Google is moving ahead with partially occupying and subleasing downtown Austin’s Sail Tower after years of speculation about its plans for the building.
Google is marketing the top six floors of the 35-story tower at 601 West Second Street for sublease, the Austin Business Journal reported. One taker is Digital Realty Trust. The Austin-based data center REIT is preparing to move into a sublease in the tower, according to a recent state filing.
The REIT is planning an 11,200-square-foot executive suite with conference rooms, offices, workstations and a terrace-level upgrade on the 32nd floor. Digital Realty generated $5.6 billion in revenue in 2023 and would be one of the tower’s highest-profile occupants to date, albeit as a subtenant.
Google signed a full-building lease for the 804,000-square-foot tower in 2019 but has yet to occupy any of it. The company confirmed in March that it plans to move in later this year after paying tens of millions in unused rent over the past several years. The lease runs through 2038.
The Sail Tower, developed by Trammell Crow Company and sold to Cousins Properties for $521.8 million ($649 per square foot) in December, has loomed large in downtown Austin as a symbol of tech dominance and pandemic-era office market uncertainty. Cousins executives said they were confident in Google’s long-term Austin plans despite delays in occupancy.
If Digital Realty’s move-in is finalized, it would mark one of the first major leasing wins in the building and a potential anchor for other subleases as Google consolidates operations. The tech giant’s roughly 2,000 Austin employees are still largely based out of its offices in the Saltillo development in East Austin and 500 West Second Street, next door to the Sail Tower.
Austin’s office market is one of the nation’s softest. Vacancy ticked down to 24.8 percent in the first quarter, according to Partners. While leasing activity has improved, sublease availability is a significant pressure point in the central business district.
— Judah Duke
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