Retail space around town is nearly all leased up, and to make matters worse for expanding shop owners construction is down — 700,000 square feet is set to be added in 2016, a 22 percent drop from last year's 900,000 square feet added.
The Austin area hasn't seen retail construction top 1 million square feet since 2014, according to The Weitzman Group's latest retail occupancy report. All of that adds up to a severely constricted market that has building owners and store owners alike looking for novel ways to maximize the available stock.
Retail occupancy is at 96 percent citywide, making redevelopment a popular choice. Suburban Austin markets are seeing especially strong retail occupancy due to the backfilling of long-vacant spaces instead of ground-up construction.
In Georgetown, new tenants moved into a former Albertsons that had been vacant since 2006, bringing the space back to full occupancy. A gym took more than 29,000 square feet and speciality sports store Golf Ranch took more than 8,000 square feet. La Playa Mexican Restaurant also moved into the facility redeveloped by Manny Farahani of Austin.
So far this year, the largest vacancy in Austin was created by Sports Authority, which closed its 42,000-square-foot store in Southpark Meadows at I-35 and Slaughter Lane.
The area's top redevelopment projects highlighted in Weitzman's report:
Saks Fifth Avenue Off 5th, which opened in the first quarter inside 50,000 square feet that used to be a furniture store in Northwest Austin's Gateway Shopping Center.
The Spot — a combination bowling alley, movie theater and bar — is set to open this fall in a former Target in San Marcos. It is in the Springtown Center, whichEndeavor Real Estate Groupacquired in 2014.
H&M leased 20,000 square feet in Bee Cave’s Hill Country Galleria for its second Austin location.
The average rent for Class A retail space in prime locations tops $30 per square foot in the Austin area, according to Weitzman's report, and some new construction projects are seeing rates rise to $40 per square foot or more.
The report highlighted several major projects already finished this year or scheduled to deliver in 2016:
Rock Rose, the 100,000-square-foot retail phase of Domain Northside focused on local shops, and the nearby 127,500-square-foot Nordstrom set to open this fall.
Star Ranch retail center in Hutto, which will include a 121,000-square-foot HEB Plus, a Gold's Gym and a Five Star ER.
Crystal Falls Town Center, a 94,000-square-foot retail center set to open in Leander in the fourth quarter.
With projects underway and announced for the upcoming year, the report says the market will see "a notable uptick in construction" in 2017. Some of the projects slated for the year ahead include:
The Parke, the 370,000-square-foot development in Cedar Park that will be home to Austin's first 365 by Whole Foods Market grocery, Nordstrom Rack, Dick's Sporting Goods, Michaels and Marshalls.
Belterra Village, a 200,000-square-foot mixed-use center in Dripping Springs, which will include a hotel, medical office, senior living community, and 85,000 square feet of retail space.
Aldrich Street, a multi-phased retail development that could feature as much as 1.2 million square feet of mixed-use space along I-35 between 51st Street and Airport Boulevard.
Allison Brown covers a variety of topics and industries for ABJ.