Commercial development market strong for some
Commercial development market strong for some
Written by Kara Vaught Friday, 21 November 2008
This year’s Texas meeting of the International Council of Shopping Centers wrapped up on Halloween, and the economy’s recent tricks were the main topic of discussion.
Over lunch, one independent Austin real estate broker responded to the question, “How’s business?” by poking the tepid chicken on his plate and replying, “About as dead as this.”
Despite the gloom, the Cedar Park and Leander commercial real estate market exhibits positive signs for those in the right position to take advantage of them.
Land in Leander
Dewayne Naumann, commercial escrow officer for First American Title Insurance Company, recently gave a tour of Leander to a friend who scouts locations for a major drug store chain.
“We spent the day out there, and we saw great opportunities,” Naumann said.
They also saw deals. The city is full of land for sale, creating a buyer’s market.
“Leander is the next frontier,” he said. “The leadership had the foresight to see Leander is not just a sleepy little town. I’ve seen it grow from the early ’70s as just a spot in the road to what it is now.”
Naumann sees the current economic turmoil as a reality check. Gone are the commercial loans requiring just 5 or 10 percent down, but a good, solid project can get approved for a loan with 20 percent equity.
“I guess real estate wildcatters are on the sideline until they can figure out a way to dip their toe back into the pool, because the water’s a little chilly right now, and it’s only the tough people who are getting in,” he said. “But there are people getting in it. We’re seeing deals come in every day.”
Condos in Cedar Park
Mike Speciale, a custom home builder, is constructing nine office condos in Breakaway Park, located midway between Brushy Creek Road and FM 1431 off Parmer Lane.
The offices have many green features, can be purchased by unit or by building and are set in what Speciale intends to keep as a park-like atmosphere.
He envisions the condos as havens for small-business owners, perhaps especially for those whose spouses are sick of having work clutter dominating their living space, as was once the case in Speciale’s own home.
He and his real estate agent, Chrissy Caputo, are confident about the project, despite the national market disarray.
“What he’s building hits that market of what’s affordable for small businesses, and there’s neighborhoods nearby. People want to live near where they work, especially now,” Caputo said.
Who’s up, who’s down
Bill Pohl, president of brokerage house Pohl, Brown and Associates, said small retailers in the Austin area are doing just fine. The big boxes, however, are about to be hit hard. On Nov. 3, Circuit City released a list of stores across the nation it plans to close, including the one in 1890 Ranch. Pohl anticipates Cedar Park will see more of its national retailers close.
“It doesn’t have anything to do with the expertise or the economics of [the developer] or Cedar Park,” Pohl said. “We have excellent economics here. However, you can’t help it when banks are national and retailers are national and they’re getting clobbered. Look at your little finger. It’s healthy. But what happens when your body dies? It’s not going to live.”
What’s available
Capital Market Research provides real estate and land development research and analysis. Company president Charles Heimsath has more than 20 years in the business, but he cannot say how many months of supply are in the Leander and Cedar Park commercial real estate market.
“I characterize Leander and Cedar Park as an emerging office market,” Heimsath said. “If you look at the Arboretum, it has 15 years of history, so you can tell how long the square footage lasts, but you can’t do that for Leander and Cedar Park.”
However, he did declare that the area is experiencing a tenant’s market.
“This is a really good time for people to lease space and expand their businesses, and a good time for people to lock in their rate and get good tenant allowances,” Heimsath said. “That activity will also help us to recover from the current slowdown in the economy. When occupancy costs — the second-highest expenditure in a company’s budget aside from payroll — are low, it helps things move along.”
Office availability is also a positive thing from a city’s point of view.
“If you’re the city of Leander or Cedar Park, you are actively in the business of soliciting new businesses and you have 300,000 sq. ft. of vacant, available, new office space at attractive prices, that’s great news. Particularly in an area that doesn’t have a large group of office employers,” he said.
Of course, the owners of empty buildings are not experiencing the cash flow they wanted to generate. But as long as owners keep buildings and grounds properly maintained and do not allow them to go into foreclosure, empty offices do not have a detrimental effect on the community as a whole.
“If the property is foreclosed on, the successor owner is not going to spend a penny on the property while they are figuring out what to do with it,” he said. “I don’t see that happening, however. All the companies who have built space in the area are well managed.”
Breakaway Office Park
Builder Mike Speciale is working on nine office condo buildings in Breakaway Office Park.
Unique aspects of the project include Speciale’s focus on green components.
He chose structurally insulated panels to lower the future condo owner’s energy costs and is pre-wiring the buildings to accept solar power. Large windows, CaesarStone countertops and a choice of concrete or bamboo floors are some of the other environmentally friendly features.
The office condos are for sale by building or by unit, and the preconstruction price of $185 per square foot includes full finish out. More information is available at www.breakawayofficepark.com and www.specialehomes.com.
Crystal Falls Plaza brings Starbucks to Leander
Crystal Falls Plaza, anchored by Starbucks Coffee Company, is under construction at 1705 US 183, just south of the Lowe’s-anchored Gateway at Leander at the intersection of Crystal Falls Parkway and US 183.
The land was formerly occupied by a barbershop owned by City of Leander Councilman John Perez.
The main building consists of four suites, three of which are already leased. Starbucks Coffee will fill 1,753 sq. ft. on the far south corner. Next to the coffee shop, 1,200 sq. ft. is available for lease. Cricket Wireless, a cell phone and service provider, has 1,200 sq. ft., and Southern’s Pizza & Sports Pub will occupy 1,834 sq. ft. on the far north corner.
Aside from inline space, a 28,990 sq. ft. pad site with drive-through potential is also available for lease.
The property is represented by Janice Landers, managing partner of Strategic Commercial Real Estate Services.
Landers said she anticipates the shopping center to open its doors in January.
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