$400 Million Residential Project Proposed For East Town Lake Area

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Project expands developing boom east of 1-35

By Kate Miller Morton
AMERICAN-STATESMAN STAFF
Saturday, April 29, 2006

An Austin developer plans a 2,500-unit condominium and apartment community just east of Interstate 35 and south of Town Lake that would offer moderately priced housing near downtown.

Cypress Real Estate Advisors is proposing the $400 million, 50-acre project tentatively called Lakeside, with 15 to 20 buildings.

It's the third major project planned for the East Riverside Drive area, as developers seek to meet demand for near-downtown housing but avoid steep downtown land prices.

Lakeside would replace approximately 800 apartments, most dating from the 1970s.

David Cox, Cypress' vice president of development, said the land his companyis buying "has a lot of potential. It's got the proximity to downtown, it's got great views of the city skyline, and it's on the park on Town Lake, an amenity that Austinites appreciate."

Cypress intends to apply for a planned unit development designation to change the zoning of the property, which now allows up to 1,800 residential units.

Cypress also wants to have a mix of building heights, with two buildings up to 12 stories, in an area where the limit now is three stories. Some members of the South River City Citizens neighborhood group say they have concerns about the project's density.

Gayle Goff, who belongs to the group, said she likes Cypress' plans for a 100-foot setback on buildings fronting South Lakeshore Boulevard . That open space would complement the sliver of lakeshore park on the opposite side of the street.

But she said she'd prefer to see the building heights capped at nine stories and is concerned about the impact of additional car and foot traffic in the already densely populated area.

Lakeside will be laid out in a pedestrian-friendly, traditional neighborhood street grid design, connecting an area now largely fragmented by fences, security gates and parking lots of several apartment buildings. Most of the parking will be in structures, with some surface lots for approximately 15,000 square feet of shops.

Cypress will start tearing down the apartments in the middle of next year, but it could take eight years for the project to fully take shape.

About 60 to 70 percent of the planned units will be for sale townhomes, lofts and flats, priced between approximately $200,000 and $300,000. The average price of a recently completed downtown condo is approximately $530,000, according to Capitol Market Research.

Apartments are also expected to be significantly cheaper than comparable housing downtown.

Lakeside is just the latest project proposed in the area.

Earlier this year, Australia-based Constellation Property Group announced plans for an approximately 250-unit upscale condo project on 4.5 acres at the northeast corner of Interstate 35 and Riverside Drive, where the Wellesley Inn & Suites currently stand.

H.M. "Mac" Pike Jr. and Wally Scott of the Sutton Co. have begun work on what could eventually be a 16-acre mixed-use project just east of the inn. The project could include between 800 and 1,000 apartment and condo units and as much as 200,000 square feet of retail.

The first phase, converting a former apartment building on Town Lake into condos, is under way.

"I think it's pretty self-evident that land prices downtown have escalated so rapidly that people are looking for affordable alternatives," said real estate consultant Charles Heimsath of Capitol Market Research. "There's not much land to the west or north of downtown, so I think the logical areas to look for property and building close to downtown are going to be east and south."

Cypress has bought and sold several high-profile parcels of downtown land and still plans an 80-unit condo project at the northwest corner of Sixth Street and West Avenue.

Rising downtown land prices were a major factor in the company's decision to buy land east of the Interstate.

"We saw price escalation in the market, and we were looking for an alternative to serve a wider portion of the market," Cox said.

Demand for reasonably priced housing close to the center of the city is making areas east of I-35 more attractive, and Heimsath believes the sheer size of the Cypress project provides an unusual opportunity to bring more buyers to a part of the city that has not seen new investment.

"If it was a five-acre parcel, I think I would be very hesitant to try to build mid-range housing product in that location, but the fact that it's 50 acres means you can really create an environment that changes the character of the entire area," Heimsath said. "I think that's really the key to making this successful, because otherwise you're in kind of a sea of lower-income rental housing."