Real estate company is reportedly under contract to acquire trophy tower
One of Austin’s newest trophy towers is under contract to be purchased, according to sources familiar with the situation. If the deal is completed, it would the largest office transaction in Austin since the start of the pandemic.
Multiple sources said Newport Beach, California-based Kilroy Realty Corp. (NYSE: KRC) is in final talks to purchase Indeed Tower at 200 W. Sixth St. The sparkling new 36-story glass tower is about a block from Congress Avenue and many of the bars that make up Austin’s famed Sixth Street.
The deal would have Kilroy Realty paying $1,050 per square foot, according to a source. The price includes commissions and unpaid tenant improvements. With 709,000 square feet under Indeed Tower’s new roof, that would equate to a roughly $744.5 million price tag.
The sale of Indeed Tower, if consummated, would be the second high-rise deal in the past few weeks. Car Properties Inc., an East Coast company, acquired 100 Congress in May.
CBRE Inc.’s Austin office handles leasing for Indeed Tower. Troy Holme, Casey Ford and Katie Ekstrom are on the CBRE brokerage team for the high-rise at 200 W. Sixth St. Holme said he could not comment on any possible deals involving Indeed Tower.
Indeed Tower would be the largest office transaction in recent history in Austin, a city that has fared better economically than almost anywhere else during the pandemic. The decline of 1.5% in the number of nonfarm payroll jobs in the metro between February 2020 and April 2021 was smaller than every other major U.S. metro except Salt Lake City, according to a Greater Austin Chamber of Commerce analysis.
“This would undoubtedly be the most sizable sale of the pandemic or post-pandemic period,” NAI Partners Managing Director Ryan Bohls said.
Sam Tenebaum, CoStar Group’s director of analytics, said in an email Indeed Tower is also the third largest contiguous office building in Austin, after the old 3M campus off River Place Boulevard and a building on Dell’s campus.
“So it’ll certainly register as the largest sale in recent history,” he said.
Colliers International pointed out that Tech 3443, a mixed-use development at the former Motorola campus in East Austin, sold in October for $45 million as part of bankruptcy proceedings. According to CoStar Group, Tech 3443 could yield more than 4 million square feet of space. The development could include two 40-story towers at 3443 Ed Bluestein Blvd.
Indeed Tower, located at the corner of Sixth and Lavaca streets, was completed in March but sits largely empty due to pandemic circumstances. The high-rise’s general contractor was California-based DPR Construction. Page Southerland Page served as architect. Construction financing was provided by JPMorgan Chase and Wells Fargo. Principal Real Estate Investors was the equity partner.
Vinson & Elkins earlier this year committed to more than 50,000 square feet at Indeed Tower.
The anchor tenant is job-search company Indeed Inc. Other tenants include Heritage Title and Brown Advisory. They are expected to move in soon.
According to the tower’s website, floors 16, 21-24 and 26 are still available to lease. They all have 33,000-square-foot floor plates, equating to 198,000 square feet of open space being advertised — or roughly 28% of the total square footage.
The Teacher Retirement System of Texas had committed to a 100,000-square-foot lease at Indeed Tower, but the public pension fund’s trustees backtracked last year.
Kilroy’s roster of properties includes Kilroy Airport Center near Los Angeles International Airport; One Paseo, a mixed-use property in San Diego; Terra Bella, a 114,175-square-foot office building in Silicon Valley; and Skyline Tower, a 416,755-square-foot office building in metro Seattle.
Kilroy completed the sale of The Exchange on 16th in San Francisco’s Mission Bay neighborhood on March 30, the real estate company stated. According to the San Francisco Chronicle, the 750,000-square-foot complex was purchased by private equity firm KKR for $1.08 billion, or $1,440 per square foot.
The square footage price was a record, according to The Real Deal. And the total sale price was the second-highest for a commercial property in San Francisco history, trailing only the Boston Properties purchase of the Embarcadero Center in 1998 for $1.2 billion, The Real Deal added.
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