Prime downtown Austin hospital site poised for redevelopment


It will be up to developers to shape the future of the six blocks where University Medical Center Brackenridge sits into what could become one of downtown Austin’s largest mixed-use projects.

The 14.3-acre site at 15th and Red River streets is owned by the board of Central Health, the Travis County entity charged with providing health care to low-income and uninsured residents. Central Health is expected to approve a master development plan Wednesday night created by Gensler, an architectural and design firm.

“The Central Health site is the largest (nonstate-owned) site for redevelopment left in downtown,” said Charles Heimsath, a local real estate consultant. “Given the extraordinary strength of the downtown market, it should attract numerous offers from nationally known mixed-use developers.”

David Armbrust, an Austin real estate lawyer, said the site is “one of the last — if not the last — large tracts of contiguous land poised for redevelopment in the central business district. We may need to wait another generation or two to see something similar.”

The ­development could have as much as 3.7 million square feet of space, and buildings as tall as 35 to 40 stories. Proposed uses include a hotel, housing, restaurants, shops and a medical office building.

“It certainly has the potential of being the largest mixed-use project ever, in terms of both size and value, in downtown Austin,” said Perry Lorenz, a downtown landowner and developer.

Todd Runkle, principal and managing director of Gensler’s Austin office, said the development “will truly be a transformational project.”

“Central Health has received a tremendous amount of interest from the local and national real estate and financial investment community,” Runkle said.

The potential uses outlined in Gensler’s plan aren’t surprising based on discussions last year about redeveloping the site.

Central Health says the suggestions in the plan are flexible and fluid “to take advantage of unforeseen opportunities” and “address unforeseen challenges.” The plan will take shape over the next 15 to 20 years just south of a new medical school, research building and teaching hospital that will replace the publicly owned UMC Brackenridge. The new hospital is to open in 2017 and will be owned by the Seton Healthcare Family, which operates UMC Brackenridge for Central Health on a long-term lease.

That lease brings in about $32 million a year, which goes to Central Health. A key reason for redeveloping the Brackenridge campus is to bring in revenue to offset that loss. The plan, as proposed, should accomplish that, said Sarah Malm, senior director of strategy and business development at Central Health.

Another goal is to incorporate feedback from the community, obtained from a series of forums, Malm said. Ideas for the site included offering behavioral health services, building low-income housing, delivering social services to homeless people and providing job training for poor residents. Differences emerged between those who want the project to focus on services and those who favor businesses that would return revenue.

Central Health officials said the proposal includes both, though the plan’s focus is weighted heavily to revenue-producing ideas. Specific services and businesses won’t be determined until Central Health asks developers to respond to a request for proposals, which will go out in the next six months, Malm said.

Malm said the master plan is “about laying the framework for the potential redevelopment process.”

The plan proposes razing buildings on the property in phases. The last to go would be the hospital parking garage, which would serve new medical facilities across the street and is expected to continue providing about $9 million a year in revenue to Central Health. The final build-out of the site is expected between 2030 and 2035, Malm said.

“This is a milestone in a really long process,” Malm said. “This is not the end.”

The plan calls for setting aside one block for a medical office building. But health concerns are contemplated elsewhere in the plan.

Central Health would retain ownership of the land and lease space to businesses and others. Property tax revenue would come from such ventures as a hotel, should one end up on the site, Malm said. Central Health would put the revenues it receives back into its programs and health care services, she said.

To date, Central Health has spent almost all of the $1.5 million the board allocated on developing a master plan, Malm said.

The Travis Central Appraisal District values the land alone at $42.8 million, not counting the buildings, which include two parking garages, a medical office building and education center.

Central Health’s upcoming request for proposals will provide a rare opportunity for developers, real estate experts say.

Downtown has seen a surge of new development since 2000. One of the largest redevelopment projects to date is taking place in the Seaholm district on downtown’s southwestern side, where former industrial sites are being transformed into housing, shops, offices, restaurants, a hotel and a new central library.

The Seaholm projects attracted interest from both local and national developers.

With the Brackenridge site, “its proximity to the University of Texas, the Waller Creek corridor, I-35, the central business district, the new medical school, and on and on, will make it very interesting to large, well-funded developers,” Lorenz said. “Its ultimate value will depend on zoning, height restrictions and entitlements, all of which boils down to allowable density.”

Dewitt Peart, president and CEO of the Downtown Austin Alliance, said the site’s location, which isn’t in a height-restricted Capitol view corridor, gives it “a significant competitive advantage.”



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