AUSTIN – (Realty News Report) – IBM and Hines have mutually ended a planned lease that would have made IBM the anchor tenant for a new 507,200-square-foot office development Hines proposed in The Domain, a major mixed-use district in Austin’s northern suburbs.
Rather than moving into the proposed Hines building, IBM has taken a 320,000-square-foot lease in Domain 12, an office tower owned by Cousins Properties, assuming space previously leased by Meta Platforms (Facebook’s parent company).
Meta Platforms has been reducing its Austin office footprint and is attempting to sublease roughly 600,000 square feet it leased but never occupied in the new 66-story Sixth & Guadalupe tower in downtown Austin.
Hines and IBM have provided limited public detail about the terminated Hines lease. Hines has not yet broken ground on the project and says it is actively discussing the site with other prospective tenants.
In a prepared statement, Hines said: “Hines and IBM have terminated the lease agreement for IBM to serve as a key tenant at OneTerra, a new office project at the Domain in Austin. Hines and IBM maintain a strong, positive relationship and look forward to continuing our work on other strategic partnerships, both now and in the future. Hines remains excited about the future of this best-in-class property and is actively engaged in conversations with other potential tenants.”
The tech and chip company Nvidia is also searching for office space in Austin, with sources in the real estate community saying Nate Stricklen, vice chairman of CBRE, is working with Nvidia on a site search for about 300,000 square feet.
When Hines originally announced the IBM lease for its Domain development, the company indicated construction was expected to start in late 2023 with occupancy projected in 2027. With the IBM agreement ended, those timelines may be revised.
An IBM spokeswoman confirmed the lease with Hines was “terminated” and said IBM plans to relocate its Austin employees to the Cousins Properties building in The Domain in 2026. “IBM was presented with another opportunity that more closely aligned with our team’s needs,” the spokeswoman added.
The Austin office market, like many across the U.S., has seen rising vacancy and downward pressure on rents in recent years. Cushman & Wakefield reported Austin Class A vacancy reached 29.5 percent in the second quarter of 2024, up from 25.9 percent a year earlier.
Cousins Properties, an Atlanta-based real estate investment trust, owns several office buildings in The Domain. Cousins’ portfolio there totals about 2.5 million square feet and is approximately 99 percent leased.
The Domain is often referred to as Austin’s “second downtown” due to its concentration of offices, residential units, retail, dining and entertainment options.
IBM’s new location will be in Domain 12, a building completed in 2020 that Meta had previously planned to occupy as a primary tenant.
OneTerra – The Hines Project (Without IBM)
Although IBM will not be part of the tenant lineup, Hines has not canceled OneTerra. The firm continues to market the project to other prospective tenants.
CBRE brokers Bo Beacham and John Barksdale have been handling marketing for OneTerra, which is planned as two interconnected 14-story towers in The Domain.
Designed by Houston-based architecture firm Muniz + Albin, OneTerra’s design includes private balconies on each floor, outdoor sports facilities, a ninth-floor amenities deck, and an upscale fitness and conference center.
The project is being designed to achieve LEED Gold certification, and Hines will pursue additional sustainability and performance recognitions including WELL Platinum, WiredScore Platinum, and Austin Energy Green Building distinctions.
The OneTerra site sits adjacent to the North Mopac Expressway and a nearby Whole Foods Market, offering convenient access and neighborhood retail amenities.
Hines has previously developed in Austin, including a mass-timber building called T3 Eastside at 1200 East 4th Street just east of downtown. T3 Eastside contains approximately 93,000 square feet of Class A office space and about 9,200 square feet of residential space.
Founded by Gerald D. Hines in Houston in 1957, Hines is a global real estate investment, development and property management firm operating in 30 countries and managing a portfolio valued at roughly $93.2 billion across residential, logistics, retail, office and mixed-use assets.
Sept. 12, 2024 Realty News Report Copyright 2024
Image: 2023 rendering of OneTerra, courtesy Hines. Architecture: Muniz + Albin
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Listen to recent episodes of The Ralph Bivins Project featuring industry guests including Sam Scott of CommGate, John S. Moody, Jr. of Moody Law Group, Scott Martin of Granite Properties, Robert Clay of Clay Development, Alma Zavala of CommGate, Adam Lair of Partners Capital, Jake Donaldson of Method Architecture, Bill Baldwin of BLVD Realty, Johnny Cruz of RAMSA, John Breeding of Uptown Houston, Dean Strombom of Gensler, Lou Cushman of Cushman & Wakefield, and Edward Griffin of Griffin Partners.
File: Cousins. IBM Stops Hines Lease – Takes Facebook Space Instead Austin Domain IBM Stops Hines Lease – Takes Facebook Space Instead, Meta Platforms, CBRE.