Ask national retailers about their biggest complaint in Austin, and they’ll tell you that there’s no place for them to go. (Now, they understand how we feel standing in line at Franklin’s.) The Weitzman Group SVP Britt Morrison (center, between his sister, Kelli Morrison, and his fiancé, Brittany Byrd) tells us the 96% market-wide occupancy swells to 99% in shopping centers like the Domain and Mueller (which TWG reps), where rates can be north of $40/SF. Not to mention that retailers and restaurants are on waiting lists for space (some have been on there for years).
For years, Austin lagged behind Dallas and Houston as a market where national and regional retailers wanted to be, Britt says. Now, that’s flipped, and retailers expanding into the Southwest are starting in Austin and San Antonio as test markets before heading into Dallas and Houston, he tells us. TWG reps dozens of retailers, including three growing chains looking for more locations in the region: California-base Pieology (fast-casual restaurants that occupy about 1,800 to 3,000 SF), the largest dental group in North America, Heartland Dental (medical retailer that occupies about 2,800 to 3,800 SF and will lease or buy its sites), and Factory Mattress (traditional retailer that takes 4,000 SF to 5,500 SF).
Development is still slow, he says, with only Costco bringing in new space, followed by a couple of Walmart locations coming in the next 18 months. San Marcos is where the huge growth is as Texas State student population increases. The biggest growth can be found in the urban infill 10k SF to 12k SF strip centers, Britt says. Many of the new developments are fully leased before they even break ground and are commanding $34 to $36/SF. Across all product types, Britt tells us you can have up to a dozen retailers bidding up rates for a location when it becomes available. But it will take higher rates to finally justify the new construction that tenants locked out of the Class-A market need, and few concepts are balking at higher rates if the location can deliver stronger sales. When he can get away from the office, you can find Britt donning his green and gold and heading up to watch his Baylor Bears in their brand-new stadium on the Brazos River. Sic 'em!
