Construction is due to start soon on a third building at Rollingwood Center, an office complex in Rollingwood near downtown Austin.
Bryce Miller, managing principal with Austin-based Endeavor Real Estate Group, said Endeavor plans to break ground in the first quarter of 2018 on the five-story building, which will have 121,541 square feet of space and a four-story parking garage.
When completed in 15 to 18 months, it will join two existing buildings Endeavor developed totaling 215,000 square feet of space, both of which are fully leased.
The new building will have high-end finishes throughout all of the public spaces, including limestone floors and walls and floor-to-ceiling windows. Endeavor is not disclosing the cost of the project.
With demand strong in Austin’s office market, Endeavor will start the third building without any tenants signed up yet.
“The southwest submarket remains highly desirable,” said Jeff Graves, research director in Austin with Cushman & Wakefield, a commercial real estate services firm.
Office vacancy rates in the Southwest part of Austin have risen slightly over the last 12 months as some new projects have opened, Graves said. Still, rents have continued to rise and occupancy levels remain healthy, he noted.
The occupancy rate for the highest quality (Class A) office space in the southwest market area was 87.3 percent in the third quarter, dipping from 88.3 percent in the year-ago quarter, according to Cushman & Wakefield, which tracks the numbers.
Rents for Class A space rose to $37.25 per square foot per year, up from $36.78 a foot in the year-ago quarter, Cushman & Wakefield reports.
Austin-based HPI Real Estate Services & Investments, a commercial real estate firm, puts the southwest market’s occupancy rate somewhat higher. Sam Houston, HPI’s office division partner said it has stayed around 90 percent to 92 percent all year.
Houston said that while the southwest market remains healthy as a whole, those office developments that are located closer to downtown, like Rollingwood Center, Barton Oaks and Barton Skyway, “have performed the best” due a larger number of medium to small downtown firms that are seeking rent relief in nearby areas from downtown’s pricier rates.
Graves said several office projects are under construction in the southwest sector “that show faith in the area.” They include Walsh Tarlton Overlook and Davenport 360, two projects that will bring an additional 90,000 square feet of office space to market.
In addition, Starwood Capital’s recent purchase of several large Southwest office properties from Brandywine Realty Trust “shows that outside investors are bullish on the southwest submarket and Austin in general,” Graves said.