A 45-acre mixed-use development, heralded as a significant new destination south of Austin, has cleared crucial approval stages. Austin-based Capella Commercial LLC received the green light from the Kyle City Council on June 18 for “Project Two Step,” a development poised to transform the area near Farm to Market Road 150 East and I-35.
The project plans to incorporate up to 350 multifamily units, 24 townhomes, and at least 150,000 square feet of commercial and office space. Residents and visitors can look forward to amenities such as private parkland open to the public, rooftop pickleball courts, and a dog park.
First unveiled last December at a Kyle City Council meeting, “Project Two Step” faced a slight delay in May when a planned unit development was initially stalled. Following some revisions, including adjustments to the construction timeline and stricter water regulations for a prominent water feature, the project received unanimous approval from the council on June 18, including zoning, development, and incentive agreements.
The development will unfold in three phases, as per city documents. The initial phases will focus on retail and restaurant spaces, along with townhomes, residential flats, and an entertainment hub connected to the city’s Vybe Trail. This hub will feature public amenities such as a water feature, a dog park, and a rooftop pickleball court. The final phase will introduce the 350-unit multifamily component.
Resolut RE will handle leasing for the project, according to Michael Noteboom, senior vice president in Austin for the firm.
The incentives agreement for “Project Two Step” includes up to $14.9 million in performance-based incentives over 20 years, based on a 50% rebate on property and sales taxes. These grants are contingent upon meeting construction milestones, with the majority of the project set to be completed in the first phase.
Todd Dailey, managing partner at Capella, shared that the project has been in the works for several years, involving numerous meetings with city staff and extensive analyses to identify what Kyle needs. Inspired by visits to The Historic Pearl in San Antonio, the development aims to integrate dining, entertainment, and more into the local context.
The eastern gateway of Kyle will be transformed by this project. The 15-acre western tract will feature an outdoor amphitheater surrounded by restaurants, retail spaces, offices, a hotel, townhomes, residential flats, and two small ponds. The 31-acre eastern tract will host a multifamily project with additional retail, a beer garden, rooftop pickleball courts, and a large pond suitable for kayaking and paddleboarding. The site will also include a dog park and a parking structure.
The project focuses on supporting local businesses and performers, with plans to include a silo at the project’s entrance to advertise upcoming events. The development agreement mandates high material standards to ensure quality construction.
If all goes according to plan, Capella aims to break ground this fall and complete the 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, located about 20 miles south of Austin, has seen significant growth, with an estimated 2023 population of about 62,500. This growth has attracted new employers and large-scale developments, including Sovereign Flavors Inc., Tesla Inc., Costco Wholesale Corp., Sprouts Farmers Market, and the $250 million Vybe Park.
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