TECHNOLOGY

Rackspace nixes plans to move to ACC Highland campus on former Highland mall site

The San Antonio-based company had planned to move 500 employees to the space once occupied by Dillard’s.

Posted February 9th, 2017

San Antonio-based Rackspace has nixed plans to move more than 500 employees into Austin Community College’s Highland campus, formerly the Highland Mall site in North Austin.

Rackspace — a cloud hosting company — had announced plans to open its offices in a space that once housed the mall’s Dillard’s women’s store. Renovations to the building, which has been stripped to its steel shell, were estimated to cost $14.5 million, according to a filing with the Texas Department of Licensing and Regulation.

ACC approved plans for a public-private partnership with Rackspace last year.

But Rackspace was acquired in November in a $4.3 billion buyout by private equity firm Apollo Management Group. This week, the company said it is cutting 6 percent of its U.S. workforce along with an undisclosed number of jobs overseas.

ACC vice president of finance and administration Neil Vickers told the American-Statesman that after Rackspace changed ownership “negotiations subsequently suspended.”

“The college is moving forward in the best interest of the college and its stakeholders,” Vickers said in a written statement. “ACC is pursuing exciting opportunities for the space, including new partnerships that support the original vision to enhance our programs, provide real-world learning experiences with students, and build strong community alliances.”

RELATED: San Antonio-based Rackspace to cut 6 percent of U.S. workforce.

Under the original plan approved by ACC’s board of trustees, a commercial real estate development firm would have renovated the four-story, 194,000-square-foot former Dillard’s space, funded by a portion of Rackspace’s lease payment.

The partnership was expected to include paid internships for ACC students, as well as enhanced technology and other educational benefits.

Founded in 1998, Rackspace operates data centers around the world, and employs more than 6,200 employees worldwide.

Its first operation in Austin was a small office with eight salespeople that opened in 2006, but the company quickly began to hire tech support and programmers in Austin, as well.

Rackspace’s current Austin office is off Interstate 35 near Rundberg Lane. The company has 500 employees in Austin, Rackspace spokeswoman Monica Jacob said.

Jacob confirmed that Rackspace is no longer planning to move to the ACC campus, but said “we have no further updates to share regarding the office space at this time.”

The Rackspace layoffs announced Monday will involve at least 275 of its more than 4,600 U.S. employees, and will also entail “somewhat smaller reductions” in Rackspace offices in other countries, CEO Taylor Rhodes said in a blog post.

Rhodes said the layoffs were “personally painful, but they are necessary and manageable.” He said the company is cutting jobs primarily in its corporate administration and management teams, “while striving to create the least impact to our… support and product teams.”

While Rackspace in no longer part of the plan for ACC Highland, the college is moving forward with a number of projects included in the latest phase of the mall’s makeover, ACC spokeswoman Jessica Vess said.

A bioscience incubator debuted Jan. 31, while new classrooms, faculty offices and fine arts studios will open this spring and summer.

Construction of a regional workforce innovation complex will start this summer, as well, Vess said.

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