12/13/2018 Apple's $1 Billion Campus Caps the Rise of Austin, Texas DECEMBER 13, 2018 | KYLE HAGERTY Apple's $1 Billion Campus Caps the Rise of Austin, Texas 'Silicon Hills' Taking the Spotlight From Dallas, Houston Reects Tech's Surge Employees gather at Apple's current Parmer Lane campus in Austin, Texas. Photo courtesy of Apple. The selection by technology giant Apple of Austin, Texas, as the site for a high-prole $1 billion campus caps the state capital's emergence as a 21st century technology hub, pulling more national attention from geographic rivals Houston and Dallas as oil is eclipsed by digital innovation. At the end of a quiet 10-month search, the iPhone maker decided to plant its third ag in Austin, granting the city a consolation prize of sorts for failing to land online retailer Amazon’s second headquarters. The 133-acre site will be located less than a mile from Apple’s current Parmer Lane campus in North Austin. Apple already employs 6,200 people in Austin, the largest group outside of its headquarters in Cupertino, California. The planned facility will welcome 5,000 new Apple employees with the option of expanding to 15,000. The new hires will make Apple Austin’s largest employer. http://product.costar.com/home/news/1437091690?tag=1 1/4 12/13/2018 Apple's $1 Billion Campus Caps the Rise of Austin, Texas “It’s not an entirely surprising decision,” said Sam Tenenbaum, CoStar’s Austin market economist. “In Austin, you have the job engine with the city’s great universities, the community investment Apple has already made and the pre-existing business and political connections. Not to mention 133 acres across the street from their current campus, that’s a unique opportunity.” The city, as host to cultural events such as the annual South by Southwest media festival, has grabbed more attention on the national cultural stage with its tech-savvy population in the past two decades as technology and entertainment have taken a high-prole place in American lives through cellphones and streaming internet programming reecting 21st-century life. That contrasts with the national image of Texas in the last century as a state known for the oil boom epitomized by Houston and the nancial rewards of the industry that turned Dallas into a major city on the national stage. The announcement only builds on Apple's presence in Austin because the company also leases a smaller 215,000-square-foot space at the Capital Ridge ofce building in the southwest section of the city. In 2012, Apple inked a deal with the city of Austin, giving the company $8.6 million in incentives over 10 years to set up shop. The state of Texas also kicked in $21 million in incentives. Apple also leases a smaller 215,000-square-foot space at the Capital Ridge ofce building in Southwest Austin. In 2012, Apple inked a deal with the city of Austin, giving the company $8.6 million in incentives over 10 years to set up shop. The state of Texas also kicked in $21 million in incentives. Now, Apple is back at the well. The Austin American-Statesman reports the state may offer Apple as much as $25 million for its new campus, but that it's not likely the city will offer money, as the site is in unincorporated Williamson County. Low-Prole Process The new campus is a culmination of a process begun by Apple in January this year, when the company issued a statement in announcing its intentions to invest $350 billion in the U.S. economy and create 20,000 jobs in ve years. A site-selection process sparked rumors around Austin. Apple’s tactics were more in line with traditional site-selection processes, according to experts interviewed by CoStar News . The behind-the-scenes approach allowed Apple to evade the kind of public scrutiny online retailer Amazon faces from residents and politicians about incentives for its so-called HQ2 search. Apple bypassed Austin, one of 20 cities that were http://product.costar.com/home/news/1437091690?tag=1 2/4 12/13/2018 Apple's $1 Billion Campus Caps the Rise of Austin, Texas nalists, and ended up splitting its second headquarters project into two sites and announcing last month it was putting the ofces in New York and in Arlington, Virginia. In addition to Austin, Apple plans to open three new ofces that will each employ at least 1,000 workers in Seattle, San Diego and Culver City, California. Austin, which once promoted itself as Silicon Hills, has a robust lineup of tech companies. The area is famously home to Dell Technologies and its chief executive, Michael Dell. Fellow tech giants Facebook, Google, Indeed and Oracle employ thousands. Dutch chipmaker NXP Semiconductors has a major presence after buying Freescale Semiconductor in 2015. Many video game companies have studios around town. The tech industry has found Austin’s affordable cost of living, lack of a state income tax and young culture to its liking. The metropolitan area population of 2.1 million residents is younger and signicantly better educated than the rest of Texas and the United States. Apple has gone so far as to offer Austin Community College students a one-year, full-year course designed by Apple engineers and educators in a new app-programming partnership. Since 1987, Austin has hosted the South by Southwest festival and is well-known for its high- end restaurants and barbeque. “It’s all the same reasons Amazon wanted to come here,” Tenenbaum said. “Adjusted for cost of living, it’s one of the highest-paying tech places in the country. It’s getting more expensive, but it’s not Silicon Valley or Boston expensive.” Kristina Raspe, Apple’s vice president of global real estate and facilities, was on hand in Austin to share the news of the new campus in front of over a thousand Apple employees. “Everything Apple does will ow through Austin,” Raspe told the excited crowd. The project, which will be completed in phases, will total about 3 million square feet, of which 2 million will be dedicated to ofce and R&D space. Like other Apple facilities, the campus will include 50 acres of preserved green space and be powered by 100 percent renewable energy. Raspe said when fully operational, every form of Apple’s business, from accounting to customer support, will take place in Austin. Doubling Size The new campus will double Apple’s footprint in Austin. “We always say everything is bigger in Texas. Today we can say Apple is bigger in Texas,” Gov. Greg Abbott told the group of Apple employees. “This campus truly elevates Austin as one of http://product.costar.com/home/news/1437091690?tag=1 3/4 12/13/2018 Apple's $1 Billion Campus Caps the Rise of Austin, Texas the premier technology hubs in the world. This is a Texas-sized investment.” The site selected by Apple has been the source of speculation over the years. Known as Robinson Ranch, with a rail line running through it, the area is prime for development, but the owners have been extremely picky and patient with selling off their 6,300 acres of land holdings. About 4,400 acres of the ranch are designated for mixed-use, high density and transit-oriented development. The Domain, an ofce, retail, and residential center considered by many to be Austin's second downtown, is just a couple of miles east of Robinson Ranch. Over the past decade, the area has seen its ofce inventory expand by more than a 25 percent to roughly 8 million square feet. As the node has become increasingly amenitized, more apartment developers have joined the mix, delivering more than 2,300 units since 2014, according to CoStar research. Accompanying all the apartment and retail development has been more than half a million square feet in new available ofce space over the same time, all fully leased. That's created the desire for many in Austin to follow suit. Facebook, Amazon and HomeAway have all leased major ofces at The Domain in recent years. The growth has created major trafc issues for the area, especially Parmer Lane, which will now be asked to handle trafc for two Apple campuses. “That’s at least 5,000 more people going down Parmer Lane every day. That road wasn't built to handle the trafc that is there already,” Tenenbaum said. Austin's tech industries accounted for nearly 140,000 local jobs, or 14 percent of Austin's total employment, about twice the national average, according to the city's chamber of commerce. Spurned by Amazon, Apple’s deal will help to fuel Austin’s tech employment. “Mrs. Claus told me this holiday season I’d nd a gift or two from Apple under my tree,” Austin Mayor Steve Adler said at the news conference. “How she pulled this one off, I have no idea. We want to tell you how appreciative we are in this community for this opportunity.” http://product.costar.com/home/news/1437091690?tag=1 4/4.