It’s a developer’s dream: Two unrestricted parcels in downtown Austin that could become a blank canvas on which to envision a large mixed-use project near both the Austin Convention Center and a commuter rail stop.
The dream could become a reality if a developer offers owners of the 112-unit Railyard condominiums a price they can’t refuse.
The Railyard was built in 1983 and spans two half city blocks at 201 E. 4th Street and 301 E. 4th Street. It is being put up for sale by the Railyard Condominium Owners Association in response to several unsolicited inquiries from developers.
Commercial real estate services firm CBRE, which has the listing, isn’t giving a ballpark price range for what the property might fetch but expects to see keen interest.
“The opportunity for a large-scale, mixed-use development across two unencumbered half city blocks between Congress Avenue and the Convention Center in downtown Austin will attract significant interest from national and international capital,” said John Barksdale, a senior vice president with CBRE in Austin.
Barksdale said there is a limited supply of available blocks that are unimpeded by Austin’s Capital View Corridor rules, which are designed to preserve views of the Capitol dome.
The Railyard would allow for a maximum development potential of over 1.8 million square feet across the two half blocks, CBRE said, and could include a mix of office, apartment, condominium and hotel uses.
Along with national and international prospects, CBRE will be marketing the property to large corporate office users who could have interest in a significant presence in downtown Austin.
“This is an unparalleled opportunity in the heart of Austin’s central business district,” said Mark Emerick, also a CBRE senior vice president in Austin. “Interest will be far reaching due to the distinctly broad spectrum of development potential, including the ability to deliver an office campus of this magnitude.”
Perry Lorenz, a downtown landowner and developer, said word around the local real estate community is that the Railyard received offers of more than $1,000 a square foot for the land, “which as far as I know sets a record for downtown dirt,” Lorenz said.
Charles Heimsath, an Austin-based real estate consultant, also said he thinks the Railyard will garner a record price.
“I have long wondered when the Railyard owners would realize how valuable their property is for a high-rise development,” Heimsath said. “I am certain… someone will pay a record price for the opportunity to develop these sites. I am encouraged to see more underutilized sites coming to market, as more high density development in the downtown area is needed to meet the strong demand from all segments of the market.”
Michelle Hardy has been a Railyard resident and property owner since 2008. She is also a former member of the homeowners’ association board and served as its president in 2017.
Hardy said that although an official vote of the owners has not yet been taken, “I think the community will sell with the right offer.”
“It would be bittersweet to sell,” Hardy said. “I love the Railyard and downtown living is the best. However, Austin is growing and changing, and we sometimes have to let go of the old to make way for the new.”
Last year, another 1980s-era downtown Austin condo project changed hands when a Dallas developer bought the Villas on Town Lake with plans to build two high-rise apartment towers on the site at 80 Red River Street.
More than 80 percent of the Villas owners — the statutory requirement for a sale to occur — agreed to sell their units at the 2.3-acre property just steps from Lady Bird Lake and the hike-and-bike trail.
Although the ultimate purchase price wasn’t disclosed, another firm, the Sutton Co. in Austin, had the property under contract in 2016 for $50.8 million. At that time, Sutton Co. was offering owners of two-bedroom units about $925,000 to $930,000, while owners of one-bedroom units stood to net just under $500,000.
When the Railyard opened in 1983, it “was a groundbreaking urban residential development and a true harbinger of the demand for downtown living that continues to evolve and grow,” said Charles Cirar, CBRE vice chairman. “The long, successful history of the Railyard as a residential community is a testament to the potential of the site to become an exciting mixed-use development for a new generation of residents and businesses.”