A New Real Estate Class That Combines Business and Pleasure | Ezine Daddy

XSpace brings its unique “commercial condominium” concept from Australia to Texas – and finds a good fit for the state’s booming real estate market.

As business relocations to Texas continue, a side effect is a boiling commercial real estate market. At the end of 2021, the National Association of Realtors’ list of top office markets of the year placed Austin at #1 and San Antonio at #10. Meanwhile, Colliers’ 2022 Global Investor Outlook recently predicted Dallas as the top market for commercial real estate investing in 2022. Houston isn’t lagging behind either, registering the highest volume of commercial real estate transactions in the country in the third quarter of 2021.1

Of course, as any urban Texan knows, the residential side of real estate is hot too. With people moving in from all over the country, many homes are on the market in the blink of an eye. Entering this ecosystem comes a new “commercial condominium” concept from XSpace, co-founded by Australians Byron Smith and Tim Manson. The XSpace concept is a mixture of existing real estate classes. Currently for sale in a near-completed building 15 minutes from downtown Austin, XSpace units can serve a whole range of functions from showroom to office to man cave to podcast studio.

XSPACE IS AN ATTRACTIVE ALTERNATIVE FOR COMPANIES THAT WANT TO OFFER VERSATILE AND HIGH-QUALITY SPACE FOR EMPLOYEES IN AN EXPENSIVE COMMERCIAL REAL ESTATE MARKET.

This first XSpace building (with more planned soon for Houston and Dallas) is three stories tall and contains 106 customizable units ranging from 300 to 2,500 square feet. The building includes a 3,000 square foot lounge overlooking Lake Travis and a commercial kitchen. Almost all of the units in the Austin building have been sold, and the owners plan to use their units for both business and personal use. “The concept is a sophisticated market adaptation from Australia,” says Smith. “It has evolved to fill a gap between residential and office/commercial.”

Homeowners currently include car enthusiasts, small business owners, high-profile podcasters, and high net worth individuals who want a home office without expanding their home. Roger Clemens has purchased a first floor unit where he will display his memorabilia and oversee his charitable foundation.

XSpace also represents an attractive alternative for companies that want to offer versatile and high-quality space for employees in an expensive commercial real estate market. A technology company has bought four units together that it will use as a satellite office. Smith points out that this is a great way to provide employees with an interesting place to work while adding value to the company. Smith and Manson are also seeing real estate investors getting in on the action. Some conduct 1031 exchanges, which allows them to avoid paying capital gains taxes by reinvesting proceeds from the sale of another investment property in XSpace units.

Regardless of who is buying, the XSpace co-founders have identified a strong desire for upscale space and premium amenities. This corresponds to the much-discussed “flight to quality” trend in real estate, which shows investors and commercial tenants a clear preference for high-quality new buildings and renovations.

Real estate investor and retired NFL lineman Lyle Sendlein is a supporter of XSpace and a unit owner, and he has recognized the trend for quality in this investment and beyond. “I invest a lot in apartment buildings and because people are spending more time in their homes [following the pandemic]we see a higher demand for quality – ceiling height, soundproof walls, efficiency, so many things.”

The flight to quality means XSpace is well positioned in the market. Units have 18-foot ceilings (Houston will be 20 feet) with the option of adding a mezzanine, which 90 percent of buyers choose. The lakeside location offers views of nature near the heart of Austin. And the shared lounge area on the top floor is vital to the project.

“Community is everything about what we do,” says Smith. “XSpace is for cool and interesting people. When you’re there, you might bump into these high-profile, cultured guys, maybe a former pro athlete or someone interested in rounding out your project. They can go to the common area to have a meeting or watch Monday Night Football—like WeWork without the nonsense.” The community aspect won Sendlein over. “I’m not someone who likes to work from home,” he says. “I am a great networker and like to connect dots. Having a place like this is something I’m excited about.”

As people’s business and personal lives increasingly overlap, XSpace offers a whole new concept to meet new needs. (It’s so new that the fire department had to literally rewrite their rulebook to classify the Austin building.)

The real estate market may be very hot, but with XSpace, owners can get in at an affordable price. And as XSpace expands into other markets, more Texans will have a chance to board.

1 Dan Katz, “Texas Commercial Real Estate Market Heats Up Like Nowhere Else in the Country,” Texas Public Radio, December 8, 2021.

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