ABJ: Half of Freescale Semiconductor site for lease
Apr 11, 2010
http://www.bizjournals.com/austin/stories/2010/04/12/story1.html
In what could prove a mixed blessing for Austin and its commercial real estate market, more than half of the massive, nearly 1 million-square-foot Freescale Semiconductor campus in North Austin is now available for lease, according to AQUILA Commercial LLC.
On the downside, more than 6 million square feet in similar Class A office space is already for lease in the Austin area, and supply continues to outweigh demand, according to the latest quarterly report by Oxford Commercial. The total size of the Freescale buildings for lease — about 500,000 square feet — is regarded by local real estate experts as the largest chunk of office space of its kind on the Austin market now, and the average office space runs about 25,000 square feet or less.
On the upside, Freescale’s space is plug-and-play-ready, real estate experts said — an appetizing carrot for Austin economic development officials to wave in front of the growing number of companies thinking about moving or expanding here. It’s already come in handy. Hanger Orthopedic Group Inc., which is moving from Maryland, recently started using 30,000 square feet space at the North Austin Freescale campus temporarily while its new headquarters at the Domain are being made ready.
“You don’t always want that size of land on the market during a downturn, but since we are seeing more companies coming here and seriously looking at Austin to set up operations, having that kind of inventory can help,” said Brian Gildea, economic development director with the city of Austin’s Economic Growth and Redevelopment Services Office.
Austin-based AQUILA has been tapped to lease the property by its owner, San Francisco-based Spear Street Capital, a real estate investment firm that specializes in converting single-tenant campuses into multitenant properties, and which bought the Freescale campus in a quiet deal in 2008. AQUILA has renamed the campus “7700 Parmer,” as its owners want to emphasize its availability and that it’s not solely a Freescale site.
“What 7700 Parmer offers is an immediate opportunity for a corporate user to get an extremely high-quality, world-class campus facility for less money than new construction,” said David Putman, a principal at AQUILA who is marketing the property with fellow principal Bart Matheney.
The 955,000-square-foot Freescale campus, which sits on a 129-acre site on Parmer Lane near Anderson Mill Road, has four buildings. Freescale will continue to fully lease two of the buildings, known as Building A and Building B. Building C, which is about 290,000 square feet, and Building D, about 210,000, are up for lease.
7700 Parmer used to be home to Motorola Inc., the initial occupant when it opened in 2001. In 2004, Motorola created Freescale as a spinoff and set up a large operation there.
Freescale officials wouldn’t disclose how the company’s operations have been scaled back at the North Austin site, but it has reduced its workforce to offset an industrywide contraction in the past year. In January, Freescale reported a $1.2 billion loss on $3.5 billion in revenue during fiscal 2009, which followed a $7.7 billion loss on $5.2 billion in revenue during 2008. The company reported losing $114 million on $951 million in revenue during the fourth quarter 2009, compared with a $4 billion loss on $940 million in revenue during the same three-month period the previous year.
In early 2009, Freescale cut about 700 local jobs as part of companywide reduction of 2,400 positions, some of which were at 7700 Parmer. A Freescale spokesman said the company frequently moves employees between its handful of sites in Austin — it employs about 5,000 in Austin altogether — and stressed Freescale shared the North Austin campus with other tenants in the last couple of years before the cuts.
Matheney confirmed that PayPal, the online payment service owned by e-commerce giant eBay Inc., has leased about 70,000 square feet at 7700 Parmer for its data center in Austin.
Tenants at 7700 Parmer have a variety of amenities that tend to attract companies wanting a better work-life balance for employees. The property includes a large outdoor pavilion, running trails, basketball and sand volleyball courts, soccer and baseball fields, a lake, a full-service gourmet cafeteria, an accredited preschool onsite run by Stepping Stone School, a fitness center and a teaching center-auditorium that Baylor University uses for its graduate MBA program.
New plans for 7700 Parmer include adding monument signage for tenants along Parmer Lane, separating the buildings’ infrastructure, updated landscaping and adding up to 1,500 parking spaces to its existing 3,675 spots for higher-density corporate users.
“7700 Parmer is a calling card for Austin, in that it allows us to compete for tenants throughout the country that are looking to take advantage of the available workforce, quality of life and cost-of-living advantages that Austin offers,” Matheney said. “This project represents one of the largest blocks of space in the southwest part of the country and will undoubtedly attract world-class tenants.”
