According to James Montgomery, Austin managing partner at DLA Piper, the firm is relocating to 401 Congress Ave. from 1221 S. Mopac Expwy. to take advantage of the greater convenience and amenities of a location in the heart of Downtown, a few blocks from the Texas State Capitol. "We're attracted to the vibrancy of Downtown Austin, with its growing number of great restaurants and retail outlets and its access to Lady Bird Lake and residential properties," he says. "Our firm is looking forward to being in one of Austin's premier Downtown addresses."
The lease is the building's largest one since Thomas acquired the 560,674-sf structure in June 2007. The Los Angeles-based company purchased the property and nine smaller office buildings in Austin from Blackstone Real Estate Advisors of New York City for $1.15 billion, reportedly the largest commercial real estate deal in Texas history.
The Frost building and 11-story, 1,400-space parking garage was the largest asset in the portfolio and the most prominent. Built in 2003, the distinctively designed structure has become a major feature of the city skyline.
Thomas now owns interests in and manages about 2.5 million sf of office space in Downtown Austin. It also owns interests in and manages nearly another one million sf in the city's growing northwest submarket.
The deal comes at a time of growing vacancies in the local market. According to Oxford Commercial, a locally based real estate services firm, the class A vacancy rate is about 18% for the city as a whole compared to less than 12% at this time last year. However, Andy Smith, Thomas Properties' local managing director of leasing, says the current Downtown vacancy rate of 12% is the lowest it has been since 2001. He reports the Frost building is about 90% leased.
"DLA Piper is a world class firm and we are very pleased with its selection of Frost Bank Tower as its new home in Austin," Thomas Properties chairman and CEO James Thomas says in a press release. "We are very proud of the performance of our portfolio in Austin and we continue to be committed to this market."
Britt Reed and Ty Puckett in Transwestern's Austin office represented the tenant in the transaction with the owner using its in-house team to work out the terms. The rent was not released, but a search of several leasing sites shows other class A office space in Downtown Austin is $24 per sf to $36 per sf. The city's class A average is about $30 per sf, according to Oxford Commercial.
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