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As the central Texas office market continues to recover from the pandemic, construction of a three-story office building in East Austin, a neighborhood that is rapidly gentrifying, is progressing.
The project is named 1515 Cesar Chavez, after his address. According to the developer, the building will have 71,632 square meters of office space, a modern design and an underground car park.
The site is about four blocks from Plaza Saltillo Station, which is a metro stop for the capital on East Fifth Street and Comal Street.
The office project should be ready for occupancy in August 2022. The developer is Pennybacker Capital based in Austin, a partnership with Lost Herd Enterprises in Austin.
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The groundbreaking ceremony for the building took place in May, and excavations are currently being carried out.
Brent Powdrill, Kevin Kimbrough and Bethany Perez from commercial real estate services company JLL are handling the leasing of the building.
Powdrill said the local office market saw increasing interest in East Austin over the past quarter.
“The main prospects for the building are creative technology tenants, but also marketing companies and professional service providers (such as engineering and architecture firms),” said Powdrill. “We are very confident about the dynamism of the East Austin market.”
In the area’s office market as a whole, “JLL sees a record level of rental activity focused in Austin and we remain optimistic through 2022, 2023 and beyond,” said Powdrill.
1515 Cesar Chavez will have, among other things, several outdoor terraces with a view of the city center, showers and bicycle storage facilities. The building will be equipped with the latest mechanical technology to create clean air for its tenants, say its developers.
A recent JLL report, the Worker Preference Barometer, found that “an increasing number of employees are virtually burned out and seeking the structure, engagement, and collaboration that come from working in an office. “
“In addition, the work-life balance is now the top priority over salary,” the report said.
In JLL’s outlook for the office market for the second quarter, the company said falling unemployment rates, rising consumer spending, greater mobility, and improved immunization rates all add to the pent-up office supplies.
“Technical and creative professional tenants continue to be drawn to new office buildings in East Austin as the neighborhood continues to rapidly attract the latest restaurants, bars and after-work entertainment,” said Powdrill. “The 1515 creative boutique design coupled with proximity to downtown Austin and the Capitol Metro’s Plaza Saltillo Station provides employers with ample opportunity to find work-life balance with easy access to one of Austin’s most talked about neighborhoods and prioritize. “
Last month, Sam Tenenbaum, director of analytics at CoStar Group, a global commercial real estate data company, said some tenants are delaying their plans to return to the office in response to the surge in coronavirus cases, “the situation remains fluid.”
However, Tenenbaum noted that “the market itself is recovering – we are certainly not back to pre-pandemic levels of vacancies, sublet space and letting activity, but we are seeing the first signs of recovery.”
Austin-based Aquila Commercial made a similar statement in its second quarter report on the Austin office market.
While the coronavirus pandemic “had a significant impact on the Austin office market over the past year …
Barrett said sublease space continues to decline as some companies re-occupy their space or successfully lease vacant space (for example, Amazon recently rented VRBO’s 114,000 square foot sublease space in a tower in the North Austin domain).
In addition, a number of large development projects are beginning to move forward, noted Barrett. For example, Springdale Green, which received final building permits in June, is expected to add 775,000 square feet of office space to 30 acres in East Austin.
“It was a great relief to see the Austin office market recover so quickly after such an unexpected crisis, and it further confirms that our market is as resilient as ever,” wrote Barrett. “I have high hopes that the Austin market will finish strong in 2021.”
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