Capella Commercial gets green light to develop destination project in Kyle

Rendering of courtyard in center of project
Jun 25, 2024
Justin Sayers - Senior Staff Writer, Austin Business Journal

A 45-acre project described by developers as a mixed-used destination south of Austin has secured a number of key approvals.

Austin-based Capella Commercial LLC on June 18 received green lights from the Kyle City Council for elements of the plan, known as "Project Two Step," that straddles a curved area of Farm to Market Road 150 East near I-35. The development is slated to have up to 350 multifamily units, 24 townhomes, at least 150,000 square feet of commercial and office space, private parkland open to the public and amenities like rooftop pickleball courts and a dog park.

The project was first revealed last December during a meeting of the Kyle City Council, which has been considering the approvals over the last month. A planned unit development stalled in May when the council failed to approve it. That prompted modifications that included rearranging a construction timeline to include a parking garage in an earlier phase alongside retail and adding more strict water regulations for a prominent water feature. The zoning was unanimously approved June 18, along with development and incentives agreements.

Two Step will be built in three phases, according to city documents. The first two would primarily include the retail and restaurant space — townhomes, 15 residential flats and an entertainment and retail hub that connects to the city's Vybe Trail and offers public amenities like a water feature, dog park and rooftop pickleball court. The third parcel would include the 350-unit multifamily component.

Resolut RE will handle the leasing for the project, Michael Noteboom, senior vice president in Austin for the firm, said in a LinkedIn post.

The incentives agreement would provide a maximum of $14.9 million in performance-based incentives over a 20-year period based that would be based on a 50% property and sales tax rebate on the site. Those grants will be paid back based on hitting construction goals, with the bulk of the project scheduled to be completed in first phase.

Todd Dailey, managing partner at Capella, previously said they have spent years working on the project. That involved several meetings with city staff and analyses of what was missing from the fast-growing city south of Austin — and what was coming and how they could fit into it. But it also involved multiple trips to The Historic Pearl in San Antonio, an integrated district filled with dining, entertainment options and more.

What they've proposed is something that could transform two parcels at the eastern gateway of Kyle. Plans for a western 15-acre tract include an outdoor amphitheater surrounded by restaurants, retail outlets, office spaces, a hotel, town homes, residential flats and two small ponds. The roughly 31-acre tract on the east side could include a multifamily project with retail, encompassing a beer garden, rooftop pickleball courts and a large pond. The larger pond will allow kayaking and paddle boarding. The site also includes a dog park and parking structure.

The project is focused on being "local," he said, with small business restaurants and retailers and local performers at the amphitheater. Aesthetically, they're trying to model it based on other city developments. That's one reason they plan to have a silo at the front of the project, which can also advertise future entertainment options. The development agreement includes requirements for higher material development standards.

He said earlier this year that if they secured all the approvals, Capella's goal is to start construction in the fall and complete all three phases by May 2026.

"The whole idea is to create something that's really unique," Dailey said. "It's not like a Domain, which is massive. We wanted it to be more quaint and really kind of aesthetic."

Kyle, which is about 20 miles south of Austin, had an estimated 2023 population of about 62,500. That population growth has attracted a host of new employers and large-scale development. Other notable companies that are opening in the area include Sovereign Flavors Inc. and Tesla Inc. Other retail projects include Costco Wholesale Corp., Sprouts Farmers Market and the $250 million Vybe Park.

Read Original Article