Austin Makes Deal to Buy $26 Million Office Building

A potential office buy could signal the start of a slow-motion shakeup in Austin’s civic real estate strategy.

The city is looking to purchase a 207,000-square-foot office building along Interstate 35 for $26.2 million, a move that could trigger a broader shift in its downtown real estate footprint, including the potential redevelopment of the city-owned One Texas Center.

The proposed acquisition of the eight-story building at 3300 North I-35 is up for vote at a City Council meeting next Thursday, the Austin Business Journal reported, citing public records. The price would be $127 per square foot.

If approved, the building would allow the city to relocate employees currently working out of One Texas Center at 505 Barton Springs Road, property long seen as ripe for repurposing or sale.

The University Park building off I-35 is owned by Houston-based Lionstone Investments. Lionstone’s parent company, Ameriprise Financial, shuttered the real estate investment subsidiary in November.

No timeline or redevelopment strategy yet in place, a city spokesperson told the outlet. The I-35 building is 75 percent leased, and tenants, including WeWork and the Central Texas Regional Mobility Authority, would be allowed to remain through the end of their lease terms.

City departments operating out of One Texas Center include the Human Resources Department, Watershed Protection, Transportation & Public Works and several others. The city has not disclosed how many workers would move.

The plan comes as Austin reassesses its long-term office space needs in light of changing workplace policies.

In November, the city expanded its remote work policy to allow up to 60 percent telework per week. It also shifted remote work decisions to the discretion of department heads. Officials said they are “in a transition phase” and expect office consolidation to occur gradually.

“Teleworking will play a key role in shaping future space requirements,” a city spokesperson told The Real Deal in February. “Rather than maintaining office space to accommodate 100 percent of employees at all times, departments can strategically plan for a reduced in-person workforce potentially.”

The city of Houston ended its hybrid-telework program and called all employees back to the office effective Feb. 1. The city, however, has planned no changes to its office footprint as a result, a spokesperson said in February.

— Judah Duke