Austin Retail Real Estate Market is Hot

AUSTIN ( – Big-ticket retail sales are keeping pace with Austin’s red-hot housing market. This year developers are raising 2.7 million square feet of retail space, a slight increase from last year’s construction output.

Recent reports indicate the metro’s retail market is edging toward a four-year high.

According to a Weitzman Group analysis, 28.5 million square feet of existing retail space is 93 percent filled. Some retailers are adding second and third locations; others are looking for their sixth and seventh padsites.

A recent report by Marcus & Millichap Real Estate Investment Brokerage Co. reveals cap rates for single-tenant properties are at 7 percent, and multitenant properties range in the mid-to-high 7 percent range, on average. Properties filled by top-tier tenants show returns in the mid-6 percent range.

Lance Morris, president of the Weitzman Group Austin office, said the true indicator of the market’s strength will be how quickly 11 Albertson’s grocery stores, set to close August 3–18, will be filled. Five of the mothballed Albertson’s are in the metro.

Brad Bailey, Marcus & Millichap’s regional manager in Austin, warns that the metro needs to make sure adequate infrastructure is in place to handle the growth. The outlying areas, many with two-lane highways, are getting developments of 500,000 square feet and more. Bailey says road-widening projects will be needed to keep traffic flowing smoothly.

1 thought on “Austin Retail Real Estate Market is Hot”

  1. Hot is good. However, I’d like to see it grow more steadily and in a healthy fashion. All those crazy growth patterns of the pre-2000 and East-West coast double digit growth is not necessarily a good idea. Some people make a lot of money in short run, but the market cannot be sustained when the wage level remain the same (or actually decreased due to inflations.)

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