Riverside Buys Austin Office Asset
Conversion to residential is a possibility for the property.
Private equity investor Riverside has acquired Lavaca Plaza, an 11-story building with 122,042-square-foot of office space in Austin, Texas, for an unspecified price. Unico Properties sold the asset.
JLL represented Unico in the sale.
Originally completed in 1981, the property features 476 parking spaces on the first through seventh floors and a parking ratio of 3.9 per 1,000 square feet, giving it one of the highest parking ratios in downtown Austin.
The top four stories are office space with a variety of suite sizes. The property has a vacancy rate of 46.2 percent, Yardi Matrix shows.
READ ALSO: Office Discounts Create Conversion Opportunities
Unico Properties bought the property for $61.4 million in 2015, according to Yardi Matrix.
Lavaca Plaza includes an on-site café, conference rooms, showers and a bike locker. The asset is LEED Gold certified and has a Walk Score of 99, with access to Austin’s 2nd Street District, 6th Street Entertainment District and Lady Bird Lake.
The JLL Capital Markets Investment Sales Advisory team representing the seller included Managing Directors Ryan Stevens and Drew Fuller. Lavaca Plaza presents an “exceptional redevelopment opportunity,” Stevens said in a statement, though the buyer has not revealed any plans to do so.
Conversion a possibility
The sale comes at a time of soft fundamentals for the Austin office market. Metro Austin’s office vacancy rate stood at 24.5 percent in July, according to a Yardi Matrix report, down 270 basis points from a year ago, but still elevated. Its rate is the third-highest nationally, behind only San Francisco (26 percent) and Seattle (24.9 percent).
Even so, investors are still interested in the market. As of July, Austin’s office investment volume reached $1.4 billion year-to-date, putting it seventh nationally.
One possible reason for investor interest is the possibility of conversion, which is beckoning investors to markets around the country. Office-to-residential conversion activity has picked up nationwide as developers find deals that offset costs associated with such projects. Last year, there were 11.8 million square feet of conversions underway or delivered, a higher number than any prior year.
Conversion in Austin and other Texas cities stand to be impacted by the recent enactment of Senate Bill 840, passed by the state legislature to increase housing stock. The law, which took effect September 1, allows more market-rate housing to be built on most property zoned commercial and applies to most properties that allow for office, commercial, retail, warehouse or mixed-use space.
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