IBM has leased about 320,000 square feet across the two newly proposed buildings. HINES

Austin Business Journal reports, "IBM Corp. has lined up a new home in Austin — it should be move-in ready in 2027.

Big Blue, which back in September solicited proposals for a new office hub in the Texas capital, has decided to move into a newly proposed development by Hines at the northern tip of The Domain, said Joanne Wright, an IBM senior vice president. It has leased space in two 14-story towers proposed on the site of a La Quinta Inn and Suites at 11901 N. MoPac Expy. — not far from IBM's current campus at 11501 Burnet Road.

It will mean a new home in Austin for IBM (NYSE: IBM), one of the original big tech employers in the city, and its roughly 6,000 employees.

IBM is leasing about 320,000 square feet, out of the project's 500,000 total square feet. That’s smaller than the 375,000 square feet Wright estimated the company needed back in September, and less than half of the 800,000 square feet the company occupies today.

The proposal by Houston-based Hines stood out partially because of the developer’s focus on sustainability, Wright said, and because of its approach to the future of work.

"They just have some really great, creative ideas as to how they could bring our vision of our office experience to life," she said.

For Hines, it means a significant change in plans. Austin Business Journal only recently broke the news about site plans filed for the firm's redevelopment of the far northern end of The Domain. Now, Hines intends to ditch the multifamily component of the project and instead erect two 14-story, interconnected office towers. Design work is still ongoing but current plans call for each building to have separate cores and lobbies, while they would share an eight-story podium parking garage, said Philip Croker, senior managing director at Hines.

IBM will occupy one entire tower and two of the top six floors in the adjacent tower.

Remaining around The Domain was important to IBM, said Dexter Henderson, the company's senior local executive in Austin. That will keep it close to existing business partners as well as stores, restaurants and Q2 Stadium, which help with entertaining clients and employes.

"The team was very excited to stay in The Domain because of all of the activities here," Henderson said.

Another major benefit of the new space is that it will consolidate IBM’s Austin teams in a single location, Wright said. In addition to the campus farther south across Burnet Road, which Brandywine Realty Trust is turning into the $3 billion Uptown mixed-use community, IBM will move out of its longtime building at the south end of The Domain near Brake Lane — which is surrounded by high-rises and expected to eventually be redeveloped.

The new office in Hines' buildings will "have every aspect of IBM," Wright said. "We've got AI and cloud software teams, we’ve got our system team, consulting team, marketing, sales, comms, finance and operations. It’s going to be a vibrant hub of activity."

It's a major shot in the arm for office leasing in Austin — the 320,000-square-foot lease is larger than any signed in 2022, according to data from real estate firm Aquila Commercial LLC.

However, there are still huge question marks facing the economy, including post-Covid real estate trends, recession fears and even the emergence of generative artificial intelligence. IBM announced its new Austin office space shortly after CEO Arvind Krishna told Bloomberg News that it plans to pause hiring for roles it thinks could be replaced with AI — potentially affecting around 7,800 jobs.

In January, IBM announced it would lay off about 1.5% of its workforce, or around 3,900 total jobs. It was unclear if those layoffs impacted Austin.

IBM employed 288,300 at the end of 2022. Shares in the company closed May 2 at $125.16 apiece. To track the stock yourself, go here.

Fleshed out details for Hines project

Hines could begin construction on its buildings in late 2023 and wrap up in 2027.

The project will be a "next-generation, highly amenitized office development," Croker said. He added that Hines is "committed" to achieving LEED Gold certification and will seek WELL Platinum, WiredScore Platinum and Austin Energy Green Building Two-Star designations. Such designations are awarded to buildings that achieve goals for digital infrastructures, energy efficiency, sustainability and more.

"This project reflects a clear vision into what the future of the office looks like," Croker said. "Corporate occupiers are seeking projects that deliver a differentiated, elevated experience to their workforce. Hines and IBM, both global organizations, share a lot of symmetry in their perspectives of what the office represents going forward and this project will deliver an environment that all parties will be proud of well into the future."

The project’s design architect is Munoz + Albin, Kirksey is the architect of record, Hitchcock is the landscape architect, Kimley-Horn is attached as civil engineer and Dunaway is structural engineer."


Source: Austin Business Journal

Written by: Cody Baird

Published: May 3, 2023

Posted by Grossman & Jones Group on


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