"Based on Park 22's purchase price, we knew we could aggressively market the property," says Tom Stacy, the firm's president. "Park 22 will be able to offer some of the most competitive leasing opportunities for Class A space in the Austin market."
Stacy declined to disclose the price his firm and partner Chicago-based Walton Street Capital paid the Park 22 RIG LP for the buildings, which are about 35% occupied. He does say that they can be aggressive on rents, perhaps more so than other building owners in the northwest submarket, and still make money on the project. The property's assessed market value was $19.65 million, according to the Travis Central Appraisal District.
The aggressive marketing includes free rent, strong tenant improvement allowances and quick decisions on deals, Stacy tells GlobeSt.com. The best deals, he says, will go to those who sign deals before the buildings fill up.
Stacy & Associates also plans to spend about $1 million on improvements such as painting the parking garage and making mechanical upgrades.
Park 22, built in the past three years, is just west of the intersection of Capital of Texas Highway and RR 2222 and in the corridor to which high-tech companies flocked in recent years.
The vacancy rate for Class A space in the northwest submarket is 29.7%, up from 17% a year ago. Class A rents have dropped to an average of $23.08 per sf from $27.79 last year.
Stacy says his firm is used to working in such an environment. It started in 1993 and 1994 in the CBD, when that submarket had the highest vacancy rates in the country, he says. "We know what it takes to get deals done," he says.
Digital Motorworks, a current Park 22 tenant, has doubled its space to 50,000 sf, according to Stacy. Two other companies have taken a total of 10,000 sf and Prudential Life Insurance is considering taking space in the complex. Other tenants include VisionWeb and Digital Precision.
Stacy & Associates' CBD portfolio includes Austin Centre, 823 Congress, the Littlefield and Scarbrough buildings, both built in 1910.
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