Rainey Street’s skyline sprint is nearly finished, but one stubborn holdout remains: a 1990s IHOP squatting in the shadow of Waterline, the 74-story tower soon to be the tallest in Texas.
The diner at 707 East Cesar Chavez Street is headed to a Dec. 2 foreclosure sale, meaning one of the last underbuilt corners in downtown Austin’s hottest district may finally be in play. The Austin Business Journal reported the auction notice, adding another chapter to the unraveling of Nate Paul’s World Class Holdings.
The 0.8-acre parcel — appraised at $26.8 million — is among the once-sprawling portfolio Paul has shed since a 2019 FBI raid. The site has been posted for foreclosure three months running, with previous sales rescheduled, leaving questions about whether the December date will hold.
If it does, buyers will be circling one of the few remaining development opportunities in a district that has transformed from bungalow row to a hyper-dense cluster of hotels, luxury apartments and condo towers. Roughly 7,500 residents will eventually live in the Rainey Street Historic District, with that number swelling to around 10,000 when visitors are factored in.
Next door, Waterline is still rising; a few blocks away, the convention center overhaul is gaining steam. But anyone dreaming of a ground-up project will first have to contend with the IHOP lease.
Neither the manager nor the chain’s corporate office would comment to the outlet on its status. Developers say an expiring lease would unlock near-term redevelopment, while a longer one would require a buyout or a wait-and-see approach with rent checks rolling in. That uncertainty complicates an otherwise logical land play.
Even so, the site’s potential is obvious. Urbanspace CEO Kevin Burns, behind several Rainey towers, said the parcel is large enough to support a major high-rise. He sees a hotel or apartments as the likeliest uses, noting the freeway adjacency makes condos less attractive. Intracorp Texas president Brad Stein also pointed to hospitality and retail as best fits, though his firm isn’t a bidder.
Austin’s zoning only sweetens the pot. With participation in the Downtown Density Bonus Program height limits would be freed up, allowing the site to reach a 15:1 floor-to-area ratio, and it would be free of Capitol View Corridor constraints. Austin City Council’s new temporary 350-foot height cap can be exceeded through the bonus program.
If the auction finally proceeds, the last conspicuous gap on Rainey Street’s skyline may not stay low for long.
— Eric Weilbacher
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