Austin Monitor | By Chad Swiatecki / Published August 15, 2023 at 3:46 PM CDT
The Hole in the Wall music venue has secured a 20-year lease and will remain open to celebrate its 50th anniversary next summer, thanks largely to $1.6 million in assistance from the city’s Iconic Venue Fund.
Will Tanner, who purchased the club located on the stretch of Guadalupe Street known as The Drag in 2008, signed the new lease agreement – an initial 10-year lease with two five-year extensions – with The Weitzman Group realty firm on Monday. The signing followed 10 months of negotiation and work with staff from the city and the Austin Economic Development Corporation to become the first recipient of city funds allocated to preserve culturally significant music venues.
The club, which features more than 1,000 live music performances per year, had operated on a month-to-month lease since its most recent one-year lease expired in May.
Tanner said without the city stepping in the club would have likely closed this spring.
“It had a good long run, but it was probably done without this,” Tanner told Austin Monitor. “I’m very grateful for the city of Austin to recognize that this is something that they feel like is important to stick around. … Hole In The Wall 100% got saved.”
Improvements coming to Hole in the Wall, other venues
The $1.6 million will help cover a portion of the club’s roughly $15,000 monthly rent over the length of its lease, and pay for improvements to the middle stage area and a rear building of nearly 3,000 square feet that will be made available for lease as a restaurant or other hospitality business.
The city hopes to close more deals stabilizing threatened music venues and creative spaces in the coming months using its cultural trust economic development tool that is funded with a combination of Hotel Occupancy Tax dollars for iconic venues and money from a 2018 bond package than included $12 million to open and preserve creative spaces. The bond package provided $2.4 million late last year to make improvements to the Millennium Youth Entertainment Complex and turn a 7,000 square foot portion of the city’s Permitting and Development Center on Highland Mall Boulevard and Middle Fiskville Road into a work and display space for artists.
The Economic Development Corporation (EDC) began taking applications from for potential cultural trust projects in late 2021 and used that process to identify more than $300 million in needed assistance for venues and creative organizations. The 45 submitted proposals including Tanner’s were evaluated and 14 priority projects were selected, with potential real estate deals ongoing using cultural trust dollars as part of the needed capital stack.
“The biggest point is that we’ve been able to help negotiate and secure an ability for Hole In The Wall to stay in place and thrive over the next 20 years,” Anne Gatling Haynes, chief transactions officer for the EDC, told Austin Monitor.
“This is something we think is a demonstrable way of investing in those businesses that have an economic impact to the city and community benefit,” Haynes said. “We consider ourselves the live music capital of the world, not just in brand but the fact is that we believe in our artists and musicians, and this is one place where a lot of those musicians have played.”
Property values spike on The Drag
Even with city assistance, Haynes said the deal was made possible by property owners with The Weitzman Group being willing to accept a rental rate that was “very low considering everything else on The Drag right now.”
The mostly flat rental rate stands out in comparison to the most recent appraisal of the property by the Travis Central Appraisal District that valued the club space at just over $2 million, a nearly $700,000 increase from its 2022 appraisal.
Bryan McMurrey, managing director for the Transwestern real estate services company, said the handful of commercial space lease deals he’s closed on The Drag in recent years have brought between $50 and $65 per square foot per year for their owners. He said the Hole in the Wall space would likely fetch a similar figure while praising the move to preserve it as a culturally important business.
“You could probably achieve an upper $50 to $60 (per square foot) triple net lease deal there. … Somebody could come in there and make that space really nice. It’s a great spot on The Drag,” he said.
“The club activates the district, creates foot traffic and it’s kind of a point of interest for the people that live in the student housing back behind there to the west,” McMurrey said. “It’s somewhat of an Austin time capsule that kind of reminds us all of what it used to be back in the day when we went to school at UT.”
A changing clientele
In an acknowledgment of the affordability issues that are pushing artists and musicians out of Austin, Tanner said the increasing rents in the West Campus area and other areas near the university have made the club less of a hotspot for students and the working class than in years past.
“There are less folks down there that are of age to drink is the way to put it. West Campus used to be more of a working class neighborhood, and it still is really densely populated, but it’s densely populated with a lot of people that are pretty transient people,” Tanner said. “When I started Hole in the Wall in 2008 there was a lot of mix of blue collar, musicians and service industry people that could walk there. That ship has sailed.”
With its future now certain, Tanner and his staff will work to complete the upgrades around the property in time for next year’s 50th anniversary celebration, with hopes of booking acts from all five decades of showcasing live music on its compact, iconic stage that’s highly visible for pedestrians on the other side of its display window.
“Stuff like this doesn’t happen at bars like Hole in the Wall,” Tanner said of the city’s financial and negotiating assistance.
“We’re not like high flying anything or fancy in any way,” he said. “Definitely there’s a vibe there, the people that go there really love it, certain bands really love it, and I really love it.”
This story was originally published in The Austin Monitor