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Retail Occupancy, Sales Tax Shortfall Create Austin Dichotomy

AUSTIN-Central Texas cities are cutting back on municipal services because of shortfalls in sales tax revenue. The average occupancy of 95% is readily reconcilable with lackluster sales, says one analyst.

By Tim Green | Updated on August 20, 2002

AUSTIN-Is there a conflict between stable retail real estate market figures and decreasing sales tax revenues collected by cities in the Austin area? Not necessarily. Just because stores still lease space doesn’t mean they are ringing up the kinds of sales they were two or three years ago.

The mid-year figures from NAI/Commercial Industrial Properties Co. showed occupancy was 95%, up slightly from 94.47% at the end of 2001 and rents were flat. Rents dropped one cent to $1.38 per sf at centers with 50,000 sf to 100,000 sf while rents rose between a penny and $1.63 per sf at centers with more than 100,000 sf.

Austin-area governments have cut back on services and projects in their 2002-03 budgets because of shortfalls in sales tax revenue. The proposed City of Austin budget has $177.9 million in sales tax revenue, about $10 million less than the current budget.

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