The occupancy rate closed 2001 at 95%, on par with yearend 2000 and down 1% from mid-2002. The rate remains high because supply has been limited by development and geographic complaints, according to Scott Freid, senior vice president in charge of the Austin office of the Weitzman Group/Cencor Realty Services.
Large-format retailers built in force in Austin in 2001, but construction of small-tenant retail space was limited. Total construction was one million sf in 2001, down from 1.5 million sf in 2000.
National retailers, which were active in Austin in 2001, should stay busy in 2002, the Weitzman report said. Demand came from newcomers such as the mid-priced department store chain Kohl's, which opened three Austin stores; Costco, which opened one store; and existing retailers such as Wal-Mart, Sam's Discount Club, Target and Home Depot. The report said Austin should have one of the "most balanced major retail markets in the country for the foreseeable future."
Rental rates were stable in 2001 because of demand for space by retailers and the limited availability of quality space, according to the report. Class A in-line space went for $22 per sf; class B rates ranged from $16 per sf to $18 per sf; and class C rented in the $15 per sf range. Rent stability is expected to continue in 2002.
Few closings put space back on the market, according to Weitzman, and much of the vacated space was accounted for by the end of the year. For example, the report offered the two Montgomery Ward's stores that closed after the company's bankruptcy. Work has begun at the Ward's store at Barton Creek Square Mall to turn it into Nordstrom's first Austin store in 2003 and negotiations are under way for the Ward's store at Capital Center. Details were not available.
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