When completed in 2021, Indeed Tower will rise 36 stories and be the largest downtown office building in the Texas capital. | Courtesy Trammel Crow Co.
When completed in 2021, Indeed Tower will rise 36 stories and be the largest downtown office building in the Texas capital. | Courtesy Trammel Crow Co.
Retired Texas teachers are fuming on Facebook about the decision of the Teacher Retirement System of Texas (TRS) to move its Investment Management Division (IMD) offices to the under-construction Indeed Tower in downtown Austin, where the rent will be $362,000 a month.
The IMD currently has 180 employees. In 2023, its goal is to handle more of its fund management in-house with 270 employees. After 50 years at its present location, Executive Director Brian Guthrie told members that the organization needs more space.
Teachers complained to Rep. Dan Flynn (R-Canton), saying that the rent payment would amount to more than $40 million over the 10-year lease.
On Jan. 21, Guthrie defended the move in a letter to Flynn, which is posted on the TRS Facebook page.
In the letter, Guthrie tells Flynn that the IMD plan to increase its in-house fund management with a bigger staff will “realize significant savings” for the organization.
Guthrie said TRS has a decade-long professional investment relationship with Principal Real Estate Investors, the majority investor in Indeed Tower. He says TRS negotiated a $38.50 square foot rate at Indeed Tower because it committed early in the construction process. Current market rates at Indeed Tower are $48 per square foot, he said. Guthrie said the current market rate for office space in TRS’ present 816 Congress St. location is $39 per square foot.
“While the trust is funded by employer and employee contributions, nearly two-thirds of the fund’s revenue comes from investment returns," Guthrie’s letter said. "The IMD must responsibly manage a growing and increasingly complex trust fund valued at more than $160 billion."
Defending the downtown location, Guthrie said competing state trust funds also have downtown Austin locations.
“As a global institutional investor, we foster and grow relationships with over 191 external managers that represent over $102 billion of the fund’s assets under management. In order to ensure the best return for the trust fund, these relationships require frequent in-person meetings,” the letter said.
The new office space at Indeed Tower will help IMD recruit top talent, Guthrie said. IMD works globally and people are in the office working around the clock, trading in markets around the world, he said.
“The total administrative costs, including salaries, lease costs and all other operating expenses, paid from the pension trust fund equals less than 0.12 percent of the total trust fund value of $160 billion,” Guthrie said.
Guthrie sent a copy of the letter to Flynn to Gov. Greg Abbott and other key state elected officials.
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