Lincoln Property Co. and Kairoi Residential recently broke ground on Waterline, a mixed-use development that, at a planned height of 1,022 feet, will hold the distinction of being the tallest tower in the state of Texas.
The 2.7 million-square-foot project will feature, among other offerings, a whopping 700,000 square feet of premier office space and cost an estimated $520 million to realize, according to the Texas Department of Licensing & Regulation.
Standing 74 stories, Waterline will mark the downtown Austin skyline at 98 Red River St. The striking high-rise will hover above Waller Creek and Lady Bird Lake on a site spanning more than 3 acres and, with the addition of new pedestrian bridges, will act as a new pathway from the central business district to the bustling Rainey Street Historic District.
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Architecture firms Kohn Pedersen Fox and HKS are behind the design of Waterline, which will boast 24,000 square feet of ground-level restaurant and retail offerings just below the 13 floors that will be home to the 251-key 1 Hotel Austin. The top 33 stories of the tower will house a 352-unit upscale residential segment that will have its own dedicated amenities.
Waterline’s office segment will feature Class A offerings spanning 27 floors in the middle of the LEED Gold-certified tower. The office amenities will include a 14th-floor amenity deck with 24,000 square feet of landscaped outdoor space, as well as a bar and lounge, a prep kitchen and indoor meeting spaces. On the second floor, office users will also be able to avail themselves of a state-of-the-art, 7,000-square-foot fitness facility.
“The Austin office market continues to see high demand from both corporate and technology users for best-in-class developments,” Seth Johnston, senior vice president, Lincoln Property Co., told Commercial Property Executive. “This allows companies to create a more connected office experience through heightened amenities, a commitment to sustainability, and access to the best Austin has to offer. Waterline will deliver exactly that, only to be enhanced by the creek side retail and 1 Hotel amenity offerings.
Not too much for Austin’s office market
Dallas-based LPC’s Austin portfolio is in growth mode, adding more and more square footage to the Austin office market. The real estate company has two other joint venture projects under construction, The Republic office tower and the mixed-use Sixth and Guadalupe, which are scheduled for delivery within the next two years.
LPC is hardly alone in its bid to build additional office accommodations in Austin. With demand and pricing on the rise, construction activity continues to go on the upswing, resulting in 8.5 million square feet under development during the second quarter of 2022, according to a report by Avison Young. LPC, however, is undeterred by the competition.
“While the delivery of this project is a few years out, we are confident in the continued growth and demand for mixed-use development projects in Austin,” Johnston said. “When Waterline delivers in 2026, the office, for-rent luxury residential homes, and 1 Hotel partnership will provide a best-in-class experience for the users of this project that will allow them to work, live and stay in a premier location that represents the best of what Austin has to offer.”
There’s statistical evidence that demand in the Austin office sector may very well remain strong enough to absorb the large amount of space that Waterline will deliver four years from now. As noted in the Avison Young report, Austin leads all U.S. markets in office employment growth, having added nearly 75,000 jobs, marking a 23 percent increase between February 2020 and April 2022. Additionally, in support of Johnston’s earlier comment, the report found that large tech users continue to evaluate the Austin market, with high-tech job postings having increased 35 percent from March 2020 to June 2022.
The investment and lending communities apparently see value in the market as well. Canada’s Public Sector Pension Investment Board is the main equity partner for Waterline. And Blackstone Mortgage Trust Inc. supplied the construction loan for the project, noting in a prepared statement that it is still seeing strong demand for new, best-in-class residential, office and hospitality assets in high-growth markets like Austin.
LPR and Kairoi have selected DPR to serve as general contractor for Waterline. Office tenant improvements are on track to begin in May 2025, and the tower is scheduled to top out in August 2025.