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Austin, TX

7031 East US Highway 290

Address:
7031 East US Highway 290, Austin, TX 78723
Property Type:
Multi Tenant
Price:
$2,800,000
Cap Rate:
5.90% cap
NOI:
$165,164
Square Feet:
15,750 sqft
Lot Size:
1.46 acres
Price Per Square Foot:
$177.78
Year Built:
1981/1995
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Investment Highlights

Investment Highlights

Investment Highlights

  • 15,750-Square-Foot Income-Producing Industrial Office Warehouse on 1.46 Acres Zoned CS-NP
  • Features 2 Buildings, 4 Grade-Level Doors, 12’-28’ Clear Heights, 3-Phase Power, and Fenced Asphalt Yard
  • Central Austin On South Side of US Highway 290 East Frontage Road with Easy Access to IH-35 and US-183
  • Tough Barrier-to-Entry Market with Submarket Vacancy of 3.3%
  • Lykos Services Lease with Below Market Rent and Little Time Remaining Creates Lease-Up Opportunity
  • Recently Renewed 3-Year Lease with The State of Texas Having Occupied the Building Since 1995

Investment Overview

Marcus & Millichap is pleased to present the opportunity to acquire the property located at 7031 East U.S. Highway 290 in Austin, Texas, anchored by the Texas Department of Agriculture. The subject property consists of approximately 15,750 square feet of space and is situated on 1.46 acres of land. The asset features two buildings, four grade-level doors, clear heights ranging between 12’ and 28,’ 3-phase power, and a fully fenced-in asphalt yard. The income-producing asset includes office and warehouse space in an area zoned CS-NP. Located within Central Austin on the south side of U.S. 290 Frontage Road, the property has easy access to Interstate 35 and U.S. Highway 183.

The property is partially occupied by Lykos Electric and AC, LLC, whose lease expires in June of 2022. Given that the rent is below the market rate, the asset offers investors a lease-up opportunity, while generating steady income. Since 1995, the State of Texas has occupied the property and recently renewed its lease for three years. The Department of Agriculture is housed within the larger warehouse building at the subject property. Established in 1907 by the Texas Legislature, the Department of Agriculture’s key objectives are to promote productive agriculture, consumer protection, economic development, and healthy living. The current commissioner, Sid Miller, was elected in 2014 and reelected in 2018 (Texas Dept. of Agriculture).

The subject property is situated within the East submarket of Austin, the future home of Tesla’s 4,286,680-square-foot Gigafactory. Along with another 200,000 square feet of industrial space underway, the local inventory of 7.4 million square feet will be expanded by 61 percent. Currently, logistics facilities make up 65 percent of local inventory, with specialized and flex space accounting for the difference at 16 percent and 19 percent, respectively. Over the past year, net absorption amounted to about 136,000 square feet, over 94 percent higher than the 10-year annual average. Historically high demand has pushed the vacancy rate down from 7 percent in Q1 2021 to 3.3 percent by the end of the year. As a result, market rents increased by 8.7 percent in 2021, the second-highest rate on record. Market rents now stand at $13.57-per-square-foot, offering nearly a dollar premium over the market average (CoStar). The East submarket is already supported by strong fundamentals and the mere presence of Tesla will only help make the submarket an attractive investment opportunity for years to come.

With a population of over 2.2 million residents, the population of Metro Austin has grown significantly in recent decades along with economic growth. Known as the home of South by Southwest, the Austin-Round Rock metro covers about 4,225 square miles and consists of five counties in central Texas: Travis, Williamson, Hays, Caldwell and Bastrop. Austin’s population of 940,700 people, makes Travis the most populous county in the metro. Employment gains in the tech sector have contributed significantly to the metro’s recent population and median household income growth. Tesla is currently constructing a massive Gigafactory in the city that will be finalized this year. The facility is expected to generate at least 5,000 jobs, supporting future relocations and increased demand for housing. The government is a significant driver in the local economy as Austin is the state capital and home to an IRS regional processing center as well as military bases. Located within a border state, the metro benefits significantly from international trade agreements with Mexico.

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2021 Marcus & Millichap. All rights reserved. (Activity ID: ZAC0160455)