Two Austin developers are proposing a $500 million mixed-use project downtown that — if it happens — would change the skyline with three new towers, including a high-rise with condominiums and hotel rooms that could become Austin’s tallest building.
Mac Pike and Wally Scott, principals in the Sutton Co., a real estate investment and development company, told the American-Statesman they want to build their project — tentatively called Waller Center — on 3 acres near East Cesar Chavez and Red River streets, along the banks of Waller Creek.
In addition to residential, hotel and office uses, the developers envision shops and restaurants along Waller Creek like those lining San Antonio’s Riverwalk.
The project would be the most significant to date for Sutton, which ushered in a new wave of housing in downtown Austin in the late 1990s when it converted older buildings into lofts and later co-developed the Plaza Lofts across from Republic Square.
Several local real estate experts said they think Sutton’s proposed project stands a chance of happening, with the odds improved due to a major equity player on board — Klabzuba Realty, a longtime family owned real estate and oil and gas investment company based in Fort Worth.
Pike and Scott said conceptual drawings of the project they released to the American-Statesman are in the early stages, and said the heights and uses of the buildings could change based on market demand and other variables.
In addition to a condo/hotel tower that could be as tall as 65 stories — the Austonian residential tower at Congress Avenue and Second Streets is currently Austin’s tallest building at 56 stories —Sutton envisions an apartment tower of 35 to 45 stories and an office/retail tower of 17 to 20 stories. Pike said there are no height limitations on the tract, which is zoned for dense downtown development, and said it is not restricted by rules that protect Capitol views.
Pike said he hopes to start work on all three buildings in mid- to late-2014, pending city approvals. He said intends to submit a site plan to the city in the next 90 days.
The Waller Creek tract is owned or controlled by entities of local developer Perry Lorenz.
“These are serious buyers with an ongoing substantial financial investment in the property,” Lorenz said. “They control it and are working on all aspects of use and design. Obviously it is a real challenge to put together a project of this magnitude, but we feel they are up to it or we wouldn’t be working with them.”
While Pike estimated the project’s cost at $500 million, Paul Nauschutz Jr., acquisitions manager for Klabzuba, declined to disclose how much Klabzuba would contribute to the project. He did confirm that Klabzuba would be a major equity partner in the project.
Charles Heimsath, a local real estate consultant, said that Sutton’s plans to break apart the land uses into separate towers “will make it much easier to get the project financed, which of course is the major challenge for any large project.
“Every project begins with a vision, and this is a grand vision on a great site,” Heimsath said in an e-mail interview. “With a substantial equity partner in the deal, I think this project has a good potential to get over the finish line.”
Dani Tristan, a commercial estate agent with McAllister & Associates, said the project — if completed — would be significant for downtown.
“I don’t think a project of that size has ever been built in downtown Austin at one time. It is ambitious to build three towers at once,” Tristan said.
Sutton is proposing its project for a part of town that continues to undergo transformation. A new nightlife scene and new residential buildings have emerged in recent years in the Rainey Street area, with a 23-story tower currently underway. A 50-story Fairmont hotel is planned near Sutton’s site, and major changes are in store for Waller Creek, with a flood-diversion tunnel being built that will help open up banks along the neglected creek to new development.
The latest project is even more ambitious than one Sutton announced last year on a nearby site in the Rainey Street area. There, they proposed building two mixed-use towers, each rising as high as 50 stories. However, that project will not go forward, as the 2 acre site was sold in December to an subsidiary of the Houston-based Dinerstein Companies, according to Travis County deed records. Dinerstein is a large real estate development company that builds apartments and student housing projects across the country. Dinerstein officials were not available for comment about their plans for the site.
Pike said the sale of the Rainey Street site in part enabled the Sutton Co. to pursue the proposed Waller Creek project.