AUSTIN | Whitley | 196 FT | 16 FLOORS | COMPLETE

[MightyYoda]

Originally Posted by AusTxDevelopment

Hard to answer your price point question because every project is different, but it is more expensive to build in Austin that most comparable cities. Below are just a few of the costs issues with building in Austin that the average person doesn't realize.


1. Land. There is just not very much unencumbered commercially developable land left downtown, and what is available is selling for an average of $250 per square foot right now. An acre has 43,560 square feet, so that's $10.9M for just the land. However most buildable downtown lots are a half-acre or smaller. High cost + small land sites = taller buildings, by the way. Land along Congress or near the convention center is even more expensive. Suburban land in Austin is selling for less than a tenth of that, depending on location.


2. Labor. Austin has a small blue-collar workforce in comparison to other cities. Labor here is much more expensive. If you are building a highrise you need commercial plumbing contractors, electrical contractors, etc. In Austin, there are maybe 10 commercial electrical contractors competing for business. In Dallas, there are 60+ competing for business. If there is a lot of development going on the labor costs go even higher because there are not enough local contractors to handle the workload and developers start bringing in contractors from other cities.


3. Red Tape. City and County buracracy runs up development costs. Austin has some of the most convoluted and time-consuming permitting, inspection and surveying processes of any city in the US. What takes days or weeks to do in another city can take months or even years to accomplish in Austin. If you are waiting for months (sometimes years) to get your site development permit or zoning change approved, you are incurring carrying costs on your land (taxes, maintenance, etc.) and your loan (interest) that increase your development costs. As you are constructing your building, you have to have city inspections from time to time to move forward. For example, when you put in your electrical, you can't close up the wall until you get the city inspector to approve it. If the city takes 6 to 8 weeks to get out and inspect your electrical, that means your sheet-rockers can't close up the wall and have to move on to another job while you wait for approval, incuring more carrying costs, plus construction delays. All of this adds to your bottom line.


According to Austin Investor Interests' First Quarter 2013 report (they are quoted in the Business Journal article), average apartment rent in Austin is $1.12 per square foot and occupancy is 95.1%. If you look at just downtown, the average rent is $2.34 per square foot and occupancy is 94.4%. That's averaged over all classes of apartments - old and new. In general, if you are building a new apartment building downtown, you are going to need to get $2 per square foot or more to make any profit.

So it sounds like the only thing that can be fixed in the short term is 3 and 1 to an extent with projects like South Shore. I believe building out is the best way to drive prices down, but some of the prices like the Whitley have gotten out of control for the size of our city. I think downtown will hit a wall "soon" with prices that high, but hopefully areas like South Lamar and East Riverside and the Triangle area can continue to densify and be alternatives to those who can't afford $3/sq ft.

[jtown,man]

Originally Posted by AusTxDevelopment

Hard to answer your price point question because every project is different, but it is more expensive to build in Austin that most comparable cities. Below are just a few of the costs issues with building in Austin that the average person doesn't realize.


1. Land. There is just not very much unencumbered commercially developable land left downtown, and what is available is selling for an average of $250 per square foot right now. An acre has 43,560 square feet, so that's $10.9M for just the land. However most buildable downtown lots are a half-acre or smaller. High cost + small land sites = taller buildings, by the way. Land along Congress or near the convention center is even more expensive. Suburban land in Austin is selling for less than a tenth of that, depending on location.


2. Labor. Austin has a small blue-collar workforce in comparison to other cities. Labor here is much more expensive. If you are building a highrise you need commercial plumbing contractors, electrical contractors, etc. In Austin, there are maybe 10 commercial electrical contractors competing for business. In Dallas, there are 60+ competing for business. If there is a lot of development going on the labor costs go even higher because there are not enough local contractors to handle the workload and developers start bringing in contractors from other cities.


3. Red Tape. City and County buracracy runs up development costs. Austin has some of the most convoluted and time-consuming permitting, inspection and surveying processes of any city in the US. What takes days or weeks to do in another city can take months or even years to accomplish in Austin. If you are waiting for months (sometimes years) to get your site development permit or zoning change approved, you are incurring carrying costs on your land (taxes, maintenance, etc.) and your loan (interest) that increase your development costs. As you are constructing your building, you have to have city inspections from time to time to move forward. For example, when you put in your electrical, you can't close up the wall until you get the city inspector to approve it. If the city takes 6 to 8 weeks to get out and inspect your electrical, that means your sheet-rockers can't close up the wall and have to move on to another job while you wait for approval, incuring more carrying costs, plus construction delays. All of this adds to your bottom line.


According to Austin Investor Interests' First Quarter 2013 report (they are quoted in the Business Journal article), average apartment rent in Austin is $1.12 per square foot and occupancy is 95.1%. If you look at just downtown, the average rent is $2.34 per square foot and occupancy is 94.4%. That's averaged over all classes of apartments - old and new. In general, if you are building a new apartment building downtown, you probably need to get $2 per square foot or more to make any profit.


Edited to add: One thing I forgot to mention that significantly impacts the cost of your apartment building is the type of construction. Low to mid-rise suburban apartment complexes are built out of wood, similar to home construction. High-rise urban apartment buildings have to be built out of concrete and steel, require elevators (very expensive) and secure parking garages. Huge difference in construction costs.

Appreciate the detailed response, it explained a lot.

[Austin_Expert]

Originally Posted by AusTxDevelopment

Hard to answer your price point question because every project is different, but it is more expensive to build in Austin that most comparable cities. Below are just a few of the costs issues with building in Austin that the average person doesn't realize.


1. Land. There is just not very much unencumbered commercially developable land left downtown, and what is available is selling for an average of $250 per square foot right now. An acre has 43,560 square feet, so that's $10.9M for just the land. However most buildable downtown lots are a half-acre or smaller. High cost + small land sites = taller buildings, by the way. Land along Congress or near the convention center is even more expensive. Suburban land in Austin is selling for less than a tenth of that, depending on location.


2. Labor. Austin has a small blue-collar workforce in comparison to other cities. Labor here is much more expensive. If you are building a highrise you need commercial plumbing contractors, electrical contractors, etc. In Austin, there are maybe 10 commercial electrical contractors competing for business. In Dallas, there are 60+ competing for business. If there is a lot of development going on the labor costs go even higher because there are not enough local contractors to handle the workload and developers start bringing in contractors from other cities.


3. Red Tape. City and County buracracy runs up development costs. Austin has some of the most convoluted and time-consuming permitting, inspection and surveying processes of any city in the US. What takes days or weeks to do in another city can take months or even years to accomplish in Austin. If you are waiting for months (sometimes years) to get your site development permit or zoning change approved, you are incurring carrying costs on your land (taxes, maintenance, etc.) and your loan (interest) that increase your development costs. As you are constructing your building, you have to have city inspections from time to time to move forward. For example, when you put in your electrical, you can't close up the wall until you get the city inspector to approve it. If the city takes 6 to 8 weeks to get out and inspect your electrical, that means your sheet-rockers can't close up the wall and have to move on to another job while you wait for approval, incuring more carrying costs, plus construction delays. All of this adds to your bottom line.


According to Austin Investor Interests' First Quarter 2013 report (they are quoted in the Business Journal article), average apartment rent in Austin is $1.12 per square foot and occupancy is 95.1%. If you look at just downtown, the average rent is $2.34 per square foot and occupancy is 94.4%. That's averaged over all classes of apartments - old and new. In general, if you are building a new apartment building downtown, you probably need to get $2 per square foot or more to make any profit.


Edited to add: One thing I forgot to mention that significantly impacts the cost of your apartment building is the type of construction. Low to mid-rise suburban apartment complexes are built out of wood, similar to home construction. High-rise urban apartment buildings have to be built out of concrete and steel, require elevators (very expensive) and secure parking garages. Huge difference in construction costs.

Thanks for the this post. My first thought is, why would the city make it even more expensive to build projects in our city? It seems like a terrible idea, though I'm sure the NIMBYs love it!

[MichaelB]

Originally Posted by AusTxDevelopment

Basically, yes. The Monarch would be slightly less expensive to convert to condos because the most expensive & time consuming part of the conversion is breaking up the single building into individual taxable parcels that can be sold separately. The Monarch may have consolidated all those individual parcels into a single apartment building, but the original divisions can be retrieved and reinstated, provided they didn't drastically alter the construction drawings when they changed over to apartments.

Going through an existing apartment building and deciding how to break it up into parcels is a long, expensive process. It's not just where the walls stop. It includes the plumbing, how the electrical was installed, where the heating/cooling ducts run, etc. Then you have to go through the city to get the parcels entitled, which is a slooow, costly buracratic "adventure." You also have to set up a condo association to maintain the common areas (roof, hallways, elevators, garage, pool, trash collection, etc.) and give them a starter capital fund large enough to cover operation and repairs for at least a year, until they can start collecting HOA fees when the condos begin to sell. And you also have to either upgrade all the finishes and appliances, or pull them out and offer various choices as building standard/upgrades to condo buyers (after you've kicked out all the renters, of course). It's a major undertaking and requires a lot of capital.

Makes sense. Thanks.

[LoneStarMike]

July 5, 2013

Uncle Julio's Mexican Restaurant at The Whitley




this entry from austineater.com said it was supposed to open in July.

[the Genral]

Are they expecting the majority of their business to come from foot traffic? Where would someone like me park my car? This ground level has really nice curb appeal. Makes me want to check out the inside.

[Syndic]

In reality, most of their business will probably come from the hotel across the street. But there's a parking garage by the convention center. Also, some meters you can park at, though not many.

[East7thStreet]

It's also a couple blocks from the light-rail station. Also, parking downtown is still pretty easy to find for me. You just might have to walk 4-5 blocks.

[LoneStarMike]

March 1, 2014 (All from St. David's Episcopal Church garage)

[audiomuse]

I must be color-blind because this building looks like it has gray brick to me.

[lzppjb]

The concrete at the to of JW is gray. This building is not that color. It has more reddish tones in it. I consider it brown, but can appear gray in certain light.

[MightyYoda]

Originally Posted by lzppjb

The concrete at the to of JW is gray. This building is not that color. It has more reddish tones in it. I consider it brown, but can appear gray in certain light.

I think brown is the closest color, but it isn't a deep brown for sure. It is muted enough that some of the pics do make it look grey.