"Strong retailer demand continues to fuel an active shopping center construction pace," says Herb Weitzman, president of The Weitzman Group of Dallas, who periodically analyzes the retail market. He predicts 1.5 million to 2 million sf of new retail space will be added this year, nearly as much as the 2 million sf that came to market in 1999.
A number of new retailers are coming to the area, analysts say, and others are expanding.Conn's TV and Appliance is planning several Austin stores and Kohl's, a mid-priced, freestanding department store chain has plans to open several locations next year, retail sources told GlobeSt.com. Expansions are being undertaken by H-E-B, Albertsons, Randalls, Walgreen's drugstores and Starbucks, which is aggressively adding to its portfolio.
Such retail activity is one of the reasons that, for most of the past decade including 1999, Austin has posted the highest retail occupancy rates of any major market in Texas. In a continuation of that trend, a midyear analysis shows the Austin market has an overall occupancy of slightly more than the 94% recorded at 1999 year end, according to Weitzman.
"However, several hot areas like the Arboretum are essentially full, Weitzman continues. The occupancies are based on a total market inventory of approximately 23 million sf of multi-tenant shopping center space.
Demand for retail space ensures Austin's retail rental rates stay at historically high levels, Weitzman says. As of midyear 2000, retailers seeking 1,500 sf to 2,000 sf in class A projects could expect to pay an average of $27 per sf and as much as $35 per sf per year. At midyear 1999, rates were $25 to $30 per sf. Second-generation space rates this year generally range from $15 to $22 per sf. Some older second-generation space was lower - $13 to $15 per sf. Austin piques the interest of local, regional and national retailers because of its economy, which leads the state in job growth. More than 65,000 new jobs have been added this year. Over the next four years, the new job rate is expected to grow an average of 5.2% annually, a marked increase over the US average of 2.4%. Meanwhile, the multi-family market is approximately 97% occupied while the single-family market for new and existing homes is posting double-digit sales and price increases.
"For the remainder of 2000 and beyond, the Austin area retail market should continue to experience steady, positive growth," says Weitzman.
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