Austin-based Parsley Energy, a fast-growing oil and natural gas company, has signed a lease to occupy all of the office space in a 31-story high-rise planned for downtown Austin.
The building’s developers said that Parsley Energy has signed a 12-year lease for 302,000 square feet of space in the proposed tower. Named 300 Colorado after its address, the building is estimated to cost about $175 million to construct, according to the developers.
Founded in 2008, Parsley is a publicly traded company that operates hundreds of oil and natural gas wells in the Permian Basin in West Texas. The company employs more than 450 people. Parsley officials declined Monday to comment on future hiring projections.
The building would have a total of 309,000 square feet of space, with the other 7,000 square feet to be leased by Del Frisco’s Restaurant Group for its Grille restaurant concept. Del Frisco’s is the parent of Sullivan’s Steakhouse, which has operated at 300 Colorado since 1996 but will shut down on Tuesday.
The new office tower is being developed by Atlanta-based Cousins Properties and Austin-based developers Riverside Resources and Ironwood Real Estate. Plans call for it to be 420 feet tall and have 18 floors of office space atop 13 levels of above-ground parking, said Tim Hendricks, senior vice president for Cousins Properties in Austin.
Cousins and its partners anticipate starting construction on the new office building in December, with the tower due to be completed in December 2020. Cousins will have a 50 percent stake in the venture.
Ironwood acquired the site in 2006, and initially announced plans for a residential high-rise with Riverside Resources, before changing course to partner with Cousins to develop 300 Colorado.
The new building will be directly across from Colorado Tower, another office tower Cousins developed where Parsley Energy currently occupies 135,000 square feet of space. Parsley will continue to occupy that space, in addition to its future new space, Cousins officials said.
“Cousins has developed some of the premier office properties in Austin and this (new) building will be no exception,” Bryan Sheffield, Parsley’s chairman and chief executive officer, said in a written statement. “In addition to the quality of their properties, Cousins has demonstrated a commitment to meeting our business needs and helping facilitate our rapid growth.”
With substantial acreage in the Midland and Southern Delaware basins within the Permian Basin, Parsley is ranked among the nation’s top exploration and production companies, and Sheffield is reported by Forbes magazine to be one of the youngest billionaires in the energy industry.
Cousins began its relationship with Parsley Energy in 2014, when Parsley Energy moved its headquarters from Midland to Colorado Tower in Austin.
In addition to Colorado Tower, Parsley leases 50,000 square feet of space in an office tower at Third Street and Congress Avenue downtown.
Parsley follows several other companies in Austin, including Google, Indeed, HomeAway and Facebook, that have leased entire buildings either before they broke ground or while still under construction.
Parsley’s newly signed deal is one of downtown Austin largest ever office leases, according to research from Cushman & Wakefield, a commercial real estate services firm that tracks the local office market.
“We are pleased to see another successful company thriving in Austin, especially an expanding headquarters in our downtown corridor,” said Gary Farmer, chairman of Opportunity Austin, an economic development initiative led by the Greater Austin Chamber of Commerce. “Companies like oil and gas leader Parsley Energy further diversify our economy and enhance our region’s attractiveness in offering a deep workforce that is educated and centered around innovation.”
Diana Holford, senior vice president in Austin with commercial real estate services firm JLL, said downtown Austin “continues to be the location of choice for employers.”
“Demand is so great, new construction tends to be leased before the building is five feet above the ground,” Holford said. And with demand for space exceeding the supply, she said, “rental rates continue to escalate.”
At 300 Colorado, Del Frisco’s signed a 10-year lease and plans to open a Del Frisco’s Grille, an upscale concept featuring modern American cuisine, said Bill Martens, chief development officer for Del Frisco’s.
Martens said Del Frisco’s will be scouting sites to potentially open a Sullivan’s Steakhouse elsewhere in the Austin market, although he added that there is “nothing definitive at this point.”
Commenting on the planned 300 Colorado project, Don Reese, co-founder of Riverside Resources, said: “We certainly intend to build an enduring office tower that will make all those parties and Austin proud.”
Largest downtown Austin office leases
Google — 303,836 square feet, 500 W. 2nd
Parsley Energy — 302,000 square feet in planned 300 Colorado office tower.
Facebook — Third & Shoal, 231,506 square feet
Whole Foods — 525 N. Lamar 134,365 square feet
Athena Health — Seaholm, 112,298 square feet
Parsley Energy — Colorado Tower, 100,000 square feet
RetailMeNot — 301 Congress, 95,537 square feet
CirrusLogic — Shoal Creek Walk, 84,872 square feet