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AUSTIN-The office crane hasn’t abandoned its habitat in Austin’s CBD. It’s just taking a break before returning to work on Atlanta-based Cousins Properties Inc.’s 33-story, 525,000-sf Congress at Fourth office project. Work began this week with interior demolition of buildings on the site. Cranes should be on the job by mid-February.

The project, the first on Congress Avenue since 1987, begins as Austin’s office vacancy rates are tracking higher. Another big office building, CarrAmerica’s 448,870-sf 300 West Sixth is nearing completion with the first tenants poised to move in by the end of the year. Other class A buildings in the CBD have sizeable space available.

The city’s overall vacancy rate was 16.1% at the end of the third quarter. Downtown, the direct vacancy rate is 8.8%, but balloons to 13.9% when sublease space is counted. Cousin’s is eyeing that 8.8% figure, Tim Hendricks, the company’s senior vice president of development in Austin, tells GlobeSt.com.

“I would not identify Austin with a 9% vacancy as full of vacant space,” Hendricks says in response to a question. “We don’t perceive downtown Austin as being in any type of critical condition at all. To the contrary, Austin has one of the most dynamic downtown’s supported by a strong professional business community…We feel very good about Austin.”

Even so, embarking on the project now is a “bold move,” says Charles Heimsath, who has monitored the Austin commercial real estate market for years through his firm Capitol Market Research. “What they’re banking on is a resurgence of demand for downtown office space. They’re really looking at two years from now. That takes a lot of vision and confidence in the downtown office market.”

Hendricks says the economists Cousins consulted call for a much-improved economy two years from now. “Cousins has always been able to focus their development intentions toward opportunities,” he says. “Opportunities for companies like ourselves are not when the market is at the top. Frankly, it is identifying where the market is at the bottom, where the turnaround is and doing the proper timing to deliver new product at the right time.”

Two law firms and the project’s construction company have signed on to take a total of 90,552 sf. “They’ve committed their firms and the future of their Austin firms to Congress at Fourth by signing long-term leases even in a downturn,” Hendricks says. “That leads us to believe that we’re doing the right asset and we’ve targeted our rental rates at the right point.” Current class A rental rates in the CBD are between $32 per sf and $38 per sf, Hendricks says, and Cousins is quoting rates from the middle to high end of that range.

Set on the northeast corner of Congress and Fourth Street, the building is set back from Congress with a segmented pyramid design. It will feature a plaza, high-end restaurant, retail and 1,500-space parking garage. Duda/Paine Architects LLP, based in Durham, NC, is the design architect and Dallas-based HKS Inc. is the architect of record. Constructors and Associates, also based in Dallas, is the construction company. Hendricks declined to disclose the cost of the project.

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