A California real estate firm is buying an abandoned, half-built apartment complex in Northwest Austin and plans to transform the decaying site into a future phase for its nearby 300-acre mixed-used project.
The move is the latest in a string of new developments at Parmer Innovation Center, a sprawling project packed with Fortune 500 companies that could eventually become yet another hub for retail, housing and office in North Austin.Karlin Real Estate wants to incorporate the 28-acre apartment property at 12600 McAllen Pass, called the IO at Tech Ridge,into Parmer Innovation Center across the street, potentially for restaurants and multifamily housing, said Matthew Schwab, managing director with Karlin.
Trammell Crow Co. is the master developer and CBRE Group Inc. handles leasing for Parmer Innovation Center, where General Motors, Home Depot, Natera Inc., Allegran and Blue Apron operates. 3M Corp. plans to move in next year.
Although Parmer Innovation Center looks like a small business park now, Schwab said Karlin wants to build out the property, which is roughly the same size as The Domain.
Karlin will pay $10.85 million as the winning bidder on the IO at Tech Ridge property in a bankruptcy court auction held earlier this month, beating out six bidders, according to federal court documents and attorney Eric Taube with Waller Landsden Dortch & Davis LLP. Taube represents the apartment owners, IO at Tech Ridge LP, who reportedly abandoned the project two years ago and filed for Chapter 7 bankruptcy last December. Taube said construction stalled while litigation in state court proceeded.
Schwab said the deal will likely take another month to close.
In the meantime, Karlin expects construction to be complete in August on a four-story, 116,000-square-foot spec-office space in Parmer Innovation Center. Mark Emerick and John Barksdale of CBRE said they have several prospective tenants for the building, called Parmer 3.4.
Across the private road in Parmer Innovation Center, contractors are building 3M’s future Austin campus. The maker of Scotch tape and other office supplies will start moving 500 employees to the new location from Riverplace Boulevard starting in April 2019, said 3M spokeswoman Lori Anderson.
3M sold the Riverplace campus to World Class Capital in a deal that closed in February. About 125 employees will remain at 3M's separate manufacturing facility on Research Boulevard.
3M will lease about 300,000 square feet across two buildings at Parmer Innovation Center, Anderson said. However, the company is negotiating with Karlin on another 40,000 or so square feet at the 7.2 building, Emerick said.
"Innovation" is in the business park’s name for a reason — the developers want it to be an enclave for research and tech labs backed by Fortune 500 companies and other high-growth private entities. For instance, Home Depot is a tenant but doesn't sell anything from there. Instead, hundreds of tech employees work on digital innovations.
Not another boring business park
Builders don't want this to be another boring business park. Renderings of a manmade pond surrounded by restaurants, breweries and runners look more like what you might find if Jester King Brewery in Drippings Spring somehow merged with Mueller's neighborhood pond.
Located about 10 minutes east of Austin’s second downtown — The Domain — and about 15 minutes north of downtown Austin, Emerick said the team eventually wants Parmer Innovation Center to draw Domain residents on weekends to enjoy a beer, watch a concert or hang out by the 11-acre pond.
“The pond experience more than anything is the Austin, authentic, granola" element, Emerick said.
While it could be as big as The Domain if fully developed, don’t expect this to be “the next Domain.”
“We love The Domain ...but that is a very different world than what we want to create,” Emerick said.
For now, the asking rents at Parmer Innovation Center are about $20 cheaper per square foot than The Domain — which is already considerably cheaper than downtown office rates, Emerick said.
The park will grow gradually in phases to meet market demand, and it can be expanded without disrupting current occupants. Already Trammell Crow and Karlin are permitting for the 4.1 and 4.2 buildings and could complete construction as early as August 2019.
“Ideally we land more Fortune 500s that are in Austin and want to expand or that are coming into Austin... [but] we'll do anything that makes sense as the financials are solid,” Barksdale said.
Emerick said the developers have had several inquiries for hotels but they’re waiting for the right fit.
The Austin project will serve as a model for six other mixed-used business parks Karlin is building in Sacramento, the U.K. and Raleigh, North Carolina.
Each will bear “Pamer Innovation” in its title as a nod to Austin, Schwab said.
“Austin is an anchor for what we’re looking to build globally,” Schwab added. “Our whole basis behind creating Parmer Austin and Parmer Innovation Centers was the whole idea was to create an incredible experience for employees through providing highly improved and highly amenitized campuses.”