STATESMAN EXCLUSIVE

Facebook plans major expansion in downtown Austin

Posted September 28th, 2017

In another major expansion for Facebook in Austin, the social media giant said it will lease more than 230,000 square feet of space in a 29-story office tower under construction downtown.

The new space will nearly double the Silicon Valley company’s space in Austin, where Facebook already has 700 employees and a multimillion investment. Currently, its Austin hub is in a downtown tower called 300 West Sixth, where it has 120,000 square feet of space.

Courtesy of GenslerFacebook will be the anchor tenant in a new downtown tower at 208 Nueces St., site of the former Austin Music Hall. (Courtesy of Gensler)

Under its new lease, Facebook will occupy 10 floors totaling 231,507 square feet in a building called Third + Shoal that is being built at 208 Nueces St., according to a document filed with the Travis County Clerk’s Office.

That amount of space could accommodate anywhere from 1,250 to 1,500 employees, said Sam Houston, office partner with HPI Real Estate Services & Investments.

The document says Facebook has “the right of first offer” to buy the building, which will have a total of 345,00 square feet of office space.

The building’s developers are Austin-based Cielo Property Group, partnering with TIER REIT Inc., a Dallas-based real estate investment trust, and Invesco Real Estate, a global real estate investment manager.

The building -- built on a site was previously home to the Austin Music Hall -- is due to open by the third quarter of 2018.

Katherine Shappley, head of Facebook's Austin office, said the lease would “expand our presence in the Austin area as part of our continued commitment to this thriving technology community. We’re delighted to be here and excited for what the future holds.”

Shappley did not respond to questions emailed by the American-Statesman regarding Facebook’s hiring projections, what type of positions would be housed in the new building or what the move-in timetable is.

Local real estate brokers say the deal is the largest office lease signed this year downtown, and one of the largest ever for a new lease in the city’s central business district.

For Austin, landing Facebook and other big names builds the city’s reputation as a leading global tech center, experts say.

“They don’t just drop a pin on a map and say that’s where we’ll go,” David Altounian, an assistant professor of entrepreneurship at St. Edward’s University, said in a June interview. “There are really good reasons why they are congregating in Central Texas. Because of the universities, because of the lifestyle, it’s an attractive place to bring a division.”

READ: Tech workers’ salaries go further in Austin than most tech hubs.

Facebook opened a seven-person Austin office in 2010, marking its first major U.S. expansion outside of Palo Alto, Calif., where it was then based. Facebook has since moved its headquarters to Menlo Park, Calif.

Over the past seven years, the social media giant has grown its Austin team to 700 people. Today, the company occupies four recently renovated stories in 300 West Sixth, a high-rise in the heart of downtown. This summer, Facebook signed a lease to occupy a fifth floor of the tower. The additional space at 300 West Sixth will allow the company to accommodate up to 900 workers at the site, Facebook said in June.

Facebook’s Austin office employs people in 13 different departments including finance, human resources, intellectual property, public policy and global sales. Dozens of people are part of the small-to-medium business team, which works with local businesses or agencies to craft Facebook advertising campaigns.

PHOTO GALLERY: Peek inside Facebook’s Austin office.

Facebook was lured to Austin in part because it was offered a mix of state and local incentives. The company promised to hire 200 people in exchange for a $200,000 economic development grant.

Facebook voluntarily terminated its agreement with the city in 2014 and the city made no payments, said Melissa Alvarado, a city spokeswoman.

State documents indicate Facebook received $1.4 million from the Texas Enterprise Fund.

Facebook is one of a growing number of giant California-based tech companies — including Apple, Google and Oracle — boosting their workforces in Central Texas. For the companies, the region provides a tech-savvy talent pool and a lower cost of living for the entry- and mid-level jobs they need to fill.

READ: Check out Google’s new downtown Austin offices.

Another major tech expansion was announced in June, when the American-Statesman reported that Austin-based HomeAway plans to grow by more than 2,000 additional employees.

HomeAway, the nation’s largest vacation rental company, said it will establish its global headquarters in a 16-story office tower to be built at The Domain mixed-use development in North Austin. HomeAway currently employers more than 1,500 people in Austin.

Tamir Kalifa/AMERICAN-STATESMANAlejandra Cos and a fellow Facebook employee work from a common area at the company's newly renovated downtown Austin office at 300 W. Sixth St.

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