Why an East Coast-based real estate developer plunged into Austin market
Austin Business Journal | Justin Sayers
St. John Properties ‘planting our flag’ in Texas capital, local leader says
The woman leading the Austin expansion for an aggressively growing Baltimore-based industrial and office space developer is looking to build relationships in the 51-year-old company’s newest market.
St. John Properties Inc. — which has assets of more than $4.5 billion, according to the Baltimore Business Journal — has opened its ninth regional office at 3800 N. Lamar Blvd. The office is headed by regional partner Brooke Harlander, who eyed the Austin market for a new office as part of her research in the privately held company’s partner-in-training program.
She said the Austin market made sense for St. John because of its business friendly climate as well as the rapid growth of the technology sector. The Austin area is now home to the Tesla Inc. headquarters as well as a vehicle manufacturing plant, plus Elon Musk-founded The Boring Company. Major tech employers eating up real estate and hiring here include Amazon.com Inc., Meta Platforms Inc. and Apple Inc.
Harlander stressed that while her company tends to build in suburban areas, executives are not just looking at suburban Central Texas and “don’t want to put ourselves in a box, in any way, shape or form.” But the company has found through market research that there is intense growth along the I-35 corridor from Austin to San Antonio, as well as in the northwest of the Austin metro. Williamson County has become a hub for industrial development, including tech and large business parks.
Research from NAI Partners found that the vacancy rate in the Austin industrial market shrunk to 3.3% in the first quarter of 2021 — the lowest rate ever recorded. It also marked the 11th-consecutive quarter that delivered supply (636,000 square feet) outpaced demand (represented by net absorption at 577,000 square feet) in the Austin office market.
Harlander said the Austin market is a perfect place for the company’s flex research and development product, which includes office space in the front and distribution and warehouse space in the back. It’s done well in the Northeast and she feels that Austin companies will find similar uses.
“It caters to tenants that are growing, that need flexibility, that might need more office at one point in time, might need more warehouse at one point in time. It also caters to biomedical, tech and a variety of uses that tend to be dominating the Austin market,” she said. “Our clients are everything from government contractors to we’ve built out biomedical labs, we’ve created space for logistics companies. Because the flexibility of that research and development product, we’ve also built classic office and retail. It’s all over the place.”
In addition to Maryland, St. John has offices in Louisiana, Utah, Pennsylvania, Virginia, Wisconsin, Nevada and Colorado. Last year, the company said its goal was to double its portfolio to 40 million square feet of commercial, residential and office space across the U.S. by 2036.
Harlander said that once St. John secures its first Austin-area project, it will handle everything out of the Austin office. While she’s the first employee, she said they could potentially have about 20 to 30 employees in Austin over the next decade, handling tasks such as leasing, property management and construction management in-house.
Right now, she’s spending her time “boots on the ground,” meeting people and learning about the market.
“We’re not institutional investors. We’re privately held. We can move quickly on land and we can move quickly on construction,” she said. “We’re planting our flag here. We’re here to be good partners to future clients to consultants and engineers that we work with but then also to the communities that we invest in.”