AUSTIN, TX-While most retail developers across the US are still twiddling their thumbs, developers in the Lone Star State’s capital city are once again hard at work.

“Like other cities, Austin saw a slowdown in retail development during the recession because people were concerned with demand,” says Michael Watson, regional manager of Marcus & Millichap’s local office. “But we’re starting to see more confidence from developers as the market improves and Austin adds jobs.”

In fact, less than 100,000 square feet of new retail space came online over the past 12 months, according to a recent report from Marcus & Millichap. The 410,000-square foot second phase of The Domain, which was finished in early 2010, was the last significant addition to inventory.

Today, construction is underway on 1 million square feet of retail space within the Austin metro area, and an additional 3.1 million square feet is under development in the nearby cities of Pflugerville and Kyle. Planned projects equate to 9.8 million square feet.

The 600,000-square foot third phase of the Southpark Meadows power center in South Austin is the largest project slated for completion in 2011. Final build-out of the 1.6 million-square foot development will occur in the fall and include a Sam’s Club.

Watson tells GlobeSt.com that developers are encouraged by Austin’s impressive employment numbers. The city is lucky to claim the title as the fastest growing job market in the nation. The job base is forecast to expand 3.7%, or by 28,300 jobs.

High-paying professional and business services and education and health services segments will each grow by more than 4%, according to economy.com. Last year, 14,400 positions were created metrowide, according to the Bureau of Labor Statistics.

“Job growth means Austin’s retail market is healthier than the rest of the country,” Watson contends. With the marketwide vacancy rate at 8.5%, he forecasts rental rate growth later this year.

“I describe the Austin retail market as improving,” Watson explains. “While the vacancy rate indicates an improving market, we need to see rental rate growth over a period of time for it to be a healthy market. Rents have stabilized so far, and we’re looking forward to rental rate growth by the end of 2011.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM Digital Member, you’ll receive:

  • Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more information visit Asset & Logo Licensing.