Retail space in Central Texas is at a premium, even with dozens of new projects that added almost 900,000 square feet of space last year.
A new report from The Weitzman Group, a commercial real estate firm with offices across the state, puts the region’s current occupancy rate at 96 percent – the highest in all of Texas and one of the highest in the nation.
Another 700,000 square feet of space is expected to come online in 2016, The Weitzman Group said, but much of that is spoken for, as well.
The list of projects set to debut before year’s end includes the H-E-B-anchored Star Ranch shopping center in Hutto, the Randall’s-anchored Crystal Falls Town Center in Leander, the first portion of the Mueller development’s Aldrich Street project featuring Alamo Drafthouse and Domain Northside, which will be home to the city’s second Nordstrom department store and RH, a new Restoration Hardware concept, as well as 20-plus other shops and restaurants.
“The Austin retail market is not only strong, I would go so far to say it’s a landlord’s market,” said Brett Maze, an assistant vice president for The Weitzman Group in Austin. “We’re seeing tenants having a harder time finding the perfect space, in terms of either size or location or rental rate.”
In many parts of Central Texas, retail sites are renting for about $30 per square foot per year, with prime storefronts going for $40 per square foot per year – or more. The tightest part of town, The Weitzman Group says, is Central Austin, which is largely built out and therefore has little room to add new retail space.
Most of the leasing activity in recent months has been in suburban areas, such as a former Albertson’s grocery store in Georgetown that has finally been filled with several smaller businesses after years of sitting empty and a former Target store in San Marcos that was backfilled by a Gold’s Gym and The Spot, a movie theater and entertainment venue.
Several new retail projects are in the pipeline for 2017 and beyond, promising hundreds of thousands of square feet of additional retail space, Maze said.
“Construction is starting to ramp up to meet the demand for Class A space,” he said. “But in the case of the best-located projects, their small shop space is essentially pre-leased before they even open.”
Those new projects include The Parke, a 370,000-square-foot center in Cedar Park that has already snagged commitments from a number of retailers, including Dick’s Sporting Goods, Field & Stream, 365 by Whole Foods Market, Nordstrom Rack, Chuy’s, DSW, Petco and Ulta.
Another major addition coming in 2017 is Belterra Village near Dripping Springs, which will include a 14-screen movie theater from the team behind Violet Crown Cinema, a Breed & Co. hardware store, Pet Supplies Plus, Spec’s Wine Spirits and Finer Foods and Torchy’s Tacos.