Park Central (Austin, Texas)

Company resurrects stalled office buildings

$44M project set near Parmer
Company resurrects stalled office buildings
Austin Business Journal - December 1, 2006
by A.J. Mistretta

ABJ Staff

Another dormant office development is coming back to life amidst the
vigorous local real estate market.

Koontz McCombs Austin plans to break ground in the first quarter of 2007 on
the first phase of its $44 million Park Central office project at the
southwest corner of I-35 and Parmer Lane.

The San Antonio-based real estate company will build nearly 230,000 square
feet of office space in two separate phases. The plan calls for two
three-story, tilt-wall buildings -- each comprising about 114,000 square
feet of rentable space. Floor plates will be about 38,000 square feet.

Koontz McCombs originally purchased the 20-acre tract in October 2000 and
had planned to begin work on the project later that year. But the company
shelved the plans when the office market weakened, opting to wait until
conditions improved.

Now, the company is eager to take advantage of not just the strengthening
office landscape, but other amenities that are making the intersection of
Parmer and I-35 attractive, says Rick Potter, vice president of development
for Koontz McCombs Austin.

Potter says burgeoning retail at and near the intersection and a new Tech
Ridge Boulevard extension over I-35 have factored into the company's
decision to pull the trigger on Park Central. The development is also just
across the highway from Dell Inc.'s campus at Tech Ridge and near the new
Samsung Austin Semiconductor plant.

"We feel like [I-35 and Parmer] is an emerging area for office in Austin,"
he says.

The North Central office market, while not one of the strongest in town, is
showing significant improvement.

Vacancy among Class A properties dropped nearly 3 percent in the third
quarter to 7.7 percent, according to a market report by Colliers Oxford
Commercial. Average rents among the top properties in the submarket climbed
$1.22 to $18.70 a square foot.

Other new office projects in the works nearby include the
375,000-square-foot Pavilions at Tech Ridge being developed by Gainesville,
Fla.-based Quentin Corp. on the northeast corner of Parmer and I-35, and the
95,000-square-foot office park that's part of San Diego-based St. Croix
Capital Corp.'s mixed-use Lakes @ TechRidge development at Howard Lane and
I-35.

The 20 acres Koontz McCombs is developing is part of a 47-acre tract that
The Palladium Group Inc. of Irving began developing in the late 1990s. Two
small lakes, roads and a jogging trail were added to the site. A Marriott
Residence Inn and a

Springhill Suites were developed on the tract before investment group Austin
Developers Inc. purchased the balance of the property in 2004.

A number of other projects are currently in the works on the tract,
including:
    ?      A 111-room Hilton Garden Inn
    ?      A 30,000-square-foot 24 Hour Fitness health club
    ?      And a new 20,000-square-foot, $3.5 million Central Texas
headquarters for the Boy Scouts of America

Austin-based McFarland Architecture designed the Koontz McCombs project and
Kimley-Horn & Associates Inc. handled the engineering. Koontz McCombs
Construction, an arm of the real estate company, is the general contractor.

Koontz McCombs has tapped Ronny Landry with Landry Commercial Inc. to handle
the marketing of Park Central. Potter says the project has already garnered
interest among a handful of large users in the last month, but no deals have
been inked.

Fred Higgins, investment specialist with NAI Commercial Industrial
Properties Co., is representing Austin Developers Inc. on transactions at
the Park Central tract.

Higgins says the intersection of Parmer and I-35 has exploded with
commercial activity in the last couple of years. Parmer, which extends from
State Highway 130 to RR 620, has become a primary east-west corridor. Now,
Austin's ever-expanding growth is making areas like this one, once
considered remote, practically centrally located, he says.

Higgins says Austin Developers Inc. has about 4.6 acres left at Park Central
that can be developed.

amistretta@bizjournals.com | (512) 494-2519