Aiming to fill a 'void' in Northwest Austin, big new building to rise at office complex

Paloma Ridge to grow to roughly 371,000 square feet by end of 2019

By Marissa Luck  – Staff Writer, Austin Business Journal

The newly expanded Paloma Ridge will seek LEED, Fitwell and WiredScore certifications to make it a "smart," green and healthy building as a way to compete with other class A projects rising around Austin.

A Denver-based private equity firm wants to attract tenants searching for respite from high rents and traffic downtown by nearly doubling the size of a Northwest Austin office complex.

By early next year, Ascentris LLC plans to break ground on a 160,000-square-foot expansion of Paloma Ridge, a relatively new complex located at 13620 Ranch Road 620, about three miles east of Lakeline Mall. Once construction is complete in late 2019, the entire office complex would total roughly 371,000 square feet across three buildings.

A Denver-based private equity firm wants to attract tenants searching for respite from high rents and traffic downtown by nearly doubling the size of a Northwest Austin office complex.

By early next year, Ascentris LLC plans to break ground on a 160,000-square-foot expansion of Paloma Ridge, a relatively new complex located at 13620 Ranch Road 620, about three miles east of Lakeline Mall. Once construction is complete in late 2019, the entire office complex would total roughly 371,000 square feet across three buildings.

It is a significant expansion for the far northwest office submarket, where total vacancy for class A office space was at just 5.7 percent at the end of the second quarter, according to research from CBRE Group Inc. The average class A vacancy rate for all of Austin was 10.3 percent.

Demand in Northwest Austin "seems to be ‘on’ right now," said Jake Rome, senior vice president for Ascentris, adding that the company already has "a handful of tenants on our prospective list" for the third building.

Rome and several members of the Ascentris team previously worked together at Amstar Group LLC developing projects such as downtown's 823 Congress office building, The 704 apartment complex on South Lamar Boulevard and the Travaasa Hotel near Lake Travis (now owned by Hyatt and undergoing renovations).  

Ascentris spun out of Amstar Group in 2015.

Textbook repositioning

Ascentris bought Paloma Ridge in December last year when the property was about 70 percent leased. Stream Realty brokers Edvin Beasley and Scott Deskins landed tenants for the remaining space in about six to eight months — a quicker turnaround than expected, Rome said.

"Paloma Ridge successfully filled a void in the Austin office market by offering brand new class A space at a significant rent discount to new construction,” said Beasley in a statement. Paloma Ridge also appeals to tenants with employees who live in the fast-growing residential areas of North Austin.

Now Paloma Ridge’s anchor tenants include cable company Spectrum/Charter Communications Inc. at about 30,000 square feet; homebuilder Lennar Corp. at just over 30,000 square feet; software company Informatica LLC at about 55,000 square feet; and health care tech company eHealth Inc. at about 28,000 square feet.

Rents for space at the new building aren’t finalized but will likely be around $25 to 29 per square foot, before triple-net fees, Rome said. That compares with an average asking rate of about $52 per square foot for downtown class A space in the second quarter, according to CBRE. Beasley and Dawkins are the leasing brokers for the Paloma Ridge expansion.

“We’re looking (to create a) premier suburban office that offers a value proposition to markets like downtown and The Domain,” Rome said. “We think there is a delta between rents in these highly walkable, highly amenitized markets and what we’re offing at Paloma.”

The new three-story building will have 55,000-square-foot floorplates that can easily be halved, plus a private terrace on the third floor. The design includes a high-end fitness center with “spa-quality” locker rooms, a one-mile jogging trail and outdoor amenity areas.

Sixthriver Architects, which designed the first two buildings of Paloma that were completed in 2016, will also finish design the third and final phase of the office complex.The general contractor is Hoar Construction and Big Red Dog is the engineer.

Rome said Ascentris will continue looking for investment opportunities in Austin, including developing new buildings and repositioning existing space. With $1.1 billion in assets, Ascentris invests in and manages institutional real estate, both directly and through joint venture partners and on behalf of institutional clients.

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