The Towers of Power
Are high-rises the key to a middle-class Downtown?
Kevin Burns is bucking a trend or, perhaps, starting a new one. The Downtown real estate broker and his wife have been living in the Austin City Lofts, the 14-story residential tower at Fifth Street and West Avenue. They have recently had a blessed event in the family the conventional cue to hie oneself to a House in the Suburbs, at least according to local stereotype.
Instead, the Family Burns is moving across Downtown, to the new Milago project currently under construction at the foot of Rainey Street, where Burns' UrbanSpace realtors is doing a brisk traffic, and where the 7-week-old will not be the only child. "It's neat to see," Burns says. "There's just a shift in the way people are living. It's still not the norm to have buyers with children, but it wasn't heard of at all before. ... Now that Downtown is coming up with some reasonably priced options, it's really opening up the marketplace for the Average Joe."
Burns is, of course, a bit of a ringer in addition to making his living via the Downtown residential boom, he's also an active member and leader of both the Downtown Austin Neighborhood Association and the Downtown Austin Alliance. Yet he is not alone in seeing Downtown as no longer the sole province of rich hipsters and equally rich empty nesters. The community has long held a goal of a sizable Downtown resident base 25,000 people is the number Mayor Will Wynn typically throws around. What's becoming evident is that you can't get to that level unless you make Downtown accessible and attractive to the middle class. And a whole slew of new residential towers aiming for Average Joe is on the way.
As You Prefer
In recent weeks driven largely by the contention over zoning for the Spring condominium project at Third and Bowie Downtown debates have been scraping the sky. Consider: At 14 stories, the Austin City Lofts are the tallest late-model project built during the Downtown housing boom. (The venerable Westgate Tower next to the Capitol is taller, at 25 stories.) Fairfield Residential's Milago is also 14 stories, but it includes nearly three times as many units as the Austin City Lofts. And the Milago is the shortest among nine residential high-rises currently on their way to market. Spring, whose proposed 400-foot height has, for now, been reined in to 350 feet by the Zoning and Platting Commission, is only the third-tallest of these Towers of Power. (After a two-week postponement, Spring should go before the City Council Nov. 17.)
Whenever anyone in Austin talks of tall buildings, some citizens are routinely surprised to find out that Downtown or at least that part of it under CBD zoning has no height limits per se. It has Capitol View Corridors that limit height on certain parcels, and it has density limits ("floor-to-area ratios") that, unless amended, effectively limit how much building you can put on a block.
But beyond that, no, nothing stops a developer like Tom Stacy who's already midwifed the tallest building in Austin, Frost Bank Tower from putting up an even taller building across the street at 501 Congress. This project will be primarily residential (along with a hotel and lower-level retail), including "penthouse condominiums more than 600 feet above street level." No, Average Joe will probably not be living there although at present, the highest price announced for 501 Congress is $600,000, which is not that expensive for Downtown's top floors.
This is a bit surprising given the predictability with which at least a few people balk at height. Spring, because of its unique calculus of height plus location on Downtown's far western flank has spawned the most hand-wringing. But other tall buildings like 501 Congress, or the Novare Group/Andrews Urban tower planned for Third and Nueces, next to the Austin Music Hall, or the shorter-but-closer-to-the-lake Gables Park Plaza have drawn at least limited fire for their height alone, as they wend through the development pipeline.
On the other hand, the city's adopted Downtown Design Guidelines, a late-Nineties milestone of the Downtown boom, don't even use the word "height" anywhere. Nor have any policy recommendations of the Downtown Austin Alliance "until very recently," says DAA executive director Charles Betts. The DAA has mused about seeking to loosen some of the Capital View Corridor restrictions in Downtown's northeast quadrant, where buildings even half as tall as Spring or 501 Congress would present a major challenge.
"There's always going to be some people who don't want to see that kind of height, as a matter of personal preference," says Betts. (By accident or design, the "personal preference" locution is common among Downtowners on this subject.) "But we've looked at Spring and at Novare, and we're very encouraging of both residential Downtown and of density Downtown, which is where density belongs. We think the more the better."
Spring co-developer Perry Lorenz who also chairs the city's Downtown Commission, has long served on the Design Commission, and was instrumental in developing the Downtown Design Guidelines says, "The most important thing about buildings Downtown is the streetscape, because pedestrians are always the most important ingredient. If pedestrians can get out of the sun and rain, and have windows to look in and things to do, then it doesn't matter how tall the buildings are. If people in other neighborhoods can see tall buildings in the distance and it makes them feel uncomfortable ... well, that's just a personal preference." (See?)
For the Old West Austin Neighborhood Association and its allies on the Austin Neighborhoods Council, the height of Spring is simply beyond acceptable in a "buffer zone" between the CBD and the adjacent neighborhoods. The Downtown/mixed-use zoning that Spring falls under, and which its developers want to change, is a category created back when the Downtown boom first took off, and it does include a 120-foot height limit about 10 stories, or the height of the Whole Foods mothership.
"Maintaining these transition areas is essential to the survival of the integrity of these neighborhoods," says OWANA's Laura Morrison. "There are already developers in this specific area with expressed intentions of asking for added entitlements like this for their properties. So [the Spring case] will no doubt be cited as a precedent in these cases."
In principle, few at City Hall, or in the neighborhoods, or in the DAA, or even in the developer game, would argue with the premise of these buffer zones. But the clarity with which OWANA has characterized its issue is not easy to find in real life. On the other side of Downtown, any "transition zone" lies east of I-35, outside the consensus boundaries of the CBD and encroaching, gracefully or not, on historic single-family neighborhoods not radically different from OWANA. And much to the chagrin of Southsiders, more than one building taller than 120 feet with more to come lies within the 04 ZIP code.
That was, indeed, the point of DMU and its predecessor/partner CURE ("central/urban redevelopment overlay"), at least in the memory of many who were there to expand inner city density, not limit it. The murky state of current affairs will no doubt be hashed and haggled over when Downtown gets its own, proper land-use planning process that is, a neighborhood plan, though the city is leery of using that label starting this fall and wrapping up at least one, maybe two, council elections from now. If neighborhood voices manage to gain sway in this process, fears of Spring setting an inviolate precedent may well be moot.
"I'm not at all in favor of seeing single-family housing in neighborhoods like Old West Austin demolished to make room for tall buildings," says Lorenz. "But we have a Downtown core, defined clearly in the Downtown Design Guidelines, and it goes to Lamar. I participated willingly in the Old West Austin neighborhood plan and gave away height I was entitled to on the west side of Lamar, in deference to the neighborhood. That was the buffer." The fact that the Spring parcel is still zoned DMU is a reminder, though, that for the most part, the Design Guidelines are just that, guidelines, not a real land-use plan.
Up They Go
From the planning perspective, the variables at play right now are three how big and/or tall the Towers of Power are, where they are, and most importantly what they are. As alarming as it might be for a skyscraper to pop up in your field of vision, residential towers, no matter how tall, simply aren't very intense uses. They generate little traffic, create few burdens on infrastructure, and unless they're truly enormous give no apparent pause to fire departments here or elsewhere.
"A building the size of Spring would be several orders of magnitude more intense if it were a nonresidential use," says Lorenz. "A two-story building on that site with office and retail would [create] more [auto] trips than a 400-foot tall, 220-unit residential tower." (What's on that site now is a one-story retail/office building, home to Tambaleo and Gallery Lombardi.)
"The fear is, that's not respecting the need to buffer the neighborhood, but I think it really is it's buffering the neighborhood from intense CBD uses," Lorenz continues. Those would include the Whole Foods mothership and the rest of the emerging Sixth + Lamar complex, which in toto could, and probably would, generate more traffic than Austin-Bergstrom International Airport. "The solution is to put residential right in the middle of those intense uses. Putting a project like Spring on the east side of Downtown" a talking point raised by OWANA and ZAP Chair Betty Baker "would still generate traffic because right now, those uses aren't on that side of town. When they are, then it will be a smart thing to do." (Absent that pesky Capitol View Corridor business, of course.)
However, Spring is already surrounded by Downtown residential projects like Gables West Avenue (née the Poleyard), 504 Rio Grande, and the upcoming complex on the Goodwill site across Lamar that bring in goodly numbers of residents without violating anybody's "personal preference." Establishing that if you're going to build a Tower of Power, you should build it in Whole Foods' back 40, is not that difficult. But why do we need 400-foot-tall buildings at all? Or, more to the point, why are we seeing a demand for so many towers right now?
The relationship between height and price is real but not always absolute. The sales pitch for Spring, particularly as delivered by Lorenz's partner and former City Council Member Robert Barnstone, has made much comparison to Vancouver, a city where a Downtown district smaller than Austin's CBD is home to 50,000 people, many housed in tall but very narrow "point towers." According to Lorenz, while this model is actually more expensive to build, the space is used so much more efficiently that it allows Spring to market units in the $200K-400K range not what you might call "affordable," but no more expensive than many houses, of not much greater size, in post-gentrified Old West Austin. (Of course, in the neighborhoods it's the land value that drives up the price and amplifies the siren song of the McMansion teardown.)
In even more duh-level terms, the more units you build, the more you can spread out the nonconstruction costs, and eventually you pass a tipping point where you can lower the price of the units and tap into the largest pool of potential buyers. "The only thing that can justify a major increase in the number of Downtown units is getting the prices down," says Charlie Betts. "We just hope the developers can actually deliver those $200K units." In macro terms, that's not just a function of developers' vim and vigor; it also relates to available sites. It's hard to conceive of how, without a continued shift in the city's expectations regarding height, we could possibly fit 25,000 people into the Downtown space available.
If They Build It ...
A somewhat contrarian view, though, was faintly audible during the city's mastication of the Gables Park Plaza the latest project planned for the Lumbermen's tract just west of Seaholm Power Plant. The last time a tallish Lumbermen's project came to City Council, the place turned inside out and the plan was shot down at the 11.9th hour on a 4-3 vote with Daryl Slusher the swing vote. This led folks at the board-and-commission level to wonder out loud why Gables would pitch another tall building and invite the same controversy. One answer is that the height is essential to deliver the views that the affluent Downtown prospect would demand.
Certainly views are always a selling point for high-rise residential, regardless of the price point, but the Gables rationale has little to do with the claim that higher heights equal lower prices. It's also a reminder that there will always be rich people among us, and their needs will always be met. "I think the greatest demand is in the $200K range," says local developer Taylor Andrews, partnered with Atlanta-based Novare Group on the Third and Nueces project. "But there's still a big niche for a luxury product in the right location. I don't think it's tapped out for this cycle." The Monarch, a 27-story building planned for Fifth and West across from the Austin City Lofts, is aiming exclusively for the high-end luxury rental market, a rarity in a Downtown that's dominated by condos.
Lorenz and Barnstone have some grounds for comparison, having previously delivered the much more luxe Nokonah farther north on Lamar, back when such projects were still novel. "The Nokonah was built on the premise of pent-up demand among a limited number of people who wanted high-end condo living," Lorenz says. "We went in knowing that high-rise luxury was a recipe for disaster and bankruptcy in Texas, but we figured that out of 600,000 people in Austin, we only needed 100, and it didn't matter if the rest thought we were crazy. That's how the high-end market works.
"But at $200K, then you're looking at households with a combined income of $60,000. That's definitely middle class," Lorenz continues. "There are hundreds, if not thousands, of potential buyers right now in that price range. And the market is cyclical if we get to an oversupply of units at that price point, they won't just sit there vacant. The developers will discount them, and then it will be even more affordable to live Downtown."
Developers and brokers in the new middle-class Downtown market, of course, tout the lifestyle options and amenities that go with the location, piggybacking on the same appeal that the high-end loft market has been using for years. "Even 10 years ago, Downtown was one of the most desirable places in Austin to spend time," says Taylor Andrews, "and it was unusual that we didn't have more residential already, considering it already was a 24-hour neighborhood. Now there's going to be supply to match the demand, but the demand may continue to grow even when that supply goes on line. It's a trend all over the county, not just in Austin. More housing will make Downtown more attractive, bring in more retail options, and that means more people will want to live here. It feeds on itself."
Neighbors for Neighbors?
And a middle-class Downtown is also sustained by what the planning pros call "location efficiency" which, in real-world Central Texas terms, usually ties back to traffic. "It costs a little more to live downtown," says Kevin Burns, "but what does it cost to sit in a 45-minute commute each way from Cedar Park?" According to his analysis, for a middle-class Downtown employee, that commuting cost could translate into $150,000 of residential buying power. Progressive planning types have spent a long time trying to hip banks and mortgage lenders to this fact.
Also, Downtown locations make it easier for developers to dispense with the costly on-site amenities that often get attached to high-end housing. "You don't need to build in a health club, or a pool, or a concierge who will take you to the airport," says Lorenz. "At a location near Whole Foods, there's plenty of health clubs and services and places to swim, including Barton Springs. So you can put in less of the opulence and more practical living space."
However, people who simply work Downtown now, let alone live there, know that the area is not really very rich in the routine retail and services one finds in a middle-class neighborhood. The early successes of the campaign to rebuild Downtown's retail base such as the Second Street District can meet your sushi, dress shoe, and chic furnishings needs very well. Hardware, not so much.
"I don't know which project it will be, but soon one project will create the critical mass that we need to have that diversity," says Taylor Andrews. "You'll see a national retailer like Target, or a different grocer [besides Whole Foods], or just a more diverse mix of tenants coming Downtown. If you look at cities like Seattle that do have 25,000 Downtown residents, you have both upscale retail and lots of convenience retail."
This leads to what's bound to be a talking point in tomorrow's Downtown. Both civic leaders and developers tout the residential boom as a way to use up surplus capacity in the central city and absorb regional growth using infrastructure that's already there. Right now, Downtown has access to lots of parkland, decent AISD schools that are not already filled, and utility service that, while aging, is still viable in the near term. But if you add 25,000 residents, those perceptions may change. This is already visible in public debate over certain investments such as a new central library being considered for the city's upcoming bond package. It's also driving Capital Metro's discussions of what kind of "circulator" system it might seek to support its nascent commuter rail service. (When asked what kind of infrastructure Downtown needs, Lorenz answers without hesitation, "Streetcars!")
Now, adding a lot of taxable property to the Downtown rolls will create some of the funding such future investments will require. But since Downtown development is almost by definition a cash cow for the rest of the city and region, keeping some of that money in the central city will not happen automatically. "There will be projects Downtown that need attention," says Andrews, "like the creeks, or if the city wants to create genuinely 'affordable' housing. That's going to require public money."
downtown development, Kevin Burns, Milago, UrbanSpace, Will Wynn, Tom Stacy, Gables Park Plaza, Downtown Austin Alliance, Charles Betts, Perry Lorenz, Old West Austin Neighborhood Association, Laura Morrison, OWANA, Spring Lofts, Betty Baker, Robert Barnstone, Taylor Andrews, Novare Group, Nokonah
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