- Cousins Properties has acquired the Sail Tower at 601 W. Second St. in Austin for $521.8M, making it the largest office transaction in the city this year.
- The 35-story, LEED Platinum-certified tower is fully leased to Google until 2038.
- Despite the high-profile sale, the Austin office market faces a 27.7% vacancy rate and slowing demand.
Cousins Properties (CUZ) has purchased the Sail Tower in downtown Austin for $521.8M, a high point for Austin’s office market in 2024 amidst broader market challenges.
Deal Details
The Sail Tower, named for its sail-like architecture by Pelli Clarke & Partners, stands out with LEED Platinum certification, landscaped terraces with Lady Bird Lake views, and 8.1 KSF of retail space. The building also features a fitness center and a 1,365-space parking garage.
The seller, Trammell Crow, completed the 804 KSF property in 2022. As reported by Commercial Property Executive, Google (GOOGL) fully leased it until 2038.
Austin Expansion
Atlanta-based Cousins Properties already holds a significant Austin presence with 1.7 MSF of downtown office space and 2.5 MSF across 11 buildings in the Domain district. Notable tenants include Adobe (ADBE), Amazon (AMZN), and Fidelity (FNF).
The REIT’s leadership expressed confidence in Austin’s long-term tech-driven growth, citing IBM’s 320 KSF lease extension in the Domain earlier this year.
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Challenges in Austin’s Office Market
Despite this landmark deal, Austin’s office market faces significant headwinds:
- High vacancy: Austin’s office vacancy rate is 27.7%, tied with San Francisco for the highest in the US.
- Development pipeline: 3.5 MSF of office space is under development, poised to grow Austin’s inventory by 12.1%.
- Declining sale prices: Investors are pulling back, with average sale prices dropping from $379 PSF in September to $287 in November.
Looking Ahead
The Sail Tower acquisition underscores Austin’s potential for long-term growth, driven by a robust tech sector. However, persistent vacancy challenges and an influx of new developments suggest a period of adjustment as the market seeks equilibrium.
