Round Rock has proven to be last year's hottest market and will be again this year, says Lance Morris, senior vice president in The Weitzman Group's Austin office. Dell Computer's 22,000-employee campus is the foundation for Round Rock's success. "It's made every retailer in the US want to have a store there," Morris told GlobeSt.com.
Morris estimates as many as 75 new retailers have entered that market in the past five years and more are on the way. None of the rumored newcomers can equal the charisma of Nordstrom's, which is looking but has yet to seal a space. Talk has Nordstrom's heading to a vacated Montgomery Ward's store at Barton Creek Mall, but it's not a done deal as far as insiders know right now.
Austin has once again outpaced the rest of the state in the occupancy numbers game. Dallas-Ft. Worth has come in at 90.6% occupancy; Houston, 88%; and San Antonio, 85.1%, according to The Weitzman Group's year-end analysis released yesterday. The state capital's 95% occupancy rate, up just 1% from 1999, is based on a total market inventory of about 24 million sf.
The city's entitlement process keeps the class-A market tight, assesses the Weitzman staff. The development process and water-quality ordinances "ensure that construction remains limited in the city itself," according to the report, and drives a furious pace in suburban markets such as Round Rock. Meanwhile, it's not any easier to find second-generation class-A space. Submarkets like the Arboretum are full and new space coming on the market in the premier areas have already been leased, say Weitzman's analysts.
Two years of hardy building have yet to whet the appetite. Last year, about 1.5 million sf of retail space had come to market and about 2 million sf had been added the year before. The primary project in year 2000, of course, had been the 328-acre La Frontera, which has 115 acres dedicated to retail. This year will see the start of the six-acre The Triangle, which will boast 160,000 sf of retail space to support a 1,200-resident component. And, more than 500,000 sf of retail is either under construction or planned for the CBD.
The Weitzman report, citing Economy.com, shows Austin definitely has the job growth to support the booming retail mecca. The state capital leads the nation in household income growth. More than 30,000 new jobs had come on line last year, up at least 5% from 1999. From 1990 through 1999, the Austin-San Marcos region had 239,955 jobs created. The next five years will bring more of the same, with job growth predicted to average above 5% annually for the next four years.
The grocery store-anchored centers continue to hold a strong lead in the state capital's retail market, experiencing a 12% jump. And the most aggressive rollouts are being lobbed by H-E-B, Albertsons and Randalls.
In turn, rents are at historically high levels, say the analysts. Class-A retail projects are commanding $26 per sf to $32 per sf and some areas are going for even bigger tickets. In comparison, class-A retail space had brought in $25 per sf to $30 per sf in 1999. Class-B rates are now fetching $18 per sf to $20 per sf while class C's getting $14 per sf to $15 per sf. This year will bring no relief to tenants, with rents predicted to continue upward, concludes the report.
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