Aspen plans River Place expansion

Austin Business Journal - October 13, 2006

by A.J. Mistretta

ABJ Staff

Aspen Properties Inc. is continuing to beef up its local development portfolio, this time with a sizable addition to a Northwest Austin office park.

The company plans to build 179,600 square feet of office and retail space -- plus a hotel -- at its River Place Corporate Park at the intersection of FM 2222 and River Place Boulevard in Northwest Austin. The new development will go up on 23 acres the company bought adjacent to the existing park, bringing the total to about 70 acres.

Included in the plan are two speculative Class A office buildings totaling 132,000 square feet, a 36,000-square-foot medical office building and about 11,600 square feet of retail. Aspen also wants to build a 100-room hotel on the site. It is in talks with an unnamed hotel operator.

Aspen declined to say how much it's investing in the development, but sources say given current construction costs, it's at least a $40 million project.

The company plans to break ground in February. Construction should take about 12 months. The office components are being built on a speculative basis, and negotiations are in the works with a full-service restaurant and bank for the retail space.

The new development joins about 588,000 square feet of existing office space spread among seven buildings.

Aspen purchased River Place from Financial Industries Corp. in May 2005 for $103 million. Tenants in the park include FIC Insurance, Polycom Inc., Motorola Inc. and AT&T.

"This 23-acre addition to River Place Corporate Park will serve as the gateway to the entire project," says John Tworoger, founder and chief executive officer of Aspen. He says the components of the plan were determined based on the needs of the surrounding market.

Demand for office space in the Northwest Austin submarket continues to grow, making it one of the strongest areas in town. Rents for Class A product rose to $22.40 during the third quarter, up from $20.83 at midyear, according to the most recent market report from Colliers Oxford Commercial. Meanwhile, vacancies fell to 11.7 percent, down from 14.9 percent in the previous period.

Joe Duncan, owner of Austin-based Duncan Commercial LLC, says Aspen's timing for the project is just right.