Building for the future
At our September TBA Board of Directors meeting, the board approved a design concept and funding for the new building on TBA’s property in Austin in accordance with last fall’s membership vote and our bylaws. As follow up to the membership vote in overwhelming support of the project, the board’s action last month reaffirmed optimism in the future of our industry and association. It also displayed optimism in prospects for the new building to generate non-dues revenue to support TBA programs, products and services for our members well into the future.
It is exciting to see this project starting to take shape, but I realize I am much closer to it than most of our members. As a result, I believe it may be helpful to provide a brief update.
After our membership vote, the board authorized our Executive Committee, working in conjunction with a Building Committee comprised of Austin-area bankers, to shepherd this project and provide our board with regular updates and, when needed, key recommendations. Those two committees together form our Joint Building Committee.
I want to extend special thanks to the Austin bankers on that committee — Bob Barnes with IBC, James Dyess with Horizon Bank, Jeff Hutchens with Moody Bank and Laurie Logue with Broadway Bank — for their wisdom and counsel. These bankers possess a wealth of experience in Austin’s commercial real estate market. Together, they have helped us see the promise of this project and informed our decisions along the way.
Based on the recommendations of the Joint Building Committee, a development partner, Development 2000, and architect, Beck, were selected this spring. Site analysis and geotechnical surveys were conducted, and the Beck team went to work on initial design concepts.
Since original project estimates were developed 21 months ago, we have seen some escalation in construction costs. We also have learned the City of Austin will require us to install stormwater drainage along 10th Street to a connection over a block away.
Fortunately, there are some pleasant surprises, too. One is that the Austin commercial real estate market remains strong. Office rental and parking rates have increased since original estimates. Another involves the height limitation on TBA’s building imposed by a Capitol view corridor restriction. Although the majority of our site is impacted by the restriction, we learned one
portion of our site is not impacted and can accommodate an additional level. The potential for that additional space ended up playing a role in our recommended design concept.
After multiple meetings with Beck regarding various design concepts and cost-containment strategies, the Joint Building Committee met in August and agreed on a recommended building design option to present to the TBA Board of Directors.
A few details on the building concept:
- Eight full levels — 4.5 levels of office and lobby with 3.5 levels of parking
- A large “flex space” meeting room on the rooftop ninth level with views of the Capitol that will serve the building as an amenity for the tenants and for outside event rentals. This type of space is highly desirable in Austin and can be rented for special events or training when not in use by TBA or other tenants.
- Approximately 97,000 gross square feet.
The biggest factor in the success of this project will be TBA’s location. The Austin market is unique in Texas, and TBA’s location is unique in Austin. Situated across from the Governor’s Mansion, within a short walk from the Capitol and with unobstructed views of the Capitol that will last into perpetuity, the location is one-of-a-kind. It is extremely appealing to lobbyists, law firms and government-related tenants whose services tend to be less impacted by economic fluctuations over time.
Particularly due to our unique location, we believe this project will perform well in generating non-dues revenue. Even with conservative estimates for rental, parking and loan rates, and including a vacancy factor and contingencies, we project the building to net a healthy annual cash flow for TBA after all expenses, including the abatement of TBA’s rent and expenses.
At last month’s meeting, the board’s support for the recommendation was overwhelming. I am the first to acknowledge much work remains to see this project become a reality. Due to the permitting process in Austin, estimated groundbreaking is still 10-14 months out and construction is expected to require 16-18 months thereafter. But it is important to note the significance of this step in this process and in TBA’s grand history.
At the end of the day, the board’s action was largely about our current strength and our confidence in TBA’s future. As a metaphor, I like to say future generations of Texas bankers will enjoy the shade from the trees we are planting today.
As the building project proceeds, it will not distract from our mission. We will remain focused on promoting the growth and success of Texas community banks and your communities with our education, advocacy, tools and solutions. In the future, our new building will strengthen our ability to carry out that mission.
If you have any questions about the building project, please don’t hesitate to contact me or Chris Furlow.