Stonelake Capital Partners has abandoned plans for a multifamily tower in downtown Austin.
The Austin-based developer recently listed a nearly half-acre property at East Fifth and Red River streets after cancelling plans to build a 37-story apartment tower on the site, the Austin Business Journal reported. JLL’s Jeff Coddington, Joe Dowdle, Parker McCollum and George Carameros are marketing the land for sale.
Stonelake purchased the development site, a surface parking lot and the historic building that once housed Carmelo’s Italian restaurant, in 2020 at a foreclosure auction. The company unveiled plans for a development, which would have included luxury apartments and retail space on the ground floor, the following year.
However, the project failed to materialize. Stonelake Capital did not provide a reason for its change of plans.
Housing demand is strong in Texas, but Austin’s rental market is oversaturated. Nearly 16,000 units were completed in the first three quarters of last year, causing a nearly 5 percent year-over-year decline in rents, according to Yardi Matrix. High construction costs and elevated interest rates have also made large-scale developments less financially viable.
“It’s much more favorable to acquire an existing property that’s newer and has a high occupancy than to actually take on the risk of building a new project from the ground up,” said Israel Linares, an analyst with CoStar.
Several multifamily projects are in the works in downtown Austin. Northland Living, a subsidiary of Dallas Stars owner Tom Gaglardi’s Northland Properties, plans to start construction this year on Luminary, a 280-unit project at the northwest corner of West 14th and Guadalupe streets.
Stonelake, led by managing partners John Kiltz and Kenneth Aboussie Jr., is also developing 415 Colorado, which will consist of residential units and office space.
Additionally, the company recently secured significant office leases from PayPal and Wise PLC at its Domain Tower 2. The leases, amounting to more than 150,000 square feet, boosted the tower’s occupancy to 75 percent.
— Andrew Terrell
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