Plans for the next big phase of development at The Domain are taking shape. It could result in even more high-rises towering over busy shops and eateries.
In our latest Crane Watch update, we noted that Atlanta-based Cousins Properties Inc. wants to add yet another office tower to its expansive portfolio in the North Austin mixed-use hub.
Now, we have more details about that tower, known as Domain Central 1, although there is some uncertainty with regard to its construction timeline. It appears this will be the start of a a wider district by Cousins called Domain Central.
Domain Central 1 will stand 26 stories tall, with three levels of underground parking, 13 levels of above-ground parking and 13 office levels. The tower will cost $143 million to build, according to a filing with the Texas Department of Licensing and Regulation, although it should be noted that such estimates can change.
The building will have 456,000 rentable square feet, Cousins Properties Senior Vice President and Managing Director Tim Hendricks said. The tower will have 10,200 square feet of retail space, a 12,000-square-foot amenity floor with fitness, locker and conference rooms and each office floor will have its own 2,000-square-foot terrace.
At that height and square footage, Domain Central 1 would be the tallest and largest building at The Domain.
Cousins (NYSE: CUZ) told investors in a June presentation that the development site is a parking lot at 3008 Esperanza Crossing, next to the Domain 4 office building. That is a little east of the Rock Rose entertainment district of popular bars and eateries.
The TDLR filing gave an estimated construction start date of Nov. 1, with work wrapping up in June 2025. Kendall/Heaton Associates Inc. was listed as the design firm.
But on a July 29 earnings call, Cousins Properties President and CEO Colin Connolly indicated construction of Domain Central might not begin this year, citing rising development costs as a barrier. While demand for new developments remains high, material and construction costs have compressed yields.
“I think over time we need to see costs come down or rents go up for us to financially justify moving forward,” Connolly said. “I’m actually optimistic that’s going to happen, and faster than many believe.”
Domain Central 1 represents the “first phase” of “a transformational development opportunity in the heart of The Domain,” Connolly said in a previous earnings call in April. Domain Central comprises 5.6 acres in the heart of the mixed-use community, all owned by Cousins, according to the investor presentation.
“There is nothing else like it in Austin,” Connolly said.
Directly west of Domain Central 1, Cousins plans to eventually redevelop the Domain 3 and 4 office buildings. Cousins told investors the low-rise office buildings could be redeveloped into two million square feet of new space, which would mean tall towers.
The first two phases of construction for Domain Central have the ability to develop roughly 1 million square feet in three different buildings, Hendricks said. That space includes office and multifamily development.
Examining the Cousins portfolio
Cousins Properties already has a huge footprint in The Domain, often referred to as the city’s second downtown. It owns Domain 2, 3, 4, 7, 8, 10, 11 and 12, as well as Domain Point 1 and 2, according to an investor presentation. Cousins, which has long been a major player in Austin real estate, acquired TIER REIT in 2019, enlarging its holdings even further.
Cousins is also developing Domain 9, a 338,000-square-foot tower that is already 97% leased by Amazon. The building is expected to cost $147 million to develop, according to the developer’s second quarter earnings release. Construction began in the second quarter of 2021 and Cousins has spent about $89.2 million building it thus far.
At the far northern end of The Domain, where Duval Road meets MoPac Expressway, Cousins has plans to eventually develop two more buildings called Domain Point 3 and 4.
Connolly said that while Cousins is committed do developing premier office space, it has developed mixed-use projects in the past and will do so again in the future. In addition to the Domain Central project, Cousins has land in Dallas and Atlanta that can accommodate both office and residential construction.
In Austin, 52% of Cousins’ properties are in The Domain. Elsewhere, it owns The Terrace in South Austin; San Jacinto Center, 300 Colorado, One Eleven Congress and Colorado Tower downtown; and Research Park Plaza V in North Austin.
In total, Cousins has 4.6 million total square feet of space in Austin that is 93.8% leased, according to the earnings release. The only market where Cousins owns more square footage is its hometown, Atlanta.
In the six months that ended June 30, Cousins brought in $117.7 million in rental revenue from its Austin office spaces, according to the company’s quarterly report. That was about one third of the $365 million Cousins collected across all of its markets.
Additionally, across the first half of the year, Cousins spent $172 million on property acquisition, development and tenant asset expenditures. At this time last year, Cousins had spent only $116 million.
The 2022 AFIRE international investor survey found that Austin was the No. 1 city globally for planned investments, with Atlanta ranking No. 2.
The Article is from Austin Business Journal, copyright belongs to owner
