2 condo high-rises included in downtown

post office redevelopment

Downtown residential building boom continues, but

some begin to wonder about a glut.

By Shonda Novak
AMERICAN-STATESMAN STAFF
Tuesday, February 06, 2007

More high-rise living is planned for downtown.

Two mixed-use towers with more than 900 condominiums are scheduled to be built, including a 35-story complex that will provide a new home for the downtown post office.

The projects come amid a residential building boom downtown. And although some people have raised concerns about potential overbuilding, developers say demand continues to outpace supply.

Atlanta-based Novare Group Holdings and its Austin-based partner, Andrews Urban LLC, plan to break ground on the first high-rise this fall. It will have about 400 condominiums in a tower at Sixth and Nueces streets connected to a new two-story postal facility at Fifth and San Antonio streets. The post office will have about 25,000 square feet, with about 13,000 on the ground floor.

The post office would open in 2008. The residential tower, which would include ground-floor retail space, would open in the fall of 2009. The site is now a parking lot adjacent to Miller Blueprint Co.

           
The downtown post office, which occupies prime property, will be moved to Fifth and San Antonio streets and expanded to about 25,000 square feet. It is scheduled to open in 2008

After the post office moves into the new building, the developers plan to start construction on a second high-rise at the former postal site across San Antonio Street. It would be a tower with about 40 stories and more than 500 condos. It would have more than 100 hotel rooms and and more than 25,000 square feet of ground-floor retail space. That tower is expected to open in the fall of 2010.

The new high-rises, along with a 44-story condo tower that Novare/Andrews Urban is building, would make the company downtown's largest residential developer.

The two post office-related projects combined are expected to add about $300 million to the city's tax base. Retail customers in both projects will be charged for parking. Developers have not decided whether there will be public parking as well.

The new post office site will include a seven-story parking garage, with one level of shared parking for post office and retail customers, and the rest for the condo residents. Post office parking would be free.

The U.S. Postal Service chose Novare/Andrews Urban in August through a competition to redevelop its downtown site at Fifth and Guadalupe streets. Mayor Will Wynn and many local developers have long said the site is underused, with a 1 1/2-story post office occupying 76,000 square feet of a prime downtown block.

"I'm really pleased that Novare Group and Andrews Urban are delivering on the vision of a far more vibrant and urban environment in this part of downtown," Wynn said in a statement.

Mike Wolfe of the U.S. Postal Service said the government is pleased with the initial designs.

The post office and 35-story condo tower will occupy three-quarters of a city block that Novare/Andrews Urban bought in December. The site originally was to have an office tower that Intel Corp. planned as the second phase of a chip-design facility it started but left unfinished during the tech bust of 2001.

Both new towers will need city zoning variances for higher-density projects. The developers plan to incorporate city guidelines for wider streets, with tree-lined sidewalks, benches and bicycle racks.

The condo units in both towers are expected to be priced comparably to Novare/Andrew Urban's other project, called 360, being built at Third and Nueces. That tower, with 430 condominiums, is scheduled to open in May 2008. Prices are expected to range from $190,000 to $550,000, with unit sizes from 785 to 1,638 square feet. Sizes in the new towers are expected to be similar.

With at least 16 residential projects being built or planned downtown, developers say demand is especially keen for buildings with more moderately priced units. And Novare/Andrews Urban says it will provide them.

Taylor Andrews, president of Andrews Urban, declined to say how many people are on 360's list of prospective buyers but said demand has "far exceeded expectations."

But developers of another downtown residential high-rise, who planned to keep prices at levels similar to Novare's, are finding out how challenging that is.

The historically high cost of land downtown and sharply rising costs of construction materials and labor are pushing up prices at the 41-story Spring condominium tower, set for groundbreaking soon at Third and Bowie streets.

Spring's developers, Robert Barnstone, Diana Zuniga and Perry Lorenz, had hoped to price units from $200,000 to $400,000. Now, those prices have jumped to about $235,000 for a one-bedroom condo with about 600 square feet and to the mid-$450,000s for a two-bedroom unit with about 1,100 square feet, Barnstone said.

The developers have added some larger three-bedroom penthouse units, which initially will be priced in the mid-$700,000s, he said.

Barnstone says plumbing, electrical and other subcontractors are in short supply in Austin. So, the contractor is having to recruit electricians from Florida. Also, the building's extensive windows are costing twice as much as originally budgeted, he said.

Houston-based Metrostudy, which tracks the housing market, said developers started 728 downtown condo units in 2006.

Three condo high-rises — the 360, Spring and the Shore condominiums — are under construction downtown.

"This will be a telling year in the downtown condo market as those three projects begin to convert their unit reservations into actual contracts to purchase," said Eldon Rude, director of the Austin office of Metrostudy.

Local real estate consultant Charles Heimsath said demand for residential units downtown "is very strong, and many people will be interested in purchasing units at the Novare projects due to their lower prices and central location near office towers and the Warehouse District."

Barnstone said he isn't worried about a downtown condo glut. Spring's marketing center, which opened in mid-December, is taking, on average, two reservations a day for its 240-unit project and has about 780 potential buyers interested in reserving a unit, he said.

"While some may think we are building too much too soon, I suggest the opposite is true," Barnstone said. "We are in the first inning of a very exciting ballgame. When the reality of Austin's new downtown takes shape, people that never thought they would want to live downtown will reconsider. In fact, I predict that downtown development will be the new engine of growth for Austin."