AUSTIN – (Realty News Report) – IBM and Hines have scrapped a deal that would have placed the computer company as the anchor tenant in a new 507,200-SF office project that Hines plans to develop in The Domain district in Austin’s northern suburbs.
Instead of moving into the proposed Hines building, IBM has assumed a 320,000-SF lease from Meta Platforms (Facebook’s parent company) in the Domain 12 building owned by Cousins Properties.
Meta Platforms has been downsizing its Austin office footprint, and is trying to sublease 600,000 SF it leased – but never occupied – in the new 66-story Sixth & Guadalupe tower in downtown Austin.
Hines and IBM did not offer many details about the lease that dissolved in the Hines Domain building. Groundbreaking has not occurred and Hines says it is in conversations with other possible 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 Nvidia tech/chip company is looking for 300,000 SF of office space in Austin. Nate Stricklen, vice chairman of CBRE, is working with Nvidia in the site search, according to sources in the real estate community.
When Hines first announced the IBM lease in the Domain building, the firm said construction was expected to begin in late 2023 with occupancy in 2027.
An IBM spokeswoman said the lease with Hines was “terminated” and IBM expects to relocate its Austin employees to the Cousins building iin The Domain in 2026.
“IBM was presented with another opportunity that more closely aligned with our team’s needs,” the IBM spokeswoman said.
The Austin office market, like most of the nation, has experienced rising vacancy and lower rents in recent years. The vacancy rate for Austin’s Class A buildings hit 29.5 percent in the second quarter of 2024, up from 25.9 percent a year earlier, according to Cushman & Wakefield.
Cousins Properties, an Atlanta-based REIT, owns a number of office buildings in Austin. Cousins’ buildings in The Domain have a total of 2.5 million SF and are 99 percent occupied.
The Domain district is called Austin’s “second downtown.”
IBM will be located in the Cousins’ Domain 12 building, which was completed in 2020 and is where Meta was expected to be a prime tenant.
OneTerra – The Hines Project (Sans Big Blue)
Although IBM won’t be joining the tenant roster, Hines’s OneTerra project has not been cancelled.
CBRE’s Bo Beacham and John Barksdale have been marketing the planned Hines’ OneTerra project, which will be configured as two 14-story interconnected towers in The Domain.
Designed by Muniz + Albin, a Houston-based architecture firm, OneTerra will have private balconies on each floor, outdoor sports facilities, a ninth-floor amenity deck, and a high-end fitness and conference center.
The new building is being designed for LEED Gold certification and Hines will seek WELL Platinum, WiredScore Platinum, and Austin Energy Green Build distinctions.
The OneTerra site is adjacent to the North Mopac Expressway and a Whole Foods Market.
In Austin, Hines recently developed a mass-timber building called T3 Eastside at 1200 East 4th Street, just east of downtown. T3 Eastside has 93,000 SF of Class-A office and 9,200 SF of residential space.
Hines, a global real estate investment, development, and property manager, was founded in Houston by Mr. Gerald D. Hines in 1957. Hines operates in 30 countries and manages a $93.2 billion portfolio of high-performing assets across residential, logistics, retail, office, and mixed-use properties.
Sept. 12, 2024 Realty News Report Copyright 2024
Image: 2023 Rendering of OneTerra, courtesy Hines. Architecture: Munoz + Albin
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File: Cousins. IBM Stops Hines Lease – Takes Facebook Space Instead Austin Domain IBM Stops Hines Lease – Takes Facebook Space Instead , Meta Platforms, CBRE.