The Opportunity
In 2014, DivcoWest acquired The Avallon, a five-building, 318,000-square-foot, mid-rise office campus located in Northwest Austin adjacent to The Arboretum.
AQUILA was engaged to lease the property, based on previous success representing another DivcoWest property in the Northwest submarket.
The Background
The Avallon was originally developed in the mid-80s as a three-building senior living center. The senior living center never came to fruition, but the original intention gave the property a less corporate and more residential feel.
The property was then converted to an office project by Crescent Real Estate Equities, and BMC Software leased the three-building for its Austin headquarters. In the early 2000s, BMC pushed for the development of two additional buildings on the site in order to grow the campus to 318,000 square feet. However, BMC eventually downsized and never actually occupied a portion of the campus.
Because of this staggered development, the finishes across the project were dated and incohesive.
The Challenge
When DivcoWest acquired the property, the vacancy rates were high and the asking rates were well below market, despite the competitive landlord’s market of the time. The tenants that were in the building were small, low-credit tenants.
DivcoWest saw an opportunity to reposition the property with AQUILA’s help, through capital improvements, rebranding, and strategic leasing efforts.
The Solution
Renovate & Rebrand
Renovate the Campus, Inside and Out
DivcoWest engaged AQUILA’s project management team to lead the capital improvement efforts. The goal was to unify the buildings through the cohesive common area and lobby design, create a campus setting and provide ample on-site amenities to appeal to prominent corporate users.
The property sits on 16 acres, which was transformed into a park-like setting with live oaks, water features, and stone walkways throughout. Throughout the campus, amenities were enhanced and added, including barbecue pits and outdoor seating, a horseshoe pit, a disc golf course, sports courts, and tenant gardens.
In order to create a sense of community and emphasize the campus setting, the buildings were interconnected through crosswalks, and a central area was designated for food trucks.
Interior renovations included modern and matching lobby finishes in each building, as well as the addition of a tenant conference facility and a fully renovated fitness center.
AQUILA also recommended additional and renovated signage throughout the campus, based on tenant feedback. This included wayfinding, monument, and identity signage.
Rebrand the Property
With renovations underway, AQUILA began the process of rebranding The Avallon.
The current brand had a stigma attached to it; the property was originally designed as a senior living center, which didn’t have much appeal to the modern office tenant.
The goal of the rebrand was to shed the old association and to draw new associations to the property’s strengths.
After careful deliberation, the property name was changed to The Campus at Arboretum.
This new name highlighted two of the property’s most desirable offerings.
- The Proximity to The Arboretum: Located within walking distance to The Arboretum, a major Austin retail hub with over one million square feet of stores and restaurants, it was important to emphasize the project’s proximity to it by including it in the name.
The Arboretum is also recognized for its location along three major Austin thoroughfares, meaning the association would also ring through the property’s accessibility to all parts of town. - Campus Setting: Having transformed the project from a disjointed former residential center to a Class A office campus, it was crucial that the new name brings to mind the vision of a modern corporate campus.
Along with the new name, came a new logo.
With the new brand established, AQUILA launched a strategic marketing campaign to announce the new identity of the project. This included monthly emails to AQUILA’s robust database of contacts in the Austin brokerage community, outlining planned renovations with featured renderings and updating the progress over time.
Reimagine & Restack
Spec Suite to Kick Off Momentum
As the renovations came to a close, AQUILA identified an opportunity to spec out a 5,500-square-foot space that had been sitting vacant for some time. Our team felt confident that with the new buzz around the building, the spec suite would be quickly taken off the market and kick off momentum within the building.
After having sat vacant for over a year, just two weeks after completion, AQUILA had two desirable groups fighting for the suite, and we were able to quickly come to terms with the right tenant and fill the space.
Restacking the Building to Allow for New Tenants
AQUILA’ was able to rearrange existing tenants and manage their growth needs in such a way that allowed us to make room for new large tenants.
The fully-renovated The Campus at Arboretum proved to be attractive to prominent Austin companies, and AQUILA secured and retained a number of large-credit companies for the building, including Cubic Global Defense, Plantronics, BMC Software, Nokia, VAuto, and BroadSpectrum, who took another spec suite that had been sitting vacant for months prior to the renovation.
These new leases were all signed at or above market rates.
The Results
Maintaining Tenant Relationships
Since the initial lease-up of the building after the renovations were completed in 2015, AQUILA was able to maintain relationships with the tenants within The Campus at Arboretum.
Our brokers were able to renew all but one of the original tenants (the one that shut down its Austin office entirely), despite increased rental rates, by educating the tenants about the current market conditions, as well as highlighting the recent renovations and elevating the status of the project.
Managing Tenant Downsizing Through Disposition
In 2017, AQUILA helped to facilitate the sale of the property from DivcoWest to a partnership between Vanderbilt Partners and True North Management Group.
At the same time, BMC was marketing its entire remaining space of approximately 70,000 square feet for sublease. It was especially important to maintain momentum in the project while DivcoWest was looking to sell the property, so AQUILA went to work to find the best solution for the vacancy.
While there were a number of companies interested in taking portions of the BMC suite, there wasn’t a tenant willing to take the entire 35,000-square-foot floor. With multiple groups, the new owner would have had to add a multi-tenant corridor which would add a significant cost.
Shortly after the completion of the sale, AQUILA was able to prevent BMC from leaving the property by leveraging our relationship with their brokerage team and savvy negotiations. We allowed BMC to renegotiate its lease, allowing them to downsize to half of its existing space, while extending the lease for an additional five years.
Further, we were able to quickly fill the space BMC gave back and avoid any downtime by identifying and securing the high-credit tenant, Alcatel-Lucent owned by Nokia, to take the remaining half of the BMC suite on a long-term basis
The Campus at Arboretum is now 100% leased, and Vanderbilt has retained AQUILA to lease and market the property.
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