New UT System building to lease space to retailers

Madlin Mekelburg

The UT System will lease out more than 50,000 square feet of its new consolidated building to retailers. 

Last week, the System announced administrative services and employees in downtown Austin will be integrated into one building on Seventh Street, between Lavaca and Colorado streets. The building will be completed in late 2016 or early 2017. 

The System currently operates out of five buildings downtown: O. Henry Hall, Claudia Taylor Johnson Hall, Ashbel Smith Hall and the Lavaca and Colorado buildings. According to System spokeswoman Jenny LaCoste-Caputo, the Lavaca and Colorado buildings will be demolished to make room for the construction of the new building.

According to Scott Kelley, executive vice chancellor for business affairs, the estimated cost of the project is $102 million. Kelley said projected savings for the System could be between $2 million and $8 million a year, with a total estimated net savings of more than $125 million over 30 years. 

“If you look at the age, it’ll start saving money right away,” Kelley said. “[Ashbel Smith Hall] needs roof repair right now, the little plaza area needs to be waterproofed. If we chose not to [build a new office] we would be spending millions of dollars over the next couple of years to do those. By deciding to move, we can halt that and defer those costs and not make [those changes] and save money from the beginning.”

Kelley said current office space occupied across all five System buildings totals approximately 226,000 square feet, while the new building will have about 258,000 square feet.

“Because we’ll be more efficiently using the space, we can take the employees here and move them over to occupy about 200,000 square feet, so we’ve got about 58,000 additional square feet,” Kelley said.

Kelley said leasing out some of the space for commercial development has always been a possibility. 

“We’d always envisioned potentially putting some retail on the first floor,” Kelley said. “We thought that would be good for our employees. We think, and we had discussions with the city, it also may create a catalyst for future development in this area, which we would also applaud as residents here during the day.”

LaCoste-Caputo said approximately 200 employees will be displaced once construction begins and will be temporarily moved to other office spaces around Austin. In a press release from the System, Kelley said the remaining System buildings — O.Henry Hall, Claudia Taylor Johnson Hall and Ashbel Smith Hall — will be available for leasing.

“O. Henry Hall will remain owned by the UT System and leased to new tenants,” Kelley said in the press release. “The property housing the Claudia Taylor Johnson Building and Ashbel Smith Hall will be available for improvement or redevelopment.”

System Chancellor Francisco Cigarroa, who announced last month that he is stepping down as chancellor, updated his higher education improvement plan, “A Framework for Advancing Excellence,” in 2012. In the plan, Cigarroa said he wanted the System to develop stronger “space utilization efficiencies.”