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TECH’S NEW DOMAIN: Retail came first, but now the Domain has grown into a hub for tech companies

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Written by Shonda Novak for the Austin Statesman

Jennifer Simmons loves her work — and everything around it. She’s surrounded by no shortage of shopping, dining, bars and entertainment venues, all within walking distance of her office in the Domain, the mixed-use development in North Austin.

Simmons is director of marketing for Compeat, which makes software for the restaurant management industry. The company, which has 104 employees in Austin, opened its Domain office in July 2018.

Formerly, Compeat’s office was near Oak Knoll Drive and U.S. 183. “You couldn’t walk to any restaurants, or even a Starbucks,” Simmons said. “It was not ideal. The Domain makes everything convenient — work lunches, happy hours, workouts, offsite meetings — everything is walkable. There are lots of upsides.”

Developed by Austin-based Endeavor Real Estate Group, the Domain opened in 2007. Since then, its stores, restaurants and other amenities have established the sprawling project off North MoPac Boulevard (Loop 1) as a hub of shopping and entertainment.

But the Domain’s appeal also has made it a magnet for employers. And those include the tech companies that are fueling its latest surge of growth, one marked by new office towers that are transforming the Domain.

About 3.4 million square feet of office space is built or under construction at the Domain — a 200 percent jump since 2010, according to Aquila Commercial LLC, an Austin-based commercial real estate services firm. Tech companies including HomeAway (newly renamed Vrbo), Amazon, Indeed and Facebook have leased large blocks of space, even entire buildings, and before construction began in some cases.

The Domain’s tech boom is coming as employers in that sector compete to attract and retain top talent, commercial office brokers say. And employers are choosing the Domain because their employees want to be there.

“Austin is a technology magnet, and the Domain is one of its main draws,” said Scott McLaughlin, a senior vice president with TIER REIT, a Dallas-based real estate investment trust and the Domain’s dominant office landlord. “The Domain is not only attracting from among the greatest tech companies, but the tech companies in turn are using the Domain to attract the best talent.”

Jay Lamy, an Aquila principal and co-founder, said the growing tech presence at the Domain “is significant because it is providing more and more reason for high-paying jobs traditionally reserved for Austin’s central business district to begin gravitating to the northwest.”

The Domain has been successful at providing the ‘live, work, play’ environment that many tech companies are seeking for their workers, Lamy said.

“If you look at some of the tech companies in places like Silicon Valley, you see large campuses being built that provide on-site amenities for employees,” Lamy said. “The Domain essentially provides a similar atmosphere without employers having to build out those amenities themselves. We also see some of the major tech tenants with space downtown opting to open additional offices at the Domain to access the growing workforce available in Northwest Austin.

“Commercial real estate broker Diana Holford said the Domain’s energy is palpable.

“It’s fun, it’s vibrant, it’s alive,” said Holford, senior vice president in Austin with JLL, a global commercial real estate services firm. “Who wouldn’t want to be here?”

HomeAway leads the way

In 2013, HomeAway, a homegrown Austin company, announced it would move 750 employees into an office building Endeavor had developed at the Domain. After that, office leasing and development quickly gained momentum, with Endeavor completing seven new office buildings at the development by 2016, according to Endeavor’s website.

HomeAway has now been rebranded as Vrbo, and it will soon open its global headquarters in a new 16-story office tower called Domain 11 at the north end of Alterra Parkway.

The company, which operates the world’s largest online vacation rental operation, will occupy the entire building, which will have 315,000 square feet office space capable of accommodating more than 2,000 workers. In addition to its first Domain office, Vrbo also has locations downtown and in South Austin.

Today, Vrbo is among the top five tech tenants at the Domain. Combined, those firms — including Facebook, Indeed and Amazon — fill almost 30 percent of its office space, according to Newmark Knight Frank, a global commercial real estate services firm.

But it’s not just big tech companies that are gobbling up office space at the Domain.

Compeat, which has about 200 employees, “could not have found a better fit” than the Domain, CEO Jeff Stone said. Most of its employees live within a 20- to 30-minute drive from the Domain, and some of Compeat’s customers are there. They include Paul Martin’s American Grill, Cyclone Anaya’s Tex-Mex Cantina, Doc B’s Restaurant + Bar, Punch Bowl Social, Sprinkles Cupcakes and Hat Creek Burger.

“Eighty percent of our employees are restaurant veterans, so we wanted to be located near the pulse of the industry and close to our customers,” Stone said. “We are now located where cutting-edge technology meets amazing food.”

Jennifer Day, Compeat’s communications manager, said the company did briefly consider space downtown, but Stone “quickly chose the Domain instead because the commute was easier for a majority of our employees.”

With the company seeing rapid growth — its headcount increased 500 percent over the last three years, with 270 percent occurring in the Austin office — the local office is designed to allow for expansion, Stone said.

“Being based in the tech corridor of Northwest Austin, we are sure to attract top talent as we continue to gain new customers at an incredible pace as restaurants increasingly turn to technology to streamline operations and increase profitability,” Stone said.

A revised vision

Had things gone according to plan, the Domain as it is today wouldn’t exist.

Twenty years ago, amid the dot.com boom, Endeavor’s five founding principals envisioned a 5-million-square-foot office campus on 304 acres it owned with two partners at the time. The principals had just struck out on their own from Trammell Crow Co. to launch Endeavor.

The office campus was to house many of the technology companies that were flocking to Austin during the boom, a trend Endeavor anticipated would continue over the next decade.

On the land where Neiman Marcus now sits at the Domain “was exactly where we had the first four or five mid-rise office buildings planned,” recalled Bryce Miller, an Endeavor founder and managing principal.

Endeavor went through a branding process for the planned campus, settling on the name Domain to reflect the technology era and its founders’ vision for a tech-focused campus.

By 2000, while renovating a former 180,000-square-foot IBM building on the site, Endeavor was negotiating with five tech tenant prospects for 360,000 square feet of space, twice the amount Endeavor had available.

Then came the tech bust, wiping out Endeavor’s plans.

“The prospect list went from 360,000 square feet to zero,” said Andy Pastor, also an Endeavor founder and managing principal. Across Austin, several million square feet of sublease space flooded the market.

Said Miller: “Once the market slide sank in, we realized we had roughly 300 acres of land and needed to do something to help monetize our investment.”Endeavor shifted gears. With that part of Austin underserved by retail, Endeavor began exploring the idea of a retail-driven project for the Domain.

“We thought there was long-shot potential for there to be a significant retail project for that geographic area,” Miller said.

Over the next several years, Endeavor’s founders worked on the project, encountering highs and lows — and resistance from a formidable competitor, Simon Property Group, the nation’s largest mall owner. (Endeavor would later bring Simon on as a partner. Simon eventually ended up buying Endeavor’s share of the first phase, and went on to develop a second).

Lows came when prospects for a Target, and later, a Crate & Barrel, evaporated. Then pay dirt: landing Neiman Marcus as the premier anchor tenant.

In March 2007, the Domain opened and has become the city’s signature retail center, unequaled in its size, scope and tenant mix.

And it has come to have a significant tech presence, Endeavor’s original concept.

“I think it has exceeded our expectations,” Miller said.

‘Second downtown’

Today, the Domain has about 1.8 million square feet of retail space. Along with its office space, it also has 3,700 apartment units and about 900 hotel rooms.

Its sheer mass and mix of offerings has earned it the nickname of “Austin’s second downtown.” Austin real estate consultant Charles Heimsath says the nickname fits. Its similarity to a downtown experience is also what makes the Domain such a draw for tech companies, Heimsath said.

“The Domain has a wide diversity of uses, which is what makes downtown so attractive to many of the tech companies,” said Heimsath, president of Austin-based Capitol Market Research. “You’ve got retail space, hotels, office space plus parks and open space and wide sidewalks. And now with (entertainment district) Rock Rose there’s an engaging bar scene. And, by the way, parking garages at least today for the most part are free. You can see why it’s an appealing alternative to downtown.” (Many buildings downtown charge for parking, typically about $200 a month, per Aquila).

Aquila’s Lamy said the “second downtown” label for the Domain “isn’t far off from the truth.”

“Looking at the population center of Austin over the years, it has been quickly moving towards the northwest, and I think some of that has to do with the Domain drawing more and more jobs to the area,” Lamy said.

JLL’s Holford said it’s not surprising the Domain is experiencing a tech takeover. In addition to the convenience and amenities for employees, the Domain generally comes at a savings compared with downtown office space.

“The Domain is less expensive than downtown, and you get downtown amenities at a reduced price,” Holford said. “People from out of town call me and they say, ‘I hear I need to be in the Domain.’ They’ve heard of it.”

In a report last year on the Domain, Aquila wrote that the development “offers a similar experience to a downtown office at a slightly lower price, giving tenants who might normally locate in the central business district a chance to locate closer to where many of their employees live.”

Aquila said rents averaged $52.45 per square foot in the first quarter at the Domain compared with $66.21 per square foot downtown.

Sizewise, the Domain’s 3.4 million square feet of office space is a 200 percent increase since 2010, according to Aquila. By comparison, downtown Austin has about 12 million square feet of top-tier office space existing or under construction, a 71 percent increase since 2010.

Tim Hendricks, managing director in Austin for Cousins Properties Inc., said the walkability of the Domain “reflects a lot of the great qualities of Austin’s downtown.”

“The Domain provides just another reason why tech firms continue to thrive here in Austin,” Hendricks said.

Cousins, downtown Austin’s largest office building owner, will itself become part of the Domain due to its pending merger with TIER REIT, which is expected to be final in the third quarter. TIER REIT currently owns more than 70 percent of the office space at the Domain, and it has 620,000 square feet of office space under construction, McLaughlin said. It has substantial remaining opportunities to develop new buildings as well as redevelop existing sites, potentially adding 3.5 million square feet of space.

Courting talent

For tech companies that already have offices downtown, expanding in the Domain is a chance to provide employees with both a central and suburban option.

Companies such as Indeed, Facebook and Apple are among those using a multioffice strategy to accommodate employees’ varied commuting, housing, child care needs and other preferences, said Mike Kennedy, principal in the Austin office of Avison Young, a global commercial real estate services firm.

Giving workers a choice of where to work serves as a recruitment tool for companies eager to lure new employees, Kennedy told the American-Statesman last year.

Companies realize they must “be able to attract employee talent to compete in their business model,” he said. “With a less than 3 percent unemployment rate, and significant in-migration of population, talent has a choice.”

Offering location options is a strategy being deployed by internet job search company Indeed, which is in the process of a major expansion in the Domain.

A year ago, the company, which currently has 2,500 employees in Austin, announced plans for a new wave of growth that would add as many as 3,000 new jobs in Austin over the next several years. The Domain will play a key role in that.

Indeed, which will remain at its main campus at the Champion Office Park on Loop 360 (North of Capital Texas Highway), is expanding its presence both downtown and at the Domain. Downtown, the company has signed a lease for about 307,000 square feet in a 36-story tower under construction at West Sixth and Colorado streets.

At the Domain, Indeed will occupy the entire recently completed 11-story Domain Tower as well as all of Domain Gateway, a five-story building on the east side of the Domain.

Indeed CEO Chris Hyams said the decision on where to expand in Austin was made with mobility issues in mind. Indeed employees will be able to choose a work site based on what is most convenient for them, he said.

The new offices also will have access to public transportation, which isn’t the case at the Champion Office Park campus, Hyams told the Statesman last year.

“We believe that spreading things out over multiple locations is partially a way to help ease some of the traffic and commute time, both for our employees and also for the city as a whole,” Hyams said.