For 16 months, Oracle’s new corporate campus has been quietly taking shape on prime waterfront property southeast of downtown Austin.
The sleek five-story building will have more than half a million square feet of office space that initially will house 3,000 tech workers, many of them young professionals.
Along with its original land purchase, Oracle bought a brand new apartment complex called Azul, just steps from its new office building, as a housing option for its employees. The complex, with 295 units, was valued at $76.6 million this year by the Travis Central Appraisal District.
The apartment acquisition marked the first time Oracle bought an apartment building on an Oracle campus.
The campus, an investment of hundreds of millions for the Redwood Shores, Calif.-based software company, is expected to be transformative for a part of town along East Riverside Drive that is rapidly gentrifying with hundreds of new luxury housing units.
Mike Rollins, president of the Greater Austin Chamber of Commerce, said Oracle’s “significant investment in an office campus has opened the door to new opportunities in Southeast Austin.”
“We have seen an increase in businesses considering East and Southeast Austin for their office locations, which should bring even more new jobs to the area closer to where people currently live,” Rollins said. “As employees begin populating the Oracle campus, we anticipate additional local restaurants, hotels, and services which ties to our work, live, and play values.”
Oracle’s massive investment in Austin is no accident. Oracle, the world’s second largest software company, needs to attract recent college graduates as it shifts its focus to the cloud and builds hubs for those sales groups.
Millennial workers want to be in vibrant cities, and Austin fits that bill, said Scott Armour, senior vice president of Oracle Digital.
“The talent we’re looking to attract, the rising generation, they’re tending to flock to the cities,” Armour said. “Marriage has been put off and they want accessibility to what cities have to offer. Austin is a great location, with the music scene, great cultural scene and great weather. So this has tremendous appeal given the location.”
That was a big draw for new Oracle recruit Maria Tomsovic, who joined the company after graduating from the University of Michigan last spring. She lives in an apartment near the new campus, and will soon be able to walk to work.
“I knew that the culture was great, with a lot of young professionals in downtown Austin area,” said Tomsovic, 23, who is a cloud applications consultant. “Being so close to work — and no more I-35 South — will be awesome. It’s a really good work-life balance.”
For Oracle, the 560,000-square-foot campus is just the beginning of its project at South Lakeshore Boulevard and Lady Bird Lane that is expected to add another 2,000 employees, company officials said.
“Phase one is going to house about 3,000 folks on the current campus, and phase two another couple thousand,” said Scott Armour, senior vice president of Oracle Digital.
Oracle hasn’t provided details on the second phase of development, but Armour said the state-of-the art campus demonstrates the company’s commitment to expanding in Austin.
“Oracle has got a very long-term view and commitment to having a significant presence in the Austin area,” he said. “I think this could scale to literally thousands just in my group.”
The campus will significantly expand Oracle’s presence in Austin. The company now has about 2,500 employees here in four locations and more than 4,500 total in Texas, with plans for continued hiring.
The company is among a growing number of out-of-state tech companies, from Apple and Amazon to Facebook and Google, that are tapping into Austin’s tech talent pool and ramping up their local employee headcounts.
The strategy of nearby company-owned housing is a smart approach to recruitment, said Diana Holford, senior vice president in Austin with global commercial real estate firm JLL.
“Oracle is one-upping the race for talent by providing housing. Live, work and play all at the Oracle campus,” she said. “We have not seen other companies aim for housing their employees. Rather, companies are trying to locate near where their target employee would like to live.”
Company executives said Oracle employees living at Azul pay market-rate rent but receive other financial benefits. They declined to provide details.
Employees in the project’s first phase will be working mainly in sales-oriented jobs for its cloud services, a business unit Oracle is expanding globally. The jobs will include direct selling, lead qualification, prospecting and technical support. Oracle declined to provide a pay range for the jobs.
Many will be newly minted college graduates trained through Oracle’s in-house program called “Class Of” that was launched by Oracle CEO Mark Hurd.
In Austin, Class Of recruits are tapped from Texas schools, including the University of Texas in Austin, Texas A&M University, Baylor and Southern Methodist University, as well as out-of-state universities, including Indiana University, Ohio State, University of Michigan, University of Iowa, Penn State and the University of Wisconsin.
That’s how Joe Musi, 23, arrived in Austin. After graduating from Boston University last December, he began Class Of training in February.
“I wanted to go somewhere where there’s growth and where things are happening,” said Musi, who is an application sales executive. “Austin has it, Oracle has it.”
Musi recently signed a lease for an apartment near the new Oracle campus, and like fellow Class Of member Tomsovic, he’ll be able to walk to work.
“It actually feels like a college campus — you live there, you work there,” he said. “Even during lunch you can use a gym or the sports fields. I can’t wait for it to open.”
During a recent tour of the building, it was clear that the campus was designed for millennials in mind. It will include outdoor terraces, a fitness center, “huddle rooms” and a “tech bar” to give employees the ability to get computers and devices repaired quickly.
An on-site cafeteria, complete with video games and television screens, will be “more of an experience, not just grab and go” where employees can choose from an array of freshly prepared cuisine, including local fare such as barbecue, said Lindsay Pomeroy, Oracle’s senior director of North America Real Estate.
The first employees are due to move in Jan. 8. They will be among 1,500 workers who will move into the building in phases through March.
Oracle bought the original 27 acres where the campus sits in December 2015 for an undisclosed price from Austin-based Cypress Real Estate Advisors.
The sale generated some controversy because it meant demolishing an older apartment complex on that land. In August of 2015, tenants of the Lakeview apartments, a low-income apartment complex on the land, had been asked to move out by Sept. 30, 2015 by then-landowner Cypress Real Estate Advisors.
The following June, 23 former Lakeview tenants sued Cypress. They alleged that Cypress, in its “rush to make millions” on the Oracle sale, terminated their leases prematurely, stopped making needed repairs and used other tactics to pressure the residents into leaving.
Oracle was not named as a defendant in the lawsuit. The dispute between Cypress and the tenants has since been resolved.
Oracle has since purchased another 10 acres adjacent to the new campus, including about six acres that it closed on in October. Oracle’s land holdings in the area were valued at nearly $40 million this year by the Travis Central Appraisal District. Oracle did not seek incentives for the project.
Armour said the company is convinced of Austin’s value as a hub for its operations
“It’s just emerging as a great technology hub. You’re seeing not only a lot of innovation and new companies founded, but you’re seeing a lot of successful startups started in other VC hubs moving to Austin because it’s such a great location,” Armour said. “We do travel to see customers, and there’s a growing set of customers right in the Austin area.”