KBS Sells 515 Congress, 267,956-SF Class A Office Tower in Downtown Austin, to AQUILA, Palmatum Ventures and Glendon Capital Management
KBS has completed the sale of 515 Congress, a 26-story, 267,956-square-foot Class A office tower at the corner of Congress Avenue and Sixth Street in downtown Austin, Texas. A joint venture of AQUILA, Palmatum Ventures and Glendon Capital Management acquired the property. JLL Capital Markets represented KBS in the transaction, which closed Sept. 23, 2026. The asset was held by KBS Real Estate Investment Trust III, an affiliated KBS real estate investment trust.
Property and Transaction Details
Built in 1974, 515 Congress sits on approximately 0.54 acres in Austin's central business district, within walking distance of the Texas State Capitol and a range of dining, retail, hotel and cultural destinations. The 26-story tower was 84% leased at the time of sale, while KBS reported the property averaged more than 91% occupancy over the prior decade — a historical average reflecting performance across multiple market cycles.
During its ownership, KBS invested more than $15.5 million in capital and base-building improvements, including renovations to the lobby, tenant lounge and conference facilities and modernization of the elevators. Available space at the time of marketing included a 6,102-square-foot first-floor office/retail suite and a 4,925-square-foot 19th-floor suite.
A notable recent leasing development was the expansion of webAI, which occupied approximately 40,000 square feet across the top floor, ground-level space and multiple intermediate floors. The company also added its name to the building's signage. KBS characterized that expansion and other recent lease transactions as evidence of continued tenant demand for the property.
JLL Capital Markets brokers Mike McDonald, Jonathan Napper, Ryan Stevens and Drew Fuller represented KBS in the sale. Bruce Fischer and Howard Chu, attorneys with Greenberg Traurig LLP, and paralegal Amanda Kennedy also represented KBS in the disposition.
What the Parties Are Saying
Giovanni Cordoves, KBS's Western regional president, pointed to the property's sustained occupancy and the firm's management approach as factors in the outcome. "515 Congress averaged more than 91% occupancy over the past decade, reflecting the consistent investment and active management of the property through multiple market cycles," Cordoves said. "Our deep knowledge of the Texas market, combined with disciplined underwriting, enabled us to complete a timely sale to a well-capitalized ownership group."
Brett Merz, senior vice president and co-director of investment management at KBS, cited recent leasing momentum as a signal of the building's appeal. "We have executed multiple lease transactions over the past year, signaling the value of the capital invested in the property and the continued appeal of its location and amenities," Merz said. "The recent expansion of an anchor tenant and the addition of its name to the building's signage further demonstrate tenant confidence in the property and its location."
Ben Tolson, managing principal at AQUILA, described the acquisition rationale in terms of the building's physical and locational attributes. "515 Congress has a combination of location, visibility, views and flexibility that is difficult to replicate downtown," Tolson said. "It's right on Congress Avenue, it works particularly well for today's most active tenants, and we see a real opportunity to invest in the building and enhance the experience for both existing tenants and the companies we hope to attract."
Mike McDonald of JLL framed the transaction within the broader dynamics of Austin's downtown office market. "Downtown Austin has functioned as two distinct markets in recent years, and this transaction demonstrates the qualities that continue to attract buyers," McDonald said. "Investors remain selective, but well-located, renovated properties with durable tenant bases and clear leasing potential can still generate meaningful competition."
Austin Office Market Context
The sale comes as Austin's office market shows early signs of stabilization while vacancy remains elevated. Austin recorded positive net absorption during the first half of 2026, with leasing activity showing pockets of strength in the central business district and Southwest submarket. Total office vacancy stood at 25.8% as of the first half of 2026, edging down from 26.0% in the first quarter.
The recovery is uneven. Class A properties in Austin recorded negative net absorption of 73,759 square feet in the second quarter of 2026, even as Class B properties posted more than 750,000 square feet of positive absorption during the same period — a dynamic that underscores the importance of asset-specific factors such as tenant quality, capital improvements, floor-plate flexibility and walkability in determining transaction appeal.
Apollo Global Management's August 2026 selection of Austin for a new strategic growth hub focused on innovation and emerging technology was among the corporate expansions cited as a sign of continued demand for the market.
Investment Strategy and Market Positioning
The buyer joint venture's stated intention to invest further in the building and enhance the tenant experience points to a value-add approach. The capital program completed under KBS — more than $15.5 million in improvements — reduced the immediate need for major building upgrades while positioning the asset for the new ownership group's strategy.
515 Congress competes within Austin's central business district against newer towers and other amenity-rich Class A properties. Its Congress Avenue frontage, proximity to the Texas State Capitol, views and leasing flexibility were cited by the buyer as key differentiators. The building's tenant base, anchored by webAI's expanded footprint, provides the incoming ownership with existing leasing evidence to support its underwriting.
Bruce Fischer, chair of Greenberg Traurig's West Coast real estate practice and co-managing shareholder of its Orange County office, said the transaction illustrates continued investor appetite for the right assets. "515 Congress demonstrates that landmark, well-located properties can continue to attract institutional and private capital, even in a challenging office market," Fischer said.