Austin Retail market vacancy shrinks to lowest rate in three years.
VACANCY RATE TIGHTENS TO 3.9% Demand for retail space (1.4 million sq. ft. of net absorption) outpaced supply (860,000 sq. ft. of deliveries) during the first ten months of 2021 in the Austin metro. This is the first time since 2016 that the amount of net absorption was greater than the amount of square feet delivered from January through October. With 860,000 sq. ft. delivered since the beginning of the year, 697,000 sq. ft. under construction, and another 476,000 sq. ft. planned through 2022, the demand for retail real estate may continue to surpass supply. Thanks to improved conditions, such as a recent uptick in consumer spending and a decreasing construction pipeline, the Austin retail market’s vacancy rate has tightened to 3.9%.
ROBUST LEASING ACTIVITY The Austin retail market has recorded 1.8 million sq. ft. of leasing activity—which is comprised of both new leases and renewals—from January through October 2021, an equivalent amount from this time last year. Significant lease transactions in 2021 include: H-E-B leasing 102,000 sq. ft. at 19348 Ronald Reagan Blvd. in Liberty Hill in the Georgetown submarket in January; a 62,400-sq.-ft. lease in a freestanding retail building in Taylor in the Georgetown submarket in September; and Ashley HomeStore inking a deal for 40,351 sq. ft. in 1890 Ranch Center in Cedar Park in April.
RETAIL AND ROOFTOPS The Austin housing market remains strong and competitive, according to the Austin Board of Realtors. As of September 2021, the Austin-Round Rock MSA home sales decreased 5.1% compared to September 2020 as the median sales price of $450,000 set a record for the month of September. The increased demand in the Austin housing market—not just over the past 16 months, but the past two decades—has been primarily due to job growth and a flourishing and diverse economy. Although addressing housing affordability and increasing available inventory should continue to be a top priority for the region.
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