In an exciting development for Kyle, Texas, Capella Commercial LLC has secured key approvals to move forward with “Project Two Step,” a 45-acre mixed-use destination that promises to significantly enhance the local landscape. On June 18, the Kyle City Council greenlit crucial elements of the project, which is strategically located near Farm to Market Road 150 East and I-35.
Described as a transformative initiative, “Project Two Step” will feature up to 350 multifamily units, 24 townhomes, and over 150,000 square feet of commercial and office space. Additional highlights include private parkland accessible to the public, rooftop pickleball courts, and a dog park, making it a comprehensive living and recreational hub.
Originally presented to the public in December 2022, the project faced initial setbacks in May when the city council stalled the planned unit development. Subsequent modifications, including an adjusted construction timeline and stricter water usage regulations for a prominent water feature, helped secure unanimous approval on June 18. This approval covered zoning, development plans, and incentive agreements, paving the way for the project’s commencement.
According to city documents, “Project Two Step” will be developed in three phases. The initial phases will focus on retail and restaurant spaces, along with townhomes, residential flats, and an entertainment hub. This hub, connected to the city’s Vybe Trail, will feature a water attraction, dog park, and rooftop pickleball court. The final phase will introduce the multifamily residential units, completing the project’s ambitious scope.
Resolut RE is tasked with leasing the commercial spaces, with Michael Noteboom, the firm’s senior vice president in Austin, sharing updates about the project on LinkedIn.
The incentives agreement for the development includes up to $14.9 million in performance-based incentives over 20 years, based on a 50% rebate on property and sales taxes. These incentives are contingent upon meeting specific construction milestones, with a significant portion of the project expected to be completed in the initial phase.
Todd Dailey, managing partner at Capella, emphasized the long-term planning and collaboration involved in bringing “Project Two Step” to fruition. The project was inspired by visits to The Historic Pearl in San Antonio, known for its integrated dining, entertainment, and retail offerings. Dailey’s vision is to create a similar vibrant district in Kyle, tailored to local needs and aesthetics.
The development’s design includes two main parcels. The western 15-acre tract will feature an outdoor amphitheater surrounded by restaurants, retail spaces, office buildings, a hotel, townhomes, residential flats, and two small ponds. The eastern 31-acre tract will host the multifamily residential component, complemented by retail spaces, a beer garden, rooftop pickleball courts, and a large pond for kayaking and paddleboarding. The site will also include a dog park and a parking structure.
Focused on fostering local business and community engagement, the project plans to feature small business restaurants, local retailers, and performances by local artists at the amphitheater. A distinctive silo at the project’s entrance will serve as a landmark and promotional space for upcoming events. The development agreement mandates high-quality materials to ensure the project’s lasting impact.
If construction begins as planned this fall, Capella aims to complete all three phases of “Project Two Step” 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, situated approximately 20 miles south of Austin, has experienced rapid growth, with a 2023 estimated 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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