It’s been nearly a year since Dallas-based Prescott Group purchased the historic Texas State Teachers Association building just west of the State Capitol.
Despite being an arduous retrofit of a chunky concrete structure, Prescott Group and its team of builders, engineers and designers is making substantial headway in creating a modern, light-filled Class A building that will provide about 100,000 square feet of multi-tenant office space by the end of the year.
Brian Leslie and David Dierkes, managing director and senior director of Prescott Group, gave me a tour of the property recently, recapping details of how the unique deal came together.
The real estate investment company, which particularly relishes value-added renovation projects, had been shopping around Austin for some time. The company almost initiated its first foray into Austin with the Saint Elmo Market District — a mixed-use project with retrofit characteristics in South Austin.
But the developer decided to pursue another partnership — it was a cordial parting — and Prescott Group checked in with Walter Saad, a capital markets expert then with CBRE Group Inc. and now with HFF. Saad was marketing the Capitol-area property — portions of which date back to 1950 — on behalf of the Texas State Teachers Association, which decided to sell and move to North Austin.
Prescott Group jumped at the opportunity.
“It was all kind of appealing to us,” Leslie said.
Of course the due diligence process presented a legion of puzzles to be solved. Many investors and developers shun the hard stuff, such as working within the confines of an existing footprint, old materials and obsolete floorplans. Prescott Group revels in the restraints.
In the past the company renovated a 1923 Art Deco property in Dallas into The Stoneleigh boutique hotel. The possibilities for reviving tired office buildings — in Dallas, Fort Worth and Tulsa mostly — energizes the Prescott team.
In early March 2016 the sale was completed. No purchase price has ever been disclosed, though the Travis Central Appraisal District most recently valued the property, which sits on 1 acre, at $12.5 million. Dierkes said the renovation and expansion of the property is valued at $10 million.
Prescott Group retained Andersson-Wise Architects to handled the design, even though the two companies had never worked together before.
Leslie said the company was introduced to veteran architect Arthur Andersson by way of the Saint Elmo project and was duly impressed.
What evolved is an illuminated jewel box — a radical departure from the original bunker styling. Yet, the bones of the property are completely retained with floor-to-ceiling glass panes extending beyond the original frame — thus adding more square footage. Another bonus — the property originally was entitled for six floors, but only five were ever built.
The Burt Group, which has a history of handling confounding, large scale renovations, is the general contractor.
A new level is being added along with a rooftop terrace, which includes one of the most enviable views of the State Capitol. The panorama toward the Hill Country is pretty inspiring, too.
JLL has the assignment to find tenants.
Rachel Coulter of the brokerage team expects law firms, lobbyists and financial services companies will be eager to learn more — especially given that the property will have a fitness center, showers, bike storage, building conference room, structured parking and an outdoor courtyard shaded by an expansive live oak tree.
“Some 400,000-square-foot buildings don’t have the amenities that will be here,” Coulter said. “(Prescott Group) really pays attention to the details.”
Other companies involved in the project are Big Red Dog Engineering Consulting and Sixthriver Architects, which is handling interior design. Ryan Ridgeway with Stream Realty Partners is seeking an operator for the street level restaurant space.
