September 9, 2009
Weitzman / Cencor put together a very thorough mid year analysis of the Austin Retail Market. Read on …
AUSTIN’S RETAIL MARKET CONTINUES TO POST GAINS
Austin’s retail market at mid-year has experienced a drop in occupancy due to the pull-out of national retailers such as Circuit City and Sportsman’s Warehouse. However, the impact of these vacancies has been partly mitigated by the re-tenanting of several of the box stores by concepts ranging from soft goods to grocers to office supplies.
Austin reports active leasing market and positive job growth. Austin also continues to see one of the most active leasing markets in Texas, prompted in part by job growth that has remained positive for much of the current economic downturn, although the area did lose report job losses for June.
As of mid-year 2009, the Austin retail market reported an occupancy rate of 92 percent, down approximately 1 percent compared to year-end 2008. The occupancy rate is based on a retail inventory of approximately 40 million square feet of multi-tenant retail space in centers with 25,000 square feet or more.
CBRE does a really nice job with their market reports, which I’ve posted links to below.
AUSTIN, TEXAS – 2ND QUARTER 2009 UPDATES
August 31, 2009
Considering where the local Real Estate Economy is compared to recent years and that retail typically struggles more than Office or Industrial properties during down times, it’s rather amazing that the local Retail Market is as healthy as it is.
CENTRAL TEXAS COMMERCIAL REAL ESTATE
Newcomers such as Sprouts are keeping retail market healthy.
By Shonda Novak
Wednesday, August 05, 2009
Central Texas’ retail market is holding its own during the recession, with occupancy at midyear at 92 percent, down from 92.5 percent a year ago, a new report says.
The Austin area “continues to see one of the most active leasing markets in Texas,” spurred in part by job growth that, until recently, had remained in positive territory during the economic downturn, according to the Weitzman Group, a Dallas-based retail brokerage firm.
While some national retailers have closed their Austin stores, newcomers have moved in to take up some of the space. The new retailers include Sprouts, a natural food grocer that plans five Austin area stores.
The list includes one at Anderson Mill Road and Hwy. 183, as well as previously announced locations in the Arboretum area, Sunset Valley, Round Rock and Rollingwood.
Austin’s first Nordstrom Rack will open in a former Linens ‘n Things store in the Arboretum area in October.
Shoe Pavilion’s former Brodie Lane location will house Austin’s first Buy Buy Baby store, while Staples took the space Shoe Pavilion left at the Mueller redevelopment in Northeast Austin.
Wednesday, August 5, 2009
Austin Business Journal
Austin’s retail market has seen a drop in occupancy as national retailers have pulled out of space, but thanks to backfilling by tenants like Sprouts Farmers Market, the impact hasn’t been severe, according to a mid-year report from The Weitzman Group.
The Austin retail market’s occupancy rate is 92 percent, down from about 93 percent at the same time last year, the report said.
Most of the current retail vacancies come from junior anchors that closed, including a 50,000-square-foot Sportsman’s Warehouse in Round Rock and national chain stores like Circuit City, Linens n’ Things and Shoe Pavilion.
Vacancy rates rose in Austin’s office market in the Second Quarter of 2009.
Oxford Commercial reports that vacancy rates for Class A office averaged 23.7% in the second quarter, up from 16.6% a year ago. Rents averaged $28.49/ square foot, down 5.8% compared to the same time last year.
Endeavor Real Estate Vice President Travis Dunaway said that “vacancy rates in certain parts of town have topped 25%.” Average vacancy rates are typically in the 15% range.
According to Oxford Commercial, the Northwest Austin submarket put the largest amount of space back on the market (negative absorption) with 158,000 square feet returning to the marketplace in the Second Quarter.
The downtown market is holding its own according to Endeavor’s Dunaway and is on par with its historical vacancy rate. Oxford Commercial notes that the downtown submarket is at a 14% vacancy rate which is better than almost all other submarkets.
Overall office vacancy equals 9.1 million square feet of empty space, the highest amount ever and is a comparable amount to the entire downtown office market.
Sublease space currently totals 1.2 million square feet, the most since 2003 according to Ford Alexander with Oxford Commercial.
Interesting to note that the average per square foot rental rate remained roughly the same at $26.08 / SF compared with $26.66 / SF a year ago. However, there are parts of town according to Bart Matheney with Aquila Commercial where “rents in suburban areas have dropped 12 to 17% during the past 1.5 years”.
Rick Whitely with Oxford Commercial expects to see vacancy increase and lease rates decrease in the next quarter. Sam Houston with HPI Real Estate states that things are much better than they were at the end of 2008 and early 2009 noting that most businesses seem more confident about their business environment. Ford Alexander with Oxford thinks that the office market could start to turn up in the second half of 2010 when he expects businesses to be looking to relocate to Austin or for existing companies to expand.
Major office lease deals of note in the Second Quarter include OneWest Bank Group which leased 173,962 SF in the Domain Gateway office buidling and the Teachers Retirmenet System which leased 47,000 SF at 816 Congress Avenue.
Since the first of the year sales volume is up 61% and active listings are up 14%.
This signifies a healthy Central Texas real estate market and good news for both local home buyers and sellers, said Jay Gohil, Chairman of the Austin Board of Realtors.
Comparing June 2009 sales to June 2008 sales data, the number of homes sold is down 4% and the median price of homes sold is unchanged at $199,900.
In Central Texas, the market is benefiting from low morgage rates and a healthy supply of homes for sale. Another strong incentive: an $8,000 federal tax credit for first-time buyers who close on a home before Dec. 1, 2009. (Austin home sales hit highest level in a year, Austin American Statesman, 7/21/09)
Mark Sprague, Austin partner for Residential Strategies Inc. said,
“As fewer developers build homes and the number of available lots continues to shrink, it will mean more demand for existing homes. Resales are a little better. I’m cautiously optimistic.”
Austin Business Journal – by Ron Losefsky Contributing Writer
It might surprise you to learn that in Central Texas, industrial tenants include a wide range of users such as medical clinics, charter schools, nonprofits and semiconductor equipment vendors — reflecting the economic activity we see about us each day. Many of these companies occupy space not unlike your typical office — professionally finished out and 100 percent climate controlled, with little or no “industrial” space.
Despite this diversified base of tenants, vacancy rates for industrial property across Central Texas have more than doubled recently, reaching almost 20 percent in some submarkets.
In the near term, the diversified tenant base and relative health of the Central Texas economy should keep the bottom from falling out of our industrial real estate market. Landlords of new properties will continue struggling to fill empty buildings, while owners of nearly full older properties should find lower rates and staggered leases stablizing income streams. Those tenants with strong cash flows will find themselves dining on a buffet of lease options while being courted aggressively by their current landlords — an excellent time to capitalize on today’s very attractive rates.
Austin Business Journal – by Kate Harrington ABJ Staff
It comes as little surprise to Austin real estate experts that industrial vacancy has risen during the first six months of the year. But with it, there’s been a surge in activity as some tenants venture out to take advantage of market conditions.
According to research from NAI Austin, lease rates have dropped about 30 percent for warehouse and 10 percent to 15 percent for flex, while incentives range from free rent to increased tenant finish allowance and bonuses for brokers.
NAI reports that the Austin area’s industrial real estate vacancy reached 22 percent, up from 18 percent at the end of 2008. That climb in vacancy came partly from the addition of about 700,000 square feet of newly constructed space and more than 550,000 square feet of Dell Inc.-related space that came back onto the market. Also, 2008 finished as a record year for new construction with 2.4 million square feet of inventory added to the market.