Kilroy Buys Austin Site for 19-Story Office Tower

Image courtesy of Kilroy Realty Corp.

Los Angeles-based Kilroy Realty Corp. is expanding its presence in the hot Austin market with the $40 million off-market purchase of a 2.9-acre site in the Domain submarket, where it will develop a 19-story office tower.

The site is fully entitled for approximately 493,000 square feet of Class A office space. Kilroy did not disclose a total cost for the development. Bill Hutcheson, Kilroy senior vice president, Investor Relations and Capital Markets, told Commercial Property Executive Kilroy plans to begin construction in the middle of this year, contingent on market conditions. Delivery is expected in 2024. Upon completion, the company will own approximately 1.2 million square feet in Austin.

The deal comes less than a year after Kilroy entered the Austin market with the $580 million acquisition of the newly completed 36-story Indeed Tower from Trammell Crow Co. in an off-market transaction. TCC had developed the office tower—the tallest office building in Austin—in the city’s CBD in a joint venture with Principal Real Estate Investors.

READ ALSO: Austin Market Update: Buoyant Year for Office Construction

The Domain site is located near the intersection of Burnet Road and Braker Lane. It is close to numerous amenities, including Austin’s Q2 stadium Major League Soccer stadium, the Domain Mall and the future McKalla light rail stop, which will connect from Northwest Austin through downtown. Class A office space in the Domain submarket is approximately 1 percent. Amazon, Meta, Indeed and Expedia are among the companies leasing office space in the submarket.

New Hire for Austin

Kilroy has hired Fernando Urrutia as senior vice president of Leasing for the Austin region, where he will oversee Kilroy’s leasing activity and assist in growing the local portfolio. Urrutia spent 11 years at Lionstone Investments, where he covered Austin and other Texas markets. Most recently the vice president of Acquisitions for Lionstone’s Texas region, Urrutia previously held roles across acquisitions, leasing and asset management.

Hot Office Market

Austin is the top market in the country for new office development, according to CommercialEdge, which recently the metro noted had 4.4 million square feet of office starts. As of December, Austin’s office pipeline reached 9.3 million square feet—up 15.5 percent year-over-year. CommercialEdge also reported that the metro’s under-construction volume represented 10.6 percent of total stock. When planned projects were factored in, the rate was pushed to 26.9 percent of existing stock.

In addition to completing the Indeed Tower last year, TCC and its partner MSD Capital LP, is close to delivering Google Tower, which will become Austin’s tallest office skyscraper and have 814,081 square feet. The Google Tower topped out in summer 2021 and is expected to deliver this May.

Last week, Cielo Property Group said it was planning to break ground this summer on the first of two adjacent buildings slated to rise on a city block east of Frost Bank Tower. The 46-story first tower will have a total of 750,000 square feet and is expected to come online in late 2025. In February, Inspire Development broke ground on Pearson Ranch, a $2 billion mixed-use development with 2.6 million square feet of office space.