SH 130 retail boom

Austin Business Journal - by Kate Harrington ABJ Staff

Northeast Austin is poised to see more than 3 million square feet of mixed-use development at the intersection of State Highway 130, Parmer Lane and U.S. Highway 290.

The proposals for the relatively barren part of Central Texas reverse the long-held notion that retail must follow rooftops.

Endeavor Real Estate Group LLC has increased its land holdings to include 600 acres northeast and northwest of SH 130, and plans to build a mixed-use project similar, but bigger than, its Southpark Meadows development in South Austin. The project will eventually span more than 2.3 million square feet. The still-unnamed development will include retail, multifamily housing, office space and a hotel, says Andy Pastor, managing principal with Endeavor. Pastor declines to say how much the project will cost or what a timeline looks like for groundbreaking, but says Endeavor is in discussions with potential retail tenants.

Across U.S. 290 from Endeavor's planned project, a New York developer is partnering with Austin's SCC Development Co. LLC to build 1 million square feet of retail -- tantamount to a regional mall such as Barton Creek Square. Eastbourne Investments Ltd. of Williamsville, N.Y., closed on the 124-acre tract in mid-October for an undisclosed amount. Eastbourne and SCC plan to break ground in late 2008 or early 2009 on the development, dubbed Wildhorse Crossing, a $80 million retail project at the southeast intersection of SH 130 and U.S. Highway 290. Johnson Architects of Dallas is the project's architect and Austin's Jones & Carter Inc. is doing the engineering.

Eastbourne is no stranger to the area. In June 2006, the group purchased another 390 acres at the intersection of SH 130 and State Highway 71 for $29 million, with plans to work with Boise, Idaho-based Retail West Properties to build a project called Eastbourne Crossing. That project will include 1.4 million square feet of retail space and up to 1,200 residential units. Eastbourne President Frank Egan says the company also holds approximately 500 acres around the SH 130 corridor for which the company has no immediate plans, but will likely turn into projects similar to Wildhorse Crossing or Eastbourne Crossing.

Egan says Wildhorse Crossing will be a retail-only 'power center' anchored by a big-box store. He declined to say which retailers Eastbourne and SCC are talking to, but says they are in early negotiations with potential tenants.

"We've been very active down in Austin for the last three years and identified it as a growth market," Egan says. "We have sought out opportunities specifically along SH 130 ... [In the] near term, it is a great site and, long-term, it's an even better site. That intersection is very rapidly going to develop into a retail area."

Egan and Kelly Shaw, principal with SCC, say the interest in the SH 130 corridor, especially at key intersections, has picked up noticeably in the last year. While developers are cognizant that rooftops haven't spread to the area yet, Pastor says the confluence of the new toll road, U.S. 290 and Parmer Lane make the area a regional location with huge growth potential for housing and future corporate relocations.

Developers are going farther and farther outside city cores to achieve the type of power centers that appeal to big retailers, says David Simmonds, senior vice president of The Weitzman Group. That need for large sites has set off a reverse trend of rooftops following retail in some cases, he says.

"They're banking that, in the years down the road, [the area] will grow," Simmonds says. "The question is, if you build it, will they come?"

That depends in part on which anchors retail centers like Wildhorse are able to attract, he says. Simmonds says Target and JC Penney are the most sought-after anchors nationally, and if Eastbourne and SCC can sign a well-regarded anchor, the center could be a success.

Travis Waldrop, retail specialist with NAI/Commercial Industrial Properties Co., says there is a risk of overbuilding an area that hasn't yet seen demand.

But he says since developers with large retail projects tend to build out slowly and in phases, as Endeavor has done with Southpark Meadows in Austin, there's also a good chance that Austin's growth will have reached key SH 130 corridor intersections by the time the retail projects are on the ground.

"While the overall picture may look unrealistic to a certain extent, when you put it in the context of 10 to 20 years on the horizon, those things can become more palatable."