Aspen plots Northwest office space

Aspen, dually based in Austin and San Diego, will add to the 173,000 square feet of space in two existing buildings at the Tower of the Hills complex near the southeast corner of U.S. Hwy. 183 and RR 620. With the new space, which is planned to be built in phases over the next five to seven years, the development will eventually total 1.6 million square feet.

Aspen did not disclose how much they plan to spend on the 47-acre project. The first phase, slated to break ground in the first quarter of 2007, calls for a 297,000-square-foot, four-story office building and 800-car parking garage. Phase two calls for another six-story building totaling about 300,000 square feet. Two subsequent buildings are to follow in later phases. Ponds, fountains and open spaces are also part of the plan.

Aspen purchased the Tower of the Hills and the land around it, which includes a former Target store, in 2004. The company has since invested in upgrades to the existing office buildings, taking occupancy from 20 percent to 96 percent.

Aspen Founder and CEO John Tworoger calls Tower of the Hills "one of the most exciting opportunities we've undertaken in our 30-year development history. When the company purchased this property three years ago, we envisioned incredible potential. After spending considerable time studying the market and getting to know the site's surroundings, we've concluded that now is the right time to begin moving forward with a new product."

Tworoger says location plays heavily into Aspen's confidence in the project. Not only is the site inside the booming Northwest submarket, it's also on a prominent corner near SH 45 and U.S. Hwy. 183, both of which are undergoing significant improvements.

The Northwest sector absorbed about 150,000 square feet of office space in the first half of 2006, bringing occupancy to 88 percent, according to a midyear market report produced by NAI Commercial Industrial Properties Co. Class-A rents in the submarket averaged about $22.82, up $1.31 since the end of 2005.

Max Moss, vice president in the Austin office of Trammell Crow Co., says the explosive growth occurring in Williamson County and northern Travis County is helping fuel continued expansion in the Northwest office market.

"We have seen 15 percent to 20 percent rental rate growth in the past 12 months, and I expect similar growth to continue there in the coming year," he says.

Moss says that as phases of the Aspen project come online in coming years, the space should be absorbed reasonably quickly.

"I see the office market continuing to move northwest, much like the Arboretum Plaza project 20 years ago," he says. "It's just a matter of time because the growth is undeniable."

This is Aspen's second recent office project announcement. In June, the company revealed plans to add 100,000 square feet of space to another office property in Northwest Austin, Prominent Pointe on North Capital of Texas Highway. That endeavor, also scheduled to break ground early next year, will bring Prominent Pointe to 250,000 square feet.

"The Austin office market is moving, and moving fast, which is somewhat of an anomaly when compared with other markets," Tworoger says. "This isn't surprising, given the tremendous job Austin has done diversifying its economy and fostering entrepreneurs. It's why we've committed so many resources here and plan to stay."

Since reentering Austin in 2004, Aspen has purchased 2.4 million square feet in the area, comprised mostly of Class-A office space, making it one of the largest local landlords. The company is also very active in the San Diego market, where it's currently developing more than 2 million square feet of space.