You Won't Recognize It
Internet be damned! Bricks and mortar retail isn’t going anywhere, according to panelists at yesterday’s Bisnow Austin Retail and Restaurant Summit. But it is changing completely.
Retail Solutions founder David Simmonds (with colleagues Jerel Choate, Kevin Murphy, and Fred Wendland) says people have predicted the end of retail since the demise of catalogs and it hasn’t happened yet. And although 92% of Gen Y—the 80 million people between 18 and 35—say they’ve shopped online in the last 30 days, nearly as many report they’ve shopped in a store as well. (The take home message is they'll do anything to avoid going to work.)
Rockspring Capital VP Zach Jones pointed out another reason physical stores aren’t going away: People like immediate gratification, and they still want to escape their homes and devices sometimes. Rockspring recently purchased 23 acres for retail by Bee Cave, and he says his phone won’t stop ringing with people inquiring for the pad sites. (Hope he at least has a good ringtone.)
Uncle Maddio’s Stewart Geyer (center in this panel shot) says he likes to operate near lots of other restaurants. He finds that people like to have a favorite lunch spot they can visit daily and get different food each time. He got a big surprise when he first entered Austin; the team thought of it as a secondary market and thought it’d be a relief after trying to break into Dallas. (Wrong on both counts.) He says Uncle Maddio’s (a fast-casual pizza joint) is banking on Millennial demand for customization, speed, and health. Its takeout business, in particular, is taking off, doubling in the last three years.
Our sponsor Weitzman SVP and director of brokerage Adam Zimel is seeing movie theaters and fitness centers anchor projects like never before. (Both of those may have to do with the success of The Hunger Games.) Weitzman released its year-end 2013 Austin retail report yesterday, with the big news that our retail occupancy is the highest it’s been since ’04 (95%). Adam says investment sales rose last year, and so did construction of small strip centers (there are 30 under construction ranging from 10k SF to 15k SF). He says our Class-A rents have reached a new peak, with average rates over $30/SF.
Snap Kitchen founder/CEO Martin Berson says Austin’s rents rival Houston and Dallas, and are well in excess of markets we were trailing a few years ago, like Denver and Phoenix. David added that although our Class-C rents haven’t reached their former peak, he consistently sees $18/SF or higher, double what you’d see in similar Houston and Dallas product. (It’s thanks to our occupancy; tenants here have nowhere else to go.)