Office project planned for Southwest Austin


Construction is poised to start in Southwest Austin on the first significant office project to break ground in that part of the region since the recession.

Officials with HPI Real Estate Services & Investments said work is scheduled to start Jan. 1 on a 250,000-square foot office building in its San Clemente development at Capital of Texas Highway (Loop 360) and Westlake Drive.

The project already has a lead tenant on board, HPI said. Austin-based Spiceworks has signed a long-term lease for 96,000 square feet — nearly 40 percent of the 5-story building.

The development will be built at a cost of more than $70 million, with May 2015 the targeted opening, said Sam Houston, office division partner for HPI, formerly Hill Partners.

The lease is a continuation of HPI’s long-term relationship with Spiceworks, an online social networking firm akin to a LinkedIn or Facebook for the $3.5 trillion IT industry that is on an aggressive growth trajectory.

In the early days of the 7-year-old startup, Spiceworks CEO Scott Abel said the company “crammed our first seven employees into a 300-square-foot loft at Hill Partners’ office” at San Clemente.

“When we looked at all our options, this was a no-brainer,” said Abel said, noting that the location is less than 3 miles from Spiceworks’ current 56,000-square-foot offices at Ladera Bend and offers plenty of room for growth. “The fact that it will be a brand new building and we’re the anchor tenant was just icing on the cake for us.”

Spiceworks has 235 employees, more than 200 of whom are based in Austin, Abel said. Next year, it expects to grow its headcount by almost 30 percent, to about 300 employees, he said.

“Hiring will be fairly even across our sales, marketing and development groups. By our move-in date of May 2015, we’ll probably see Spiceworks with 325 to 350 employees,” Abel said.

The firm’s online network is used by more than 4 million IT professionals and more than 2,700 technology companies, including Dell Inc., Samsung, IBM, HP and Microsoft. Users can connect with one another, talk shop, and research the tech products and services needed to do their jobs.. More than 2,000 new IT professional join Spiceworks every day as the firm continues to grow its user base and technology brands, Abel said.

The building Spiceworks will occupy will join six others in the San Clemente office-and-retail development, which is slated for eight buildings totaling 825,000 square feet once completed.    Tenants include local tech firms VM Ware and Bazaar Voice, and the foundations for the Michael Dell and Mort Topfer families.

The new building comes at a time when Central Texas is experiencing a healthy office market, with occupancies and rents rising due to the region’s ongoing job creation and population growth. A number of new office buildings are under construction, both downtown and suburban areas.

Houston said the office market in the Southwest Austin area “has made tremendous strides” in the past four years, and now has the highest occupancy of all the Austin area’s submarkets.

“In January of 2010 the Southwest market was 80 percent occupied and today it stands at 91 percent,” Houston said. That equals roughly 900,000 of (net new space leased) and we are very encouraged by the strong recovery we have seen in the Southwest over the last several years.”

Ford Alexander, a partner and co-founder with Oxford Commercial in Austin, said only two options exist currently for tenants looking for 100,000 square feet of space.

“In this (real estate) cycle, we are seeing larger tenants seeking larger blocks of space than we have experienced in previous cycles,” Alexander said. “We believe this trend will continue as technology companies from California desire to exit the state of ‘red tape and taxes.’ The developers like HPI who build speculative buildings first will reap the benefits of their risk taking.”


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