Cousins Properties is amplifying its bet on the national office market recovery with plans to scoop up an iconic office tower in downtown Austin, Texas, for a near-record price.
The Atlanta-based real estate investment trust, one of the nation's largest Sun Belt-focused office landlords, is under contract on a $521.8 million deal to acquire Sail Tower, a roughly 800,000-square-foot skyscraper leased entirely to tech giant Google. The deal with seller Trammell Crow Co., also the developer of the 35-story building, is expected to close before the end of the year. Eastdil Secured represented the seller in the pending transaction.
"Austin continues to exhibit strong demand fundamentals, attracting top talent and growing companies," Cousins President and CEO Colin Connolly said in a statement. The pending deal "enables Cousins to enhance the quality of our leading lifestyle office portfolio and is immediately accretive to earnings."
The deal would be the second-highest price ever paid for an Austin office property, according to CoStar data. It would follow Kilroy Realty's $580 million acquisition of the downtown Indeed Tower in 2021, another deal in which Trammell Crow served as both the seller and the developer for one of the city's tallest office buildings.
While the Sail Tower deal would be one of the city's largest for overall price, the $649-per-square-foot price tag is not among the top for office purchases in Austin by that metric. Clarion Partners bought 901 E. Sixth St. in 2019 for about $871 per square foot, making that deal the priciest by square foot. Cousins' purchase of 300 Colorado in 2021 for about $860 per square foot is Austin's second-largest deal by that metric.
The pending purchase emboldens Cousins' position at the forefront of a growing cohort of national office landlords looking to pursue deals.
Earlier this summer, executives of the REIT said they would take advantage of "compelling investment opportunities" to close on discounted office deals before valuations began to rebound.
Window of opportunity
Sail Tower, named for its Pelli Clarke Pelli Architects-designed curves, would be the latest addition to Cousins' Austin-area office portfolio that spans more than 1.7 million square feet and includes properties such as One Eleven Congress, Colorado Tower and San Jacinto Center.
In the past several months, Cousins has committed more than $930 million — including the pending Austin sale — in acquisitions that fit into its portfolio of high-end office properties in high-demand areas.
That's a combination the REIT has attributed to its success despite the occupancy and leasing pitfalls plaguing owners of lower-quality buildings.
Last week the REIT closed on its $328.5 million purchase of the Vantage South End, a two-building office campus in Charlotte, North Carolina, that has largely stood out against a backdrop of tenant downsizings and real estate cuts.
And in August, it closed a more than $80 million acquisition of a trophy office tower in midtown Atlanta.
Room to grow
Cousins' interest in the Sail Tower deal was largely driven by a purchase price that "is well below replacement cost" and rents that are "significantly below market," according to an investor presentation on the acquisition.
The property also includes high-demand amenities that can help to attract tenants looking to upgrade to higher quality spaces.
Austin, in particular, has benefited from companies' prioritization of upscale offices given its outsize influx of new developments. The city's downtown area has more than 1.8 million square feet under construction, according to CoStar data, a pipeline that is predominantly made up of speculative, luxury projects that broke ground in late 2023 and earlier this year.
While less than a quarter of that pipeline is preleased, developers are optimistic that Austin's office market will rebound, a sentiment bolstered by the region's strong economic outlook and steady demand in some of its newest office projects.
And for Cousins, that optimism extends far beyond Austin's core and is expected to fuel more blockbuster-worthy acquisitions.
"Broadly speaking, the office market as a whole is going to stabilize," Connolly recently said of the market's broader recovery. "You’re going to see lower-quality properties candidly disappear and repurposed while the highest-quality buildings fill back up, and that process is certainly underway today. That gives us a lot of optimism."