Retailers occupied 94.65% of the retail space at the end of 2002, up from 94.47% a year ago. In centers 50,000 sf to 100,000 sf, the asking rent was $1.41 per sf in 2002, up from $1.39 per sf, and in centers 100,000 sf and over, it was $1.64 per sf, up from $1.62 per sf.
Retail has persevered through the city's economic downturn, the economic aftermath of the Sept. 11 attacks and the current uncertainty concerning war with Iraq. And, it continues to outshine the office and industrial markets, where occupancies have risen and rents have dropped.
Eric DeJernett, an NAI CIP retail specialist, tells GlobeSt.com that some retailers are changing with the times in order to survive. "People are working at re-merchandising, cutting costs and changing their marketing to shift for the market," he says.
While the Austin-area economy is trudging through another year of what appears to be slow growth, retailers want to hang on to be there for the rebound. "There is underlying feeling that Austin is here and it's here to stay and it's not going anywhere and we need to hang in here and ride this thing out," DeJernett says.
At the same time, there is an increasing amount of turnover, he says. It may be that some stores have been unable to change fast enough or cope with the slowing market. But, there seem to be retailers ready to step into vacated stores, he says. "There are plenty of people looking for space."
The greatest weakness seems to be in high-end stores and restaurants. "Two or three years ago, the high end was where it was at," DeJernett says. "There was a lot more money in the system."
DeJernett says he was somewhat surprised that rents didn't flatten out over the year. He says the average rents reflect what building owners are asking tenants to pay and the actual rents may be lower. Also, new centers, with higher construction costs, might be boosting the rates.
"But," DeJernett says, "That's just a reflection of demand that people are willing to spend $24 to $26, triple net, to be in a center anchored by H-E-B or some other strong anchor."The report says the Arboretum continues to be a hot area and that national retailers such as Lowe's Home Discount Warehouses Inc. and Home Depot Inc. continue to stake out locations in the Austin area. The study tracks 17.2 million sf of retail space in centers 50,000 sf and larger.
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