Austin Needs More Retail
Austin's commercial real estate market is on a roll with retail occupancy expected to top 96% by the end of Q2, but it's just part of a dynamic market that shows no signs of slowing down any time soon. That's why we're excited to host Bisnow's 5th Annual Austin State of the Market event on April 30 beginning at 7:30am at the Austin Hyatt Regency.
Retail Solutions founder David Simmonds, who'll be speaking at the event, tells us the company won the leasing jobs for several new projects, but Austin needs more retail. He’s critical of the City’s development processes, but hopes that new mayor Steve Adler lives up to his promises of cleaning up the system. “Unless you fall in love with the idea of developing in Austin, why do the 18- to 24-month process when you can go anywhere else in Texas at a fraction of the cost?” he ponders. David tells us the firm’s tenant rep business increased with the addition of Dave Burggraaf joining the firm and bringing his business with Wendy's, Popeyes, Retro Fitness, Orange Leaf, and The Joint.
David tells us among the new leasing projects is the second phase of Arbortown Square (shown) near Costco. The first phase is fully leased and the 35k SF second phase two-story project is under construction with pre-leasing underway. His team is also handling leasing for the new partnership that is building out Whitestone Plaza at 1431 and Parmer. There’s fresh dirt on the back side and at least four pad sites available. There’s a 15k SF strip center at Ranch Road 2222 and Ranch-to-Market Road 620 that will break ground soon. David tells us this site has great visibility with no topography issues. Another listing is for a new development at Southwest Parkway near William Cannon. This multi-phase site will include a 15k SF strip center with 5,500 hard corner pad site (going under contract with a restaurant and production center) and another small pad site for a coffee shop or restaurant.
Austin is very dynamic and strong across all sectors right now, says Integra Realty Resources senior managing director Randy Williams, another panelist. (And he’s saying that as an appraiser; he’s supposed to be skeptical, but he knows a good market when he sees one.) The multifamily industry has been especially impressive to watch—Austin delivered 12,000 apartment units last year, but maintained over 95% occupancy. 4,400 units were absorbed in Q1 of this year alone. Rent increases have slowed but maintained their upward trajectory. That’s driven by very good employment growth, especially in high-paying tech jobs, Randy says.
The single-family sector is helping too—although we’re building about as many homes as we can, Austin still has only a two-month supply. Plus, pricing has gone up to $190k, too much for entry-level buyers. Integra had projected that multifamily occupancy will dip some this year, as Austin delivers another 13,000 units (big communities completing this year include Camden Lamar Heights and the Bowie Apartments), but Q1 absorption has changed Randy's mind and he believes occupancy will hold steady. A quick fly-by of the other sectors: retail is very tight, office pre-leasing has switched him from bearish to bullish, supply constraint in industrial is spiking rents and investment sales prices, and hotel occupancy leapt 10% last year. Join us for Bisnow's 5th Annual Austin State of the Market event on April 30 beginning at 7:30am at the Austin Hyatt Regency. (Sign up.)