Q&A: Stream's RiverSouth nearly 100% leased in tough office market – The Business Journals
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We spoke with representatives of Stream Realty Partners to figure out the property's secret to success during these trying times for office landlords. At the end of this report, check out a list of the the Austin metro's most successful office brokers who represent landlords.
Austin is experiencing a sluggish office leasing environment, but Stream Realty Partners’ 15-story RiverSouth office building has been seeing nothing but success and now is just a few thousand square feet shy of being 100% leased.
The 372,000-square-foot RiverSouth, delivered in 2022, secured an anchor tenant late last year when Tokyo Electron signed a roughly 98,000-square-foot lease. That was followed by a 10,850-square-foot lease from The Palisades Group inked in December, which pushed the amount of leased space in the property to an impressive 98%.
Other tenants at RiverSouth include Alert Media, Baker Botts, Under Armor and Goldman Sachs.
RiverSouth, located south of the river on South First Street as its name suggests, was lauded for its cutting edge technology and user functionality when it opened. The building was the first in Texas to receive a platinum rating from SmartScore, awarded by global real estate consulting firm WiredScore.
Smart design elements in RiverSouth include the ability to monitor, report and optimize energy usage; secure package delivery systems; sensors that collect data on light, noise, temperature and air quality; touchless elevator operation and separate tenant sub-metering, so each receives individual electric bills.
When RiverSouth got its platinum certification in July 2022, WiredScore had awarded 176 buildings globally with platinum SmartScore certifications, but just 36 were in the United States.
The Austin Business Journal recently spoke with Stream’s Brad Philp, managing director and partner, and Eric Herron, managing director of development and construction, about why RiverSouth has been such a successful project.
To what do you attribute the building’s leasing success?
Brad Philp: There is no surprise, but there has been a flight to quality among the active tenants in the market. Employers are trying to get employees back in the office and are willing to pay a premium to move into properties that offer best-in-class work environments with great amenities and locations. RiverSouth offers a lot of the attributes tenants are looking for in an office building: outdoor space, collaboration areas, spa-like locker and shower facilities, great views and glass lines, state-of-the-art fitness facilities, on-site security and much more. We currently have about 9,000 square feet remaining in the building, and we have deals working on those vacancies.
What kind of technological amenities does RiverSouth offer?
Eric Herron: RiverSouth is the most technology-focused building Austin has ever seen. It is a very intelligent building, the smartest in Austin and likely in Texas. In 2021, we won an award as the project was nearing completion as the smartest building in the U.S. by IBCON — a smart-building trade organization. Twenty-one building systems are integrated to communicate with each other through a building operating system. Data from over 6,000 data points in the building feed data to the operating system (brain) of the building, allowing for about 19 use cases that enable energy savings, operational efficiencies, and a better tenant experience.
Are the tech and amenities available at RiverSouth things that could be retrofitted into an older property to make it more attractive to potential tenants or add value to a property? Or are they too difficult and costly to add in renovations?
EH: Stream is currently studying retrofitting several legacy office buildings in our portfolio to smart. Likely, integrations aren’t quite as deep as in a new build, but owners can get a ton of value from integrations of three or four systems, and the cost is less than we expected to do that.
What lessons has Stream learned from the development and leasing of RiverSouth?
BP: On the leasing front, we delivered this building during Covid and in a market where there was a lot of uncertainty. We saw that the larger tenants had gone dormant to some extent, and we made a quick decision to be willing to break floors up and were willing to lease to smaller tenants — 10,000- to 20,000-square-foot tenants seemed to be the only tenants that had a line of sight on their future office needs. We broke floors up while maintaining a large block in the event a “whale” showed up. One did with Tokyo, and we had a space that would accommodate them.
We were also able to achieve higher rates on the smaller spaces vs the larger deals done in the building. It’s not often that an about-10,000-square-foot tenant can get into a newly constructed Class A office building and we provided that opportunity. In this market we have never looked back and said we wish we wouldn’t have done that deal. We’re super proud to have leased this building to the level it is at. It’s almost uncanny to have an office building leased to 100%, but we feel confident that we’ll be there soon. I think that is a testimony to the quality of the building that Stream developed.
We will have some great retail space, and we are looking for the right tenant who wants to be at the gateway to the South Central Waterfront District.
Austin-area office landlord s.f. leased
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