Quote:
Originally Posted by KevinFromTexas
If they were wanting to have balconies that required the setbacks, I really don't get why they didn't just slim up the tower (making it taller) and put it on the west side of the block and have a podium on the east side of the block with a rooftop deck. That would also protect the view for residents of the Brown Building.
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Probably because that is a logical and aesthetically superior choice, and this is a development by a public institution. They are mutually exclusive.
All kidding aside, at $133.1M for 342,200 square feet, that building is costing $389 per square foot. That is a little high. Traditional, aka non-governmental developers spend between $250 and $300 per square foot to build a mid-rise or high-rise office building including the land and soft costs. That number is inching up with materials and labor getting more expensive, but UT is closing in on $400 a foot for a 19 story building. However, the higher cost for UT may be because they are including the demolition of the existing structures in their all-in number. I'm not privy to that info so I can't say why the number is high. It is interesting, however, that any time a government or institution decides to build a building, the cost is always so much higher than what it would cost for the private sector to build.
The problem with going taller is that the higher you go, the more expensive the building becomes to construct. UT added 4 floors to their design and the cost to build it increased by $30M. If you are a developer who is planning on selling their building in the future, you have to consider your exit and look at sales prices. Highrise office buildings in Austin sell for $300 to $400 per square foot. That number has gone up and down over the past 10-15 years with the economy, but the average has not topped $400. If you put that much into the building, you won't make your money back unless you hold the property for a long time and collect the FFO. It's also hard to get financing if the cost of the building exceeds average sales prices for similar product.
It's one of the reasons you see really tall condos more often than office buildings. Condos sell individually and at a higher price per square foot than an office building. Developers can invest more money in condos because they make more money on the exit. You just have to be careful to time it with the economy and the housing market. You don't want to be caught in a down-cycle with a $450+ per square foot construction project full of unsold condos.