Austin is running out of space for new retail tenants.
New retail construction dropped to 280,000 square feet in the capital city last year, little more than half of the 402,000 square feet built in 2020 and significantly lower than before 2016, when as much as 4 million square feet of new space was built annually, the Austin American-Statesman reported.
The lack of new construction is making it difficult for new tenants to move into the Bat City, said Nick Naumann of Weitzman.
“We have an overflow of clients coming into Austin,” he told the outlet. “They’re coming from California, from New York, from Chicago. They’re wanting space and they’re ready and willing to jump in and pay market rates, but finding it is very challenging.”
Despite the pandemic causing multiple retail closures, leading to a 1.5 percent drop in occupancy in 2020 and about 770,000 square feet of vacant space, the retail occupancy rate in Austin has bounced back to 96.5 percent today, making it the strongest metro in the state, according to Weitzman.
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The Weitzman report found that a contributing factor was the low number of high-profile closures, which didn’t result in as much vacant space for new tenants to fill. In addition, the report found that when space does become available, it is almost immediately snatched up by new tenants.
The lack of available retail space in Austin has interested tenants chomping at the bit to find storefronts and is driving some out into the surrounding suburbs.
“Central is always preferred, but it’s not as accessible as we all want it to be,” Naumann told the outlet. “We’re seeing a lot of development and a lot of deals in the suburbs. That goes for Cedar Park, Leander, Pflugerville, Round Rock and even up to Liberty Hill. You’re seeing exponential growth in these markets.”
— Victoria Pruitt