Lincoln Property, Goldman Sachs Secure Financing for Austin Project

October 16, 2024

Development Austin Finance IndustrialMoreNews Southwest

Plans call for 900,000 square feet of industrial space across four buildings.

A joint venture between Lincoln Property Co. and Goldman Sachs has obtained $83.8 million in financing for the construction and lease-up of Waterstone, an 894,000-square-foot, four-building industrial development in Kyle, Texas. Bank OZK provided the senior portion of the loan, while Affinius Capital originated the subordinate portion.

Lincoln Property Co. and Goldman Sachs are developing Waterstone, an 894,000-square-foot, four-building industrial campus in Kyle, Texas. *Image courtesy of Affinius Capital*

Waterstone will feature 32-foot to 36-foot clear heights, 232 dock-high doors, 10 drive-in doors and 994 parking stalls for its four buildings. The property, located on I-35, will offer connectivity to both Austin, Texas, and San Antonio. Waterstone will also be about 30 miles from Tesla’s Gigafactory—whose presence has increased industrial demand across the Greater Austin region—and about 25 miles from Austin–Bergstrom International Airport.

Kyle’s population grew from 28,000 people in 2010 to nearly 45,700 residents in 2020, as thus becoming one of Texas’ fastest-growing cities in recent years, according to Census Bureau data. Though not far from San Antonio, the town is closer to Austin, and part of metro Austin.

Waterstone is positioned in the market to provide opportunity to the growing south I-35 corridor in the Greater Kyle/San Marcos region, according to Cole Kennedy, a development and acquisitions associate at Lincoln Property Co., who added that the property can serve both Austin and San Antonio.

As a diversified CRE company, Lincoln’s management and leasing portfolio on behalf of institutional clients totals more than 510 million square feet. The company has completed over 150 million square feet of development since its inception in 1965 and another $20 billion is currently under construction or in the pipeline.

Affinius Capital, formerly known as USAA Real Estate and Square Mile Capital Management, has about $64 billion in assets under management in North America and Europe.

“Ongoing demand for industrial properties continues to outpace supply across most markets in the U.S., creating a compelling opportunity for strategic development,” Affinius Capital Managing Director Tom Burns told Commercial Property Executive.

“Despite the broader banking sector’s pullback from development lending, this segment remains one of our most active areas, and we anticipate continued robust engagement in the industrial market,” Burns said.

An active CRE lender, Bank OZK operates in nine states and has about $36.8 billion in total assets.

Austin industrial inventory expands, vacancies up

Greater Austin remains an overall growth market for industrial, with more than 4.4 million square feet of speculative and build-to-suit product delivering during the third quarter of 2024, representing a high for quarterly deliveries, according to JLL.

New supply has put upward pressure on Austin industrial vacancy rates, which surpassed 14 percent in mid-2024, compared to around 3 percent as recently as 2021, JLL reported. That year, pandemic-era demand crested as companies struggled with supply chains and reshoring began in earnest.

Demand is still strong, however. Year-to-date absorption nearly doubled from the first half of the year to the first three quarters, spurred by strong net occupancy gains in the third quarter, JLL noted.