austin favorites have been exported to the north side, such as Kung Fu Saloon.
The story of how The Domain came to be is well-trodden ground. The future of Austin’s second downtown, however, is being written right now by some of the biggest real estate players operating in Austin.
Who owns The Domain?
As The Domain spills well-past its original boundaries, who are the developers shaping its future? Interestingly, it’s pretty much the same group that has taken downtown Austin to new heights recently.
The developer with the largest presence in The Domain is Cousins Properties Inc., which really made its mark in Austin in 2003 when it built the iconic Frost Bank Tower downtown. It owns 2.1 million square feet of currently operating properties in The Domain. The company is also developing 338,000 more square feet of office space, with a further 1.5 million square feet of new office space in the pipeline. There are also longer-term options to redevelop some of its low-rise buildings into two million square feet of office space.
Cousins is planning to develop a 26-story office tower named Domain Central 1 with 456,000 rentable square feet, Cousins Senior Vice President and Managing Director Tim Hendricks said.
At that height and square footage, Domain Central 1 would be the tallest and largest building at The Domain. It’s a great example of the potential and long-term vision Endeavor executives lined up for others — and presumably capitalized on nicely. Since cashing out of The Domain, Endeavor has gone on to buy and develop properties in other hotspots such as Nashville. Endeavor’s main focus now, locally, seems to be on the redevelopment of the old Austin American-Statesman site near downtown. In the background, sweeping long-term land deals have occurred, such as for The Dog’s Head tract near Tesla’s gigafactory.
Domain Central 1 represents the “first phase” of “a transformational development opportunity in the heart of The Domain,” Cousins Properties President and CEO Colin Connolly said in an April earnings call. Domain Central comprises 5.6 acres in the heart of the mixed-use community, all owned by Cousins, according to the investor presentation.
“There is nothing else like it in Austin,” Connolly said.
The first two phases of construction for Domain Central have the ability to develop roughly 1 million square feet in three different buildings, said Hendricks, who spearheaded the building of the Frost Bank Tower. For The Domain, his team is bullish on office and multifamily development.
A filing with the Texas Department of Licensing and Regulation listed a construction start date of Nov. 1 for Domain Central 1, but on a July 29 earnings call, Connolly indicated construction might not begin this year, citing rising development costs as a barrier.
Cousins isn’t the only big-name name builder in The Domain, though, and development has spilled beyond The Domain’s original borders.
Just to the east of Cousins’ towers — across Burnet Road near Top Golf — Philadelphia-based Brandywine Realty Trust is developing a 66-acre, $3 billion master-planned and transit-oriented community called Uptown ATX where IBM and other tenants are located now.
When Uptown ATX is complete, it will bring online 7 million square feet of office, residential, retail, and hospitality space, according to previous reporting. For context, that’s the equivalent of about 15 Frost Bank Towers.
One Uptown, a mixed-use tower with 348,000 square feet of office space and 379,000 square feet of residential space, is the first project for Uptown ATX and is already under construction.
The next planned development is a two-building, 529-unit apartment project, but after that will be a development called Skyrise consisting of two office towers. One Skyrise would be 25 stories high and provide 750,000 square feet of space, while Two Skyrise would be 19 stories tall with 550,000 square feet of space.
A new MetroRail station is also planned for the development which will increase connectivity for The Domain with the rest of Austin. The station is part of a partnership between Brandywine and Capital Metropolitan Transportation Authority, and it will bring something that’s been sorely missing from any area with a downtown moniker: serious public transit.
“As a transit hub, Uptown ATX will have the unique ability to link people with the exploding growth opportunities occurring throughout Central Texas,” Bill Redd, executive vice president and senior managing director for Brandywine, said in a statement.
Uptown ATX will accelerate the area’s status as Austin’s second downtown, Brandywine President and CEO Jerry Sweeney said in a statement.
“This community brings unmatched lifestyle and work experiences and is intentionally designed to prioritize bold architecture, community connections, green space, walkability and mass transit access,” he said.
While Brandywine is shoring up development east of Cousins’ turf, Stonelake Capital Partners is transforming the landscape to Cousins’ south in what is being called Domain South End.
The Dallas-based developer has the Indeed tower there under its belt, but its latest additions to the skyline are Domain Tower 2 — The Domain’s tallest tower at 308 feet — and The Bowen, a 19-story, 261-unit luxury apartment building. Domain Tower 2 recently snagged PayPal as a tenant. The tech giant took the top two floors.
The two towers are part of Stonelake’s plan to offer an all-inclusive urban district independent of downtown Austin, said Will Jenkins, principal in Stonelake’s Austin office.
“It is the truest urban environment outside the Central Business District,” Jenkins said. “If we would have built this building without the residential next door, I don’t think we would be able to say that. Previously, the only place that you could work in a high-rise office space and then walk to a high-rise residential property would be downtown.”
Stonelake’s master plan for the southern portion of The Domain is a15 phase mixed-use development, the site of which the company has been assembling since 2011, according to previous reporting.
Once online, Stonelake’s part of the community will total 3 million square feet of class A office space, 2,500 multifamily units, 50,000-square feet of restaurants and a hotel. As Stonelake works on The Domain, planners there are also working on a new tower for Austin’s first downtown.
Los Angeles-based Karlin Real Estate also has eyes to further develop Austin’s second downtown. Principals there are known for going big. Karlin has masterminded major projects such as the Parmer Austin office campus in Northeast Austin. It’s also trying to transform a hulking, vacant former site of 3M near Lake Travis.
But near The Domain, last October Austin City Council approved a rezoning request from Karlin for Verde Square, a development that would bring 386,000 square feet of office space, 33,900 square feet of retail, 280 apartments and a 160-room hotel online next to Q2 stadium. Verde Square is being co-developed by Austin-based Ironwood Real Estate LP.
The site was rezoned as a “gateway,” which affects the types of buildings Karlin can construct there. It’s a coveted and rare designation that is at the root of The Domain’s towering success. Under previous zoning, Karlin was restricted to a maximum height of 180 feet, but can now build up to 308 feet. Karlin can also develop at a floor to area ratio of 8:1, up from the 3:1 ratio allowed by prior zoning — which means taller, more dense development.
Another major development is coming from an L.A.-based company, Kilroy Realty Corp.
Kilroy, which spent $580 million on downtown’s Indeed tower last summer, in March purchased a 2.9-acre site just northwest of Q2 Stadium for $40 million. That site is fully entitled for up to 493,000 square feet of development.
“We are one block outside of the Domain proper, which we view as an advantage,” Elliot Trencher, executive vice president and chief financial officer at Kilroy, said in a statement. “We can leverage brand recognition of the area but also help modernize the area and establish a new center of gravity within the submarket alongside adjacent amenities, such as Austin’s Q2 MLS Stadium and the future McKalla light rail stop, which will connect from Northwest Austin through downtown.”
What the future holds
Recently, a new player has entered The Domain.
In June, an entity called HUSPRF Domain Northside LP purchased 4.3 acres in the northern tip of The Domain, beside Cousins’ Domain Point properties, public records show. HUSPRF Domain Northside is registered to the same address as Houston-based Hines, a real estate development giant with 10 million square feet of space in Houston in 2021, according to Houston Business Journal.
A La Quinta hotel is operating at that site, and it is unclear what Hines plans with the property. Hines declined to comment.
Retail is still ever-present in The Domain. Much of the retail space on the western edge of The Domain, bordering MoPac Expressway, is owned by Simon Property, while more central retail along areas such as Rock Rose Avenue are controlled by Northwood Retail.
Cousins’ Hendricks said it’s hard to predict what The Domain might look like down the road.
“I’ve got a decent set of binoculars for the future for one year, and it gets a little foggy at five years,” he said. “I have no clue in 20 years.”
Troy Holme, executive vice president at CBRE, the company handling leasing for Brandywine’s Uptown ATX, feels that the current path of constructing intentional, master-planned developments will continue.
“I think what’s going to happen is going to be a little more uniform,” Holme said.
That uniformity will come via a clear path of offices being built adjacent to multifamily and hospitality development, with supportive retail and restaurant interspersed between. This would create more walkability within smaller pockets of the Domain, which stretches about 1.3 miles from Q2 Stadium to the northern tip.
The original vision of The Domain called for a dense urban environment, Tate said.
“That’s how all the infrastructure was planned, so it’s not entirely a surprise that things turned out as they have,” he said. “I think maybe the only surprise is just how fast it’s happened. It’s been 22 years in the making, but it’s really taken off in the last seven years.”
Though it may be difficult to say what is coming to The Domain in the future, one thing for certain is that demand for office space is high.
As a whole, Austin’s office market has a 14% vacancy rate, according to Partners’ June market snapshot. Partners’ first quarter report — the latest report with a breakdown of Austin’s submarkets — showed that vacancy in North Austin and The Domain was at 11.5%, with a meager 1.8% vacancy among class A office space.
Asking prices for rent in The Domain are also reasonable when compared to downtown, which could attract tenants. In the Central Business District, the overall gross average asking rent is $58.03, compared with just $40.55 in North Austin and The Domain.
Those numbers, plus the buzz The Domain has delivered, has big decision makers eyeing the area.
“We’ve had great innovation, collaboration, and [The Domain] has been kind of the center of where we’ve created our pool for talent and our world class team,” said Joanne Wright, IBM Corp. vice president of enterprise operations and services.
She and her team are looking for a new Austin home for IBM, which is one of Austin’s largest employers. It appears Austin’s second downtown has the advantage.