The Opportunity
Austin-based real estate developer Generational Commercial Properties (“Generational”) acquired a site at 12544 Riata Vista Circle in the heart of Austin’s thriving Northwest submarket, adjacent to Apple’s Parmer Riata campus. A desirable location, a proven developer who had recently developed a 90,000-square-foot office building on the periphery of downtown and a 1 million-square-foot corporate campus in Northwest Austin, and a hot Austin market all came together to make Riata Crossing 6 a prime development opportunity. Generational hired AQUILA in the fall of 2016 to market the building with the hope of securing a pre-lease.
Riata Crossing 6 is a wildly successful project. In partnership with AQUILA, we worked to earn the trust of a new client and delivered another iconic corporate headquarters. We’re thrilled with the project, our new client and believe we’ve added another beautiful building to the cityscape.”
– Joe Llamas, Generational Commercial Properties Principal
The Challenge
With plans to build a 50,000-square-foot, two-story building, the biggest challenge in securing a lease for Riata Crossing 6 was the classic Goldilocks problem: AQUILA’s leasing team would need to find a tenant that was not too small or too large, but just right.
Finding a tenant with an appetite for a long-term commitment, who needed the exact amount of space without plans to expand, would be a challenge. While the developer and leasing team were open to dividing the space and creating a multi-tenant situation, a full-building user was far preferable.
Additionally, many companies looking for standalone opportunities are interested in owning their building. Generational, on the other hand, was looking to grow its portfolio in Austin and hold the building long-term, so they preferred to lease the property instead of selling it.
Lastly, competition was fierce. In fact, next door at Riata Corporate Park, developers had plans for a competing 60,000-square-foot building.
The Solution
AQUILA launched a marketing campaign for the building in late 2016 and fairly quickly began negotiations with a full-building user. After a year of negotiations, the deal fell through, leaving everyone frustrated.
In early 2019, with the market at an all-time high and available space tightening, both AQUILA and Generational agreed that going spec would be a smart move. AQUILA worked with Generational to reformulate the marketing plan and proceed with the building as a spec development.
While preparing to go spec, AQUILA began negotiations with Greater Texas Federal Credit Union (GTFCU), a tenant who was seeking to consolidate its operations in Austin and create a new headquarters. There was only one problem: GTFCU wanted to own its building.
AQUILA negotiated between the two parties in order to craft a mutually beneficial path forward. Generational would build the building for GTFCU, and once the shell building was complete, GTFCU would purchase the building. This wasn’t what Generational had originally intended, but the parties worked together to come up with a creative deal structure that met each of their needs.
Finally, timing became an issue as the team came up against an expiring site development permit (SDP). Because Generational had decided to go spec on the building, the building was already fully designed with a site development permit in hand. Both sides had to work quickly and efficiently through the contract, modify the building plans and start construction before the SDP expired. All parties were under a tight timeframe, but AQUILA was able to manage expectations, negotiate changes and ultimately meet the deadline and execute the contract.
The Results
Ultimately, AQUILA was able to negotiate a development and purchase agreement for Riata Crossing 6. While it was not the long-term hold Generational originally desired, AQUILA arranged an impressive return.
Greater Texas Credit Union is also very pleased with its new space:
Our new corporate office reflects a new chapter in the history of the credit union, and renews our commitment to our members, employees and the community. By consolidating back-office functions in a single, modern facility, we will achieve desired operational efficiencies and synergies that not only position the credit union for a new phase of growth, but also facilitates increased capacity to provide top-tier banking experiences for members and a top-tier working environment for employees.”
– Howard Baker, Greater Texas Credit Union President and CEO
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