Tenantless office project files for bankruptcy

[priller]

This is the brand new office complex at 183 and 620.


http://www.statesman.com/business/co...7bankrupt.html


ASPEN PROPERTIES

Tenantless office project files for bankruptcy
By Shonda Novak
AUSTIN AMERICAN-STATESMAN

Tuesday, April 07, 2009

The partnership that owns a new office building in far Northwest Austin has filed for bankruptcy, the latest evidence of trouble in the region's largest office sector...

The owners, Park at Aspen Lake II LP, said the Chapter 11 filing would give the project "an opportunity to reorganize and rebound in a stronger financial market."

"This reorganization will allow PAAL II sufficient time to complete the current leasing program, service all obligations, and maintain this property past the current economic downturn," said Brenda Tworoger, chief executive of Aspen Properties, which developed the project...

Aspen's other Austin-area properties "are stabilized and healthy with a 90 percent cumulative occupancy level," Tworoger's statement said.

The Aspen Lake building was the first component of what was planned to be a large mixed-use development on 38 acres. The site has approvals for 1.3 million square feet of additional development.

The partnership owes $235,464.82 in school property taxes, including penalties and interest, said Forrest Child, collector for the Round Rock school district, in which the property lies.

The partnership also owes just over $168,000 in property taxes to Williamson County for the 2008 tax year, said Deborah Hunt, Williamson County's tax assessor-collector.

Tax liens are the highest priority lien in any bankruptcy, meaning those claims are paid first, Hunt said.

The filing says the partnership has both assets and liabilities of between $10 million and $50 million.

[more]......

[priller]

More interesting info:

More than half of the empty top-quality office space in the Austin region is in the far Northwest area, according to Oxford Commercial, which tracks the office market.

Overall, 21.3 percent of the 12.2 million square feet of office space in far Northwest Austin is empty. That compares with an 11.8 percent vacancy rate downtown, the region's strongest office market.

[Scottolini]

This makes the area ripe for many relocations. Lots of space available, competitive pricing, and good highway access will probably make this area rebound quickly.

[KevinFromTexas]

So I guess those twin 15-story ~200 foot buildings are a no then.

[Jdawgboy]

Maybe these developers will actually look at the numbers and relize that they need to quit building low density office parks around the edge of the city and actually build in downtown where the demand is strongest.

[NormalgeNyus]

its the same reason why people move to the suburbs. you get more space for a cheaper price, the traffic is better, and your closer to your employees

[KevinFromTexas]

^I think you missed something. As the article states, the office vacancies in the suburbs are the highest in the region, but not because that area is more desirable. If that were true then the office vacancy rates should be very low. They are not. They're 10 percent higher than they are in downtown. And traffic is not better in the suburbs. When I hear someone complain about traffic in the central city and downtown, my mind goes straight to them complaining about not being able to find a parking space. That's not traffic congestion by the way. Traffic congestion and gas prices are what have led to high vacancy rates in the suburbs. Another cause is that smaller businesses have been hurting during this bad economy more so than the larger companies have. Small businesses tend to have their offices in smaller office buildings since most rental rates of suburban office buildings are lower than those in downtown, plus they don't need as much space. So there are some key reasons why suburban office vacancy rates have been higher than those in downtown. There have also been some new office projects in the suburbs (inside of Austin) while there have been few in downtown in the last few years.

[bluedogok]

Much of the suburban vacancy is due to new buildings recently completed and there has not been much new downtown built (or uses changed) for office since Frost was built. We have a bunch of suburban developers in this market who have no desire or the requisite experience to do urban development. Up until the recent economic situation it has also been easier to do suburban development when it comes to financing. The focus downtown has been residential which was needed but I also feel there needs to be more focus on making downtown complete, more of everything and not just one market segment.

[Scottolini]

There are tens of millions of square feet of office space downtown. Thousands and thousands of hotel rooms. And in a few years there will be several hundred apartments, along with several hundred condominiums. People act as though because the last few years there has been mostly residential under construction in downtown, that that is all there is. Even this decade we have had several major office buildings, and several major hotels constructed. And don't forget that Block 21 is a hotel first and foremost, and that's u/c today.

[bluedogok]

Most of what you are talking about is existing space. I know people who had looked for office space downtown (when the market was still up) and it was not as easy to find in contiguous chunks in the CBD as it was in suburban areas. There were so many suburban buildings coming online at the time and many more planned (some that I worked on) that are on hold or have been stopped. There hasn't been a major project of lease space in the CDB since the Frost Tower, most of what is available is smaller chunks. The new Capstar building that is going up is going to be mostly owner occupied for all of their various companies.

We do facility management for some of the property managers and are the firm of record for some buildings. Large corporate tenants are going to have a hard time locating in the CBD if the property is not available, they will locate in the burbs because that is where the abundance of large available space is, and it is cheaper for them. That does not help downtown as much as some more large office space would. I commute from South Austin to The Domain everyday, I wish my commute was cut in half and we were located downtown like some of the consultants that we work with. If/when I start my own firm I will more than likely choose downtown, but it would be easier for me because I wouldn't need a large space and there are a bunch of smaller suites available and that is part of the problem, pockets of small suites in between existing tenants.

I think when things start to move back towards development there needs to be more focus on getting more office built in downtown rather then on the fringes, but it goes back to the chicken-egg thing, the developers here would rather do suburban development and there is a glut of it at the moment.

Austin Business Journal - Austin office market moves into positive territory in Q3
Friday, October 3, 2008
by A.J. Mistretta Online editor

After a sluggish start this year, activity appears to be picking up in the Austin office market just as newly-delivered projects push the area’s total inventory of space over the 40 million-square-foot mark.

Tenants absorbed about 156,000 square feet of local office space during the third quarter, according to the latest report from brokerage firm Oxford Commercial. That’s the first positive quarterly absorption of 2008 following two quarters of space being put back on the market. Combining that early negative absorption and the latest gains, the market has actually absorbed about 27,000 square feet this year—a positive considering the significant amount of new space being added to the market at a time of economic uncertainty.

Vic Russo, senior vice president at Oxford, says that given the economic uncertainty that’s affecting companies at all levels, few businesses are plotting major expansions at the moment. But some, like gaming companies, are being forced to add space to accommodate new hires.

Meanwhile the total amount of available sublease space fell to 570,000 square feet during the third quarter. Some of that may be attributable to companies taking back space they put up for sublease, but Oxford broker Ryan Kasten says he’s organized a number of sublease deals recently for tenants looking to take advantage of the shorter terms and flexibility that come with a sublease.

During the third quarter, developers delivered about 800,000 square feet of new space, nearly all of it in the active Far Northwest submarket. That additional product pushed the overall vacancy rate up from just over 16 percent in the second quarter to 17.6 percent. Russo says because of the significant amount of newly finished product and the positive absorption, he’s not overly concerned about the vacancy rate increase.

Meanwhile, the new properties pushed the inventory in the regional market, which has hovered in the 30 million-square-foot bracket for years—above 40 million square feet, propelling Austin into a new league of office markets. And developers aren’t done yet. There’s still another 1.4 million square feet under construction, most of which will be delivered by the end of the year, says Russo.

“Having a number of large blocks of space increases our ability to capture corporate relocations once the economy picks back up,” says Russo. “We’ll be well-positioned and able to immediately accommodate that 100,000-square-foot user.”

Russo says many of the new leases in the CBD this year have come from tenants choosing to relocate from suburban submarkets. He says they’re drawn by the growing urban residential options and downtown’s general renaissance.

Russo adds that new downtown buildings, like the under-construction Hartland Plaza that’s already fully pre-leased and Museum Tower scheduled to break ground in 2009, are likely to come online at the right time as the market is on the upswing.

Even with the tentative improvements, rental rates continue to rise. In the CBD, rents rose an average $1.04 a square foot to $32.33.

[KevinFromTexas]

http://www.bizjournals.com/austin/ne...athe-life.html

New buyer may breathe life into desolate Aspen Lake

Austin Business Journal - by Christopher Calnan, Staff writer
Date: Wednesday, March 30, 2011, 12:34pm CDT

A high-profile, vacant Austin office building that was foreclosed upon in 2009 has been bought by a Houston-based company.

Crimson Real Estate Fund LP and partner USAA Real Estate Co. have acquired from Wells Fargo Bank the Aspen Lake office building in far Northwest Austin. The deal comes two years to the month after Park At Aspen Lake II LP, the owner of the Class A, 205,000-square-foot building, filed for Chapter 11 bankruptcy protection with at least $10 million of debt.

Aspen Lake is a four-story office building near the intersection of U.S. Highway 183 and State Highway 45. It’s vacant — and always has been — and the daunting task of leasing one of the area’s largest contiguous blocks of open office space now belongs to Aquila Commercial LLC.