A Dallas investment company has entered the local real estate market with the purchase of a three-building industrial portfolio in North Austin.
Westmount Realty Capital LLC bought Braker Center 6, 7 and 11, three flex buildings in the Braker Center business park at the intersection of Metric Boulevard and Braker Lane. Together, the one-story buildings total about 217,500 square feet. The seller was ITW Mortgage Investments III Inc., which owned the properties since 1997.
A purchase price was not disclosed, but Westmount officials say the transaction was for more than $10 million. GMH Capital Partners of Newtown Square, Penn., represented the seller.
The three buildings have a combined occupancy of about 33 percent – up 10 percent following two recently signed leases for 20,800 square feet of space. The total amount of available space among the buildings is about 148,000 square feet.
“This is Main and Main in this submarket,” says Cliff Booth, president of Westmount. Booth says the Braker Center location is easily accessible from various parts of town and in a submarket that’s outperforming others. “There is a lot of other well-leased flex space in neighboring properties, and there’s no reason this property should be so vacant.”
Booth says Westmount plans to spend several million dollars making improvements to the property, from subdividing large blocks in order to accommodate smaller users to enhancing the landscaping. “We’re going to be very proactive in our approach to leasing these properties,” he says.
Booth says he expects the buildings will be about 85 percent leased in a year.
The North Austin flex market absorbed about 443,695 square feet of space in the first half of 2006, more than any other submarket, according to a midyear report from TIG Real Estate Services. That led to a decline in vacancy over the six-month period, from 40 percent to 28 percent.
David Alsmeyer, principal with TIG Real Estate Services, which is handling the leasing and management of the three buildings just purchased, says the local flex market is still recovering from the tech bust of 2000. Tech companies occupied a great deal of local flex space prior to the bust, he says, including a significant portion of Braker Center 6, 7 and 11.
“Westmount’s timing is good, as we’re seeing increased interest in flex space and now our sixth straight quarter of positive absorption,” he says.
Rising rents in the office market are a big part of what’s steering tenant interest in flex space, Alsmeyer says. Tenants that have some component not conducive to traditional office space, such as a need for a showroom or visible storefront, are increasingly turning to the flex market as office rents hover around $20 a foot.
The Trammell Crow Co. began developing the 32-acre Braker Center site in the early 1980s. Braker Center 6 and 11, with 39,825 square feet and 66,666 square feet, respectively, were finished in 1982. The 111,013-square-foot Braker Center 7 came online in 1983.
Andy Thomas, project partner and industrial specialist with Hill Partners Inc. says Class A space in Braker Center is almost all leased, while Class B is about 80 percent occupied. Hill Partners developed the 450,000 square foot Braker Center Phase III and 500,000 square foot Phase IV in the mid to late 1990s.
Thomas says the older Class B buildings like Braker 6, 7 and 11 face some infrastructure obstacles. But, he says, with no space left for new buildings, owners have an opportunity to capture tenants that want to be in the strong North submarket.
Booth says Westmount will continue to look for investment buys in the Austin area.
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