Austin eyes $90M purchase of 107-acre Tokyo Electron campus – Austin Business Journal – The Business Journals
Listen to this article 4 min
Tokyo Electron Ltd. might have a buyer for its former North American headquarters that it put up for sale late last year: the city of Austin. This article dives into the city's plans and Tokyo Electron's greater expansion strategy as it grows its regional footprint.
Tokyo Electron Ltd. might have a buyer for its former North American headquarters that it put up for sale late last year: the city of Austin.
The city is considering a $90 million purchase of the 107-acre campus, city spokesperson Shelley Parks confirmed. Meanwhile, Tokyo Electron is in expansion mode and on the hunt for another 140,000 square feet in the metro after relocating its North American headquarters from the site in Southeast Austin to the RiverSouth office tower south of Lady Bird Lake near downtown.
If the city buys the property at 2400 Grove Blvd., Parks said two existing buildings on it would be used for a second Combined Technology and Emergency Communications Center, plus office space for future city needs. One section of the property is 46.8 acres and houses Tokyo Electron’s two-building, 189,795-square-foot campus, while the other is 60.3 acres of undeveloped land with plenty of development opportunities. The site is about a couple of miles down East Riverside Drive from the Oracle Corp. headquarters and next to a former semiconductor factory owned by the University of Texas.
The Austin City Council is expected to consider the purchase on March 21, according to updated agenda documents released late in the day on March 15.
If the city moves forward with the plans, it would spend a total amount of just over $87 million, including closing costs, according to the documents. It’s also possible that the city could use some of the undeveloped land for affordable housing projects, the documents show.
Tokyo Electron also wants the opportunity to lease back the two buildings on the campus through Dec. 31, with the option to extend on a month-to-month basis through March 31, 2025, according to the documents.
Parks said the undeveloped land offers “promising opportunities” for the East Riverside and Montopolis communities, although she said the city has no specific plans for it.
The city’s proposed purchase price of $87 million matches an independent, third-party appraisal of the property, according to city documents.
Expansion plans
As Tokyo Electron shakes up its real estate portfolio, the company, which produces semiconductor manufacturing equipment, wants to open a 40,000-square-foot office in Taylor — a tall order for a small town — and it’s also seeking 100,000 square feet to establish a new research and development facility somewhere in the metro, according to an announcement.
With its new RiverSouth headquarters, a planned Taylor office and a research and development facility, Tokyo Electron would increase its Austin-area real estate footprint from 189,000 square feet to 238,800 square feet, according to the announcement, or by about 26%.
A Taylor office would be used by Tokyo Electron employees who will support Samsung Electronics Co. Ltd.’s semiconductor plant in the city, said Rick Turner, executive vice president, chief financial officer and general manager of administration of Tokyo Electron U.S. Holdings Inc. Some Tokyo Electron employees work from Samsung’s facilities, which is another reason why the company was interested in selling the Southeast Austin campus.
“The reality is, we’re going to have that office there in support of the key customer, which is Samsung,” Turner said. “But, again, it’s still early. We’re still looking at potential locations for that office.”
Turner said the company hopes to lease an office in Taylor rather than own it.
Ben White, CEO of the Taylor Economic Development Corp., described Tokyo Electron’s plan to set up shop in Taylor as “a great example of the Samsung ripple effect.”
“This demonstrates how Taylor is becoming a semiconductor hub for the entire nation,” White said.
As for Tokyo Electron’s desired research and development facility, Turner said the company typically likes to own its manufacturing and research buildings but has been looking at leasing opportunities in the Austin area.
“In this case, we feel comfortable in leasing space,” he said. “Taking existing space and fitting it up. That’s going to be our approach for this facility.”
Tokyo Electron hopes to have the new facility within 12 to 18 months, he said.
Tokyo Electron, which has been in Austin for three decades, moved its headquarters to the RiverSouth location to position it strategically for the next 30 years and to provide its employees with a more modern place to work, Turner said. Sustainability is a core initiative for Tokyo Electron, according to the announcement, and RiverSouth is a sustainable office building.
The 15-story building, which opened in 2022, is the first in Texas to receive a platinum rating from SmartScore for its cutting-edge tech and user functionality. Global real estate consulting firm WiredScore awarded the certification. Smart design elements in RiverSouth include the ability to monitor, report and optimize energy usage, secure package delivery system, sensors that collect data on light, noise, temperature and air quality; touchless elevator operation and separate tenant sub-metering, so each tenant receives its own electric bill.
Locally, Tokyo Electron has about 450 employees, Jowers said in September. It’s in growth mode, however, with plans to go from 20,000 employees companywide to 30,000 over the next five years, Turner said. The company currently has about 2,400 employees in the United States, he said.
It is unknown how many new employees will land in Austin.
—Justin Sayers contributed
This story has been updated with information from city documents that were published on March 15.
© 2024 American City Business Journals. All rights reserved. Use of and/or registration on any portion of this site constitutes acceptance of our User Agreement (updated April 19, 2024) and Privacy Policy (updated December 19, 2023). The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of American City Business Journals.
