Five long and difficult years after its first announcement, the Sixth and Guadalupe tower has finally “topped out” — reaching the structure’s maximum height of 865 feet, for now holding the title of tallest building in the city. Developed by a partnership of Kairoi Residential, Lincoln Property Company, and DivcoWest, the tower now finds itself in a remarkably different world from when it broke ground in 2019, with general contractors JE Dunn subsequently facing the pandemic, labor shortages, and increased costs due to inflation as construction continued over the last three years.
Containing 2.2 million square feet spread across 66 floors, the mixed-use building at the northwest corner of Sixth and Guadalupe Streets contains 19 levels of office space below 32 residential levels containing a total of 349 apartments, alongside 10,000 square feet of street-level retail and a whopping 14 floors of above-ground parking. The building’s design by Gensler Austin and landscape architects Nudge Design includes a 32,000-square-foot open-air amenity deck above the garage podium, described as the largest elevated outdoor space of its kind in the city.
But if you’re not a committed skyscraper junkie, the most relevant news about the building could have less to do with its topping out and more about what’s going inside. You might have heard that Facebook parent company Meta, the tower’s expected mega-tenant set to occupy the building’s entire office component at 589,000 square feet, has a pretty serious case of cold feet — the company reportedly now plans to sublease the space, rather than taking occupancy itself, as part of what it amusingly calls an “ongoing rationalization of its office footprint.” Gosh!
It’s not just Austin: Last week, Meta executives said on an earnings call that the firm expects to spend more than $3 billion to decrease its office footprint. The company already shelled out $413 million last quarter to end office leases and expects to spend another $900 million this quarter…by subleasing instead of canceling its deal for the Austin building, Meta would avoid the termination fee standard in most lease agreements. But sublease rents are typically much less than what the original tenant pays.
Combined with the announcement last week that Los Angeles-based firm Kilroy Realty is indefinitely halting construction on its Stadium Tower project near the Domain until the economy — or the building’s own pre-leasing status — looks a bit more sunny, there’s a touch of doom and gloom making its way around the local real estate universe as everyone contemplates the prospect of a recession. As residents of the so-called City of the Eternal Boom, we’ve seen Austin’s market admirably stare down economic hardships like the 2008 financial crisis that took a much heavier toll on the rest of the country. Even so, that crash killed a number of tower projects formerly planned around downtown — meaning we’re crossing our fingers about the future of every announced building that hasn’t yet broken ground around here.
With the sudden ambiguity of Meta’s plan to sublease its offices, we don’t really know what the future holds for Sixth and Guadalupe — but we’re relieved to see this new benchmark for Austin’s growth take shape at all considering these last few rotten years. The building, now focused on its interior buildout, is set to open in 2023.
