As markets shift, big office campus near Apple won't expand until anchor tenant is landed

Google, Paypal, eBay, Deloitte, Electronic Arts and Polycom have called this office park home. Developers want to turn the sea of parking lots into more buildings, but they won't build on spec in this environment.

As markets shift, big office campus near Apple won't expand until anchor tenant is landed

Starting at the existing Samsung Electronics Co. Ltd. fabrication plant, a trip up Parmer Lane in North Austin takes a driver past outposts of major technology companies, eventually reaching two campuses for Apple Inc.

That is unsurprising, said Aquila Commercial LLC Principal David Putman. This part of the metro still has large swaths of available land, plus proximity to both the city of Austin and growing suburban communities with more housing supply and highly rated school districts. Parmer Lane crosses multiple highways and major thoroughfares for speedy travel.

For tech company looking for a large campus, the area near the border of Travis and Williamson counties is an alluring place. And less developed Williamson County has an edge, Putman said.

He said that Williamson County has more options for campus environments than Travis County. It's an exciting time, but Williamson County has many benefits.

That's what Putman and his colleagues have seen at 7700 Parmer, which is just north of the newer Apple campus and managed by Aquila. The 138-acre business park is fully leased by tenants including Google Inc., Paypal Inc., eBay Inc., Deloitte, Electronic Arts Inc. and Polycom Inc. 7700 Parmer is owned by Florida-based Accesso Partners LLC and has 955,000 square feet of office space across four buildings originally built for Motorola.

But the sprawling, suburban-style 7700 Parmer could radically grow in the future, with more office buildings plus apartments and retail space replacing surface parking lots. In 2018, Accesso received approval from Austin City Council to amend a planned development agreement to add another 800,000 square feet of office space. In 2020, the owner secured the zoning necessary to also add 1,800 multifamily units, a 340-room hotel and 80,000 square feet of retail space.

Those plans are still on track — Putman said a site development plan was approved this summer for the 800,000 square feet of offices and six buildings. But Putman and his team are looking for an anchor office user before breaking ground. While they've seen strong demand for the development, shifts in market trends and a looming economic recession mean they're in no rush.

"Given the current economic uncertainty, we're kind of in a holding pattern to build anything until we have a user in tow," Putman said, adding that they can accommodate a user that wants a single or multiple buildings.

What the changes boil down to is the fact that they mostly cater to the tech industry. The sector has seen a rash of layoffs at companies like Twitter Inc., Inc., Meta Platforms Inc. and Cisco Systems Inc., while others such as Apple have reportedly frozen hiring. They're also managing shifts in market trends, like companies downsizing on office space as more employees push to work from home.

He said, "The disconnect has been the fact that employees prefer to work from home while employers want their employees in the office." Employers have had to accommodate employees because of the high demand. "The employees drive the bus."

Williamson County already houses Dell Technologies Inc.'s headquarters, the $17 billion Samsung plant in Taylor and the HQs for smaller, publicly traded technology companies like Firefly Aerospace Inc. and Hyllion Holdings Corp. Large data centers are being constructed by Skybox Data Centers LLC, Hutto, and Switch Inc. in Round Rock. Mixed-use projects like the $2 billion Pearson Ranch, near 7700 Parmer and Wolf Lakes Village in Georgetown are creating large spaces for corporate use.

Some, such as Williamson County Judge Bill Gravell see the county as the "technology superhighway" of the world. John Boyd Jr., principal of Florida-based site selection company The Boyd Company Inc. said that it is one of the most desirable areas in the world for corporate projects.

Boyd stated that some of the country's most prominent site-seeking firms and commercial real estate advisors have identified this real estate. We expect that the area will be a new center for all industries that depend on chips today, including household appliances, consumer electronics, and the booming [electric car] sector.

What Putman thinks will set 7700 Parmer apart is the amenities they offer on site, like an auditorium, food hall, fitness center, basketball and sand volleyball courts and running trails. Employers are interested in nicer offices that have amenities to incentivize employees to come into the office.

"One thing that we are seeing is the groups that are looking at it really are excited about the amenities because they are trying to get their employees excited about coming back to the office. Having a full suite of amenities is a differentiator," he said. "It's pretty unique in the market and we're seeing demand that is receptive to that value proposition because they want to be able to offer those amenities."

But he said they're stuck in a holding pattern until the big users figure out how they want to use space going forward.

"Most requirements are less size than they were a year ago," Putman said. "Everybody is trying to figure out how much space they need going forward. Nobody really knows."

In the meantime, he thinks that the balance between remote and in-office work is already changing. He's optimistic the market will reflect that.

"My sense is that they're here to stay but they may not need as much space going forward," Putman said. "At least they're trying to figure it out. ... In a year or two they can wake up and that can change. That's the hope."