Austin Retail MarketView 4Q 2018 - Texas A&M …...Figure 1: Net Absorption and Market Occupancy Source: CBRE Research, Q4 2018. *Arrows indicate trend from previous quarter. ROBUST

MARKETVIEW

Despite lax quarter, Austin retail

remains robust heading into new

year

Austin Retail, Q4 2018

Q4 2018 CBRE Research © 2018 CBRE, Inc. | 1

Deliveries224,476 SF

Net Absorption(247,420) SF

Occupancy

95.9%Under Construction

565,884 SF

Figure 1: Net Absorption and Market Occupancy

Source: CBRE Research, Q4 2018.

*Arrows indicate trend from previous quarter.

ROBUST POPULATION GROWTH SPURS RETAIL STRENGTH

The Austin retail market continues to benefit from the metropolitan area’s population and employment growth. As 2018 came to a close, market fundamentals dipped as a plethora of new product was brought online. Despite occupancy rates dipping 10 basis points (bps) below 96%, the market remains eager to provide retail services to the ever-expanding population.

KENDRA SCOTT CONTINUES TO SET ENCHANTING EXAMPLE

Kendra Scott, founder and CEO of the wildly successful homegrown jewelry chain, opened a new flagship store in the heart of the South Congress district in Q4 2018. Customers can valet their cars and enjoy coffee and pastries while they peruse all the products for sale in the store. The store is expected to continue to drive the So-Co district.

UNEMPLOYMENT IN AUSTIN REMAINS ONE OF LOWEST IN THE STATE

Austin’s unemployment rate for October was 2.7%, a full 100 basis points below the state average. With the overall population and purchasing power of residents in the metro continuing to climb, it is anticipated that the demand for retail space will remain strong leading into 2019.

RETAIL FUNDAMENTALS DIP DURING Q4 2018

With the delivery of approximately 225,000 sq. ft. of new retail product to the market, market fundamentals slipped in Q4 2018 as the average asking rent fell to $20.50 per sq. ft. and total absorption for 2018 registered approximately 435,000 sq. ft. However, with 565,000 sq. ft. of new product underway, developers continue to demonstrate their faith in the burgeoning retail demand in the Austin metro.

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Occupancy (%)Net Absorption (SF, OOOs)

Net Absorption Occupancy

Avg. Asking Rate$20.50 PSF

MARKETVIEW



Figure 2: Historical Market Statistics

AUSTIN RETAIL

2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2018BASTROP COUNTY Absorption (Net SF) (16,461) (626) 4,633 11,733 1,526 17,266

Asking Rent, Avg. Annual N/A 21.00 24.00 24.00 23.50 23.50Delivered Construction (SF) - - - - - -

Occupancy Rate (%) 96.7 97.1 96.8 97.2 97.2 97.2CALDWELL COUNTY Absorption (Net SF) (1,525) 6,203 - - 1,950 8,153


Occupancy Rate (%) 97.1 97.5 94.2 94.4 94.9 94.9CBD Absorption (Net SF) 9,080 (3,709) (3,482) (12,931) (5,830) (25,952)

Asking Rent, Avg. Annual N/A 26.75 32.00 32.00 42.50 42.50Delivered Construction (SF) - - - - 36,000 36,000

Occupancy Rate (%) 98.7 94.4 98.7 97.7 97.3 97.3CEDAR PARK Absorption (Net SF) 394,795 (21,699) 20,210 17,108 2,167 17,786

Asking Rent, Avg. Annual N/A 22.50 26.00 26.00 21.25 21.25Delivered Construction (SF) 372,515 - - 11,500 37,171 48,671

Occupancy Rate (%) 96.8 95.5 97.0 97.0 96.8 96.8CENTRAL Absorption (Net SF) (35,491) (7,631) 1,045 24,446 (20,635) (2,775)


Occupancy Rate (%) 94.2 95.2 93.7 93.8 93.6 93.6EAST Absorption (Net SF) (28,767) 8,785 (1,700) (9,826) (13,600) (16,341)

Asking Rent, Avg. Annual N/A 25.00 30.00 30.00 24.50 24.50Delivered Construction (SF) 32,600 - - 27,000 - 27,000

Occupancy Rate (%) 97.4 94.5 97.1 96.9 96.5 96.5FAR NORTHEAST Absorption (Net SF) 71,182 17,226 514,100 9,835 (37,414) 503,747

Asking Rent, Avg. Annual N/A 20.50 22.00 22.00 18.50 18.50Delivered Construction (SF) 112,872 - 522,531 - 29,722 552,253

Occupancy Rate (%) 96.8 95.2 98.1 97.7 96.2 96.2FAR NORTHWEST Absorption (Net SF) (4,542) 56,189 5,052 22,190 35,739 119,170

Asking Rent, Avg. Annual N/A 17.75 18.00 18.00 17.00 17.00Delivered Construction (SF) 15,000 - - - - -

Occupancy Rate (%) 92.2 95.2 94.3 95.2 96.2 96.2GEORGETOWN Absorption (Net SF) 69,161 8,806 19,179 11,711 (17,625) 22,071

Asking Rent, Avg. Annual N/A 11.50 24.00 24.00 13.50 13.50Delivered Construction (SF) 58,200 100,068 - - 71,805 171,873

Occupancy Rate (%) 95.4 95.2 96.2 96.2 95.3 95.3HAYS COUNTY Absorption (Net SF) 68,409 (13,582) (13,211) 15,290 (5,816) (17,319)

Asking Rent, Avg. Annual N/A 22.25 24.00 24.00 22.75 22.75Delivered Construction (SF) 26,000 245,150 - 65,446 - 310,596

Occupancy Rate (%) 98.0 95.2 97.8 97.8 97.9 97.9NORTH Absorption (Net SF) (36,779) 20,453 17,518 20,625 (13,058) 45,538

Asking Rent, Avg. Annual N/A 20.50 24.00 24.00 19.00 19.00Delivered Construction (SF) 27,988 - 13,650 - - 13,650

Occupancy Rate (%) 97.1 95.2 96.6 96.7 96.5 96.5NORTHEAST Absorption (Net SF) 19,660 (120,033) (93,468) (59,019) (31,509) (304,029)

Asking Rent, Avg. Annual N/A 18.50 20.00 20.00 16.75 16.75Delivered Construction (SF) 11,000 - - 12,800 - 12,800

Occupancy Rate (%) 94.0 93.0 91.1 91.8 90.5 90.5NORTHWEST Absorption (Net SF) 125,701 22,004 10,446 82,769 (20,931) 94,288

Asking Rent, Avg. Annual N/A 24.75 26.00 26.00 24.75 24.75Delivered Construction (SF) 36,600 - - - - -

Occupancy Rate (%) 96.8 94.7 97.2 98.7 98.2 98.2ROUND ROCK Absorption (Net SF) 91,810 (1,126) 61,001 55,830 (39,291) 76,414

Asking Rent, Avg. Annual N/A 21.25 25.00 25.00 21.75 21.75Delivered Construction (SF) 171,194 14,000 - 34,700 22,500 71,200

Occupancy Rate (%) 93.6 95.0 94.3 94.1 93.0 93.0SOUTH & SOUTHEAST Absorption (Net SF) 3,623 (775) 1,687 2,815 (100,600) (96,873)


Occupancy Rate (%) 97.3 95.1 97.3 96.1 96.2 96.2SOUTHWEST Absorption (Net SF) 7,149 (19,457) (5,261) (17,898) 16,120 (26,496)


Occupancy Rate (%) 97.7 94.7 97.8 95.6 95.5 95.5WEST CENTRAL Absorption (Net SF) (3,063) (8,230) 2,990 (389) 1,387 (4,242)


Occupancy Rate (%) 99.1 94.7 98.3 97.8 98.1 98.1AUSTIN TOTAL Absorption (Net SF) 733,942 (57,202) 540,739 174,289 (247,420) 410,406

Asking Rent, Avg. Annual N/A 21.75 24.75 24.75 20.50 20.50Delivered Construction (SF) 931,409 408,918 536,181 215,746 254,198 1,415,043

Occupancy Rate (%) 96.3 96.2 96.4 96.6 95.9 95.9

MARKETVIEW

Q4 2018 CBRE Research 3

AUSTIN RETAIL

© 2018 CBRE, Inc. |

1,500

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60,000

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70,000

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2013

2014

2015

2016

2017

2018

Median HH Income Population (000s)

Figure 7: Population Growth and Purchasing PowerPopulation (000s)

Source: Moody’s Analytics, Q4 2018.

HH Income ($)

Source: U.S. Bureau of Labor Statistics, Moody’s Analytics, Q4 2018.

Figure 6: Austin Labor Force & Unemployment

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Asking Rates ($/SF)

Community Neighborhood Strip Power Lifestyle

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SF (000s)


Figure 5: Asking Annual Rents by Center Type, NNN Avg.

Figure 3: Asking Annual Rents, NNN Avg. Figure 4: Deliveries



3004005006007008009001,0001,1001,2001,300

2

3

4

5

6

7

8

2005 2007 2009 2011 2013 2015 2017 2019 2021

Total Employment (Non-Farm) Unemployment Rate

Forecast

(%) (Thousands)

MARKETVIEW

Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

CBRE OFFICES

CBRE Austin500 W 2nd St., Suite 1700Austin, TX 78701

To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway at www.cbre.com/researchgateway.

CONTACTS

Luke GoebelResearch [email protected]

E. Michelle MillerResearch Operations [email protected]

MARKETVIEW

Population growth and strong

economy leads to a healthy retail

market



166,046 SF 199,096 SF96.3% 655,890 SF




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Occupancy (%)Net Absorption (SF,000s)

Series1 Occupancy

AUSTIN’S RETAIL MARKET REMAINS STRONG

REBUILDING SOUTH CONGRESS: SIGNS OF CHANGE

AUSTIN RECORDS THE FOURTH LOWEST JOB RATES IN TEXAS

BUDDING DOWNTOWN MARKET SEEING BOOM

MARKETVIEW

2017 Q1 2018 Q2 2018 Q3 YTD YTD 2018

BASTROP COUNTY

-16,461 -626 4,633 11733 15,740

0 0 0 0 0

2,291,556 2,249,119 2,106,611 2,120,081 6,475,811

96.7 97.1 96.8 97.2 97

CALDWELL COUNTY

-1,525 6,203 0 0 6,203

0 0 0 0 0

449337 449,337 449,337 460,065 1,358,739

97.1 97.5 94.2 94.4 94.4

CENTRAL BUSINESS

DISTRICT

9,080 -3,709 -3,482 -12,931 -20,122

0 0 0 0 0

1826593 1,853,427 1,825,427 1,794,120 5,472,974

98.7 94.4 98.7 97.7 97.7

CEDAR PARK

394,795 -21,699 20,210 17,108 15,619

372,515 0 0 11,500 11,500

7,251,755 7,555,227 7,518,939 7,541,892 22,616,058

96.8 95.5 97 97 97

CENTRAL

-35,491 -7,631 1,045 25,446 18,860

0 0 0 0 0

6,245,901 6,283,838 6,266,018 6,284,316 18,834,172

94.2 95.2 93.7 93.8 93.8

EAST

-28,767 8,785 -1,700 -9,826 -2,741

32,600 0 0 27000 27000

2,964,886 2,991,099 3,210,915 3,253,190 9,455,204

97.4 94.5 97.1 96.9 96.9

Rentable Building Area (RBA)





Absorption (Net, SF)

Delivered Construction (SF)

Occupancy Rate (%)



Occupancy Rate (%)




Occupancy Rate (%)



Occupancy Rate (%)



Occupancy Rate (%)



Occupancy Rate (%)


AUSTIN RETAIL



MARKETVIEW

2017 Q1 2018 Q2 2018 Q3 YTD YTD 2018

FAR NORTHEAST

Absorption

(Net, SF)71,182 17,226 514,100 9,835 541,161

112,872 0 522,531 0 522,531

2,658,778 2,675,130 3,291,681 3,388,610 9,355,421

96.8 95.2 98.1 97.7 97.7

FAR NORTHWEST

Absorption

(Net, SF)-4,542 56,189 5,052 22,190 83,431

15,000 0 0 0 0

3,437,317 3,481,407 3,455,429 3,387,759 10,324,595

92.2 95.2 94.3 95.2 95.2

GEORGETOWN

Absorption

(Net, SF)69,161 8,806 19,179 11,711 39,696

58,200 100,068 0 0 100,068

5,005,347 5,176,911 5,216,452 5,258,439 15,651,802

95.4 95.2 96.2 96.2 96.2

HAYS COUNTY

Absorption

(Net, SF)68,409 -13,582 -13,211 15,290 -11,503

26,000 245,150 0 65,446 310,596

7,655,087 7,936,548 7,973,710 8,038,688 23,948,946

98 95.2 97.8 97.8 97.8

NORTH

Absorption

(Net, SF)-36,779 20,453 17,518 20,625 58,596

27,988 0 13,650 0 13,650

6,401,585 6,468,793 6,498,905 6,502,927 19,470,625

97.1 95.2 96.6 96.7 96.7

NORTHEAST

19,660 -120,033 -93,468 -59,019 0

11,000 0 0 12800 12800

2,542,511 2,625,216 2,688,195 2,644,795 7,958,206

94 93 91.1 91.8 91.8


Occupancy Rate (%)


Occupancy Rate (%)


Occupancy Rate (%)






Occupancy Rate (%)


Occupancy Rate (%)


Occupancy Rate (%)




AUSTIN RETAIL


Source: CBRE Research, Q3 2018


MARKETVIEW

2017 Q1 2018 Q2 2018 Q3 YTD YTD 2018

NORTHWEST

125,701 22,004 10,446 82,769 115,219

36,600 0 0 0 0

4,597,324 4,592,017 4,607,237 4,607,237 13,806,491

96.8 94.7 97.2 98.7 98.7

ROUND ROCK

91,810 -1,126 61,001 55,830 115,705

171,194 14,000 0 34,700 48,700

6,870,180 6,801,553 6,881,225 6,945,824 20,628,602

93.6 95 94.3 94.1 94.1

3,623 -775 1,687 1903 2,815

11,050 38,700 0 0 38,700

11,460,462 11,526,541 11,318,357 9,958,466 32,803,364

97.3 95.1 97.3 96.1 96.1

7,149 -19,457 -5,261 6,820 -17,898

56,390 11,000 0 14,600 25,600

7,887,046 7,921,738 7,915,129 7,971,956 23,808,823

97.7 94.7 97.8 95.6 95.6

-3,063 -8,230 2,990 -389 -5,629

0 0 0 0 0

686618 686,618 686,521 686,521 2,059,660

99.1 94.7 98.3 97.8 97.8

733,942 -57,202 540,739 199,096 682,633

931,409 408,918 536,181 166,046 1,111,145

80,292,463 81,274,519 81,910,088 82,255,198 245,439,805

96.3 96.2 96.4 96.6 96.6







Occupancy Rate (%)

AUSTIN M ARKET TOTAL



Occupancy Rate (%)



Occupancy Rate (%)

WEST CENTRAL



Occupancy Rate (%)

SOUTH & SOUTHEAST



Occupancy Rate (%)

SOUTHWEST



Occupancy Rate (%)



AUSTIN RETAIL


Source: CBRE Research, Q3 2018


MARKETVIEW


AUSTIN RETAIL

© 2018 CBRE, Inc. |

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HH Income ($)

Source: Real Capital Analytics, Q3 2018.

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($, Millions)

Figure 6: Retail Investment Sales Volume

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Asking Rates ($/SF)


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SF (000s)






MARKETVIEW


CBRE OFFICES

CONTACTS

MARKETVIEW

Asking rents, occupancy hit new

expansion cycle high point



536,181 SF 540,739 SF96.4% 739,713 SF




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Annual Net Absorption Occupancy

OCCUPANCY SCALES EVEN HIGHER

PFLUGERVILLE WELCOMES MASSIVE NEW RETAIL OUTLET

AUSTIN UNEMPLOYMENT FALLS TO 2.8%

ST. ELMO PUBLIC MARKET BEGINS

CONSTRUCTION IN SOUTH AUSTIN

MARKETVIEW




AUSTIN RETAIL

2017 Q2 2018

BASTROP COUNTY

Absorption (Net, SF) (16,461) 4,633

Delivered Construction (SF) - -

Occupancy Rate (%) 96.7 96.8

CALDWELL COUNTY

Absorption (Net, SF) (1,525) -



CENTRAL BUSINESS DISTRICT

Absorption (Net, SF) 9,080 (3,482)



CEDAR PARK

Absorption (Net, SF) 394,795 20,210

Delivered Construction (SF) 372,515 -


CENTRAL




EAST

Absorption (Net, SF) (28,767) (1,700)



FAR NORTHEAST


Delivered Construction (SF) 112,872 522,531


FAR NORTHWEST




GEORGETOWN


Delivered Construction (SF) 58,200


HAYS COUNTY




NORTH




NORTHEAST




NORTHWEST




ROUND ROCK




SOUTH & SOUTHEAST




SOUTHWEST




WEST CENTRAL




AUSTIN MARKET TOTAL




MARKETVIEW


AUSTIN RETAIL

© 2018 CBRE, Inc. |

1,500

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55,000

57,500

60,000

62,500

65,000

67,500

70,000

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75,000

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2012

2013

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2015

2016

2017

2018




HH Income ($)


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($, Millions)


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Asking Rates ($/SF)


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MARKETVIEW


CBRE OFFICES

CONTACTS

MARKETVIEW

93

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


Q1 Q2 Q3 Q4 Total Annual Net Absorption Class A Occupancy Rate

No room on store shelves.

Occupancy highest in Texas;

causes slower leasing activity



Net Absorption246,856 SF

Occupancy96.3%

Under Construction883,232 SF


Figure 1: Net Absorption and Class A Occupancy


Avg. Asking Rate$22.25 PSF

AUSTIN’S CLASS A OCCUPANCY NEARS 98%

Limited availability continues to constrict market

activity. Class A occupancy only registered down

slightly during the final 90 days of 2017. Retailers

aren’t just on the search for prime, Class A space,

overall occupancy is high as well at 96.3%—the

highest measured in Texas.

LARGEST BLOCKS OF SPACE TAKEN UP BY FITNESS AND INLINE STORESNet absorption continued to fall off peak levels

registered in 2015, while new construction

captured a large portion of demand—over 150,000

sq. ft. of the 247,000 sq. ft. absorbed. Large blocks

were occupied this quarter by fitness tenants

including Crunch Fitness and Orangetheory

Fitness.

2018 RETAIL SALES GAINS EXPECTED

CBRE Econometric Advisors forecasts Austin retail

sales volumes to reach $29.7 billion in 2018, a 6%

increase from 2017. Similar sales growth is

projected to continue over the next five years at an

annual rate of 5.6%, higher than the U.S. average.

NEW NEIGHBORS: TEXAS ADDS 400,000 OF THEM SAYS U.S. CENSUS

Once again Texas population gains grew faster

than any other state between July 2016 and July

2017. This reflects 190,000 net migrations from

elsewhere into Texas, according to recent data

from the U.S. Census Bureau. Growth in the

technology industry has contributed to

population gains in Austin which are

concentrated in suburban submarkets like

Williamson County.

MARKETVIEW



AUSTIN RETAIL

Figure 2: Market Snapshot

MarketNumber of

Centers

Net Rentable Area(SF)

Vacancy(%)

Asking Rate,

NNN Avg. Annual($/SF)

Under Construction

(SF)

Delivered Construction

(SF)

Q4 2017Net

Absorption(SF)

2017Net

Absorption(SF)

Bastrop County 73 2,291,556 3.3 20.26 0 0 (12,100) (16,461)

Caldwell County 17 449,337 2.9 26.50 0 0 (1,000) (1,525)

CBD 63 1,826,593 1.3 13.50 0 0 (1,738) 9,080

Cedar Park 159 7,251,755 3.2 26.50 0 0 57,477 394,795

Central 186 6,281,261 5.8 22.72 0 0 (12,752) (35,491)

East 84 2,964,886 2.6 22.00 260,000 0 (22,390) (28,767)

Far Northeast 83 2,658,778 3.2 20.33 0 40,722 47,561 71,182

Far Northwest 82 3,437,317 7.8 21.98 0 0 (15,878) (4,542)

Georgetown 146 5,030,167 4.6 16.80 145,475 0 30,668 69,161

Hays County 200 7,655,087 2.0 24.91 262,450 0 21,001 68,409

North 157 6,401,585 2.9 20.62 13,650 0 18,660 (36,779)

Northeast 62 2,542,511 6.0 19.73 12,800 11,000 17,973 19,660

Northwest 122 4,597,324 3.2 25.93 0 17,600 56,111 125,701

Round Rock 166 6,870,180 6.4 22.12 78,400 142,294 56,602 91,810

South 225 9,361,403 3.1 22.99 0 0 (14,201) (10,524)

Southeast 54 2,099,059 0.8 24.85 48,700 0 9,464 14,147

Southwest 187 7,887,046 2.3 26.44 43,757 10,169 15,238 7,149

West Central 33 686,618 0.9 20.00 18,000 0 (3,840) (3,063)

Austin Total 2,099 80,292,463 3.7 22.25 883,232 221,785 246,856 733,942

MARKETVIEW

1,500

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1,800

1,900

2,000

2,100

2,200

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60,000

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65,000

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(2.0)

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30,000

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Annual Sales Growth (%)Retail Sales ($,Millions)

Gross Retail Sales Retail Sales Growth


AUSTIN RETAIL

Figure 3: Asking Annual Rents, NNN Avg.



Source Moody’s Analytics, Q3 2017.

HH Income ($)

Figure 7: Austin MSA Retail Sales

Source: CBRE Econometric Advisors, Q4 2017.

0

200

400

600

800

1000

1200

2011

2012

2013

2014

2015

2016

2017

Under Construction Delivered Construction

SF (000s)


Figure 4: Construction


0

200

400

600

800

1,000

1,200

1,400

Q4 20

13Q1

2014

Q2 20

14Q3

2014

Q4 20

14Q1

2015

Q2 20

15Q3

2015

Q4 20

15Q1

2016

Q2 20

16Q3

2016

Q4 20

16Q1

2017

Q2 20

17Q3

2017

Q4 20

17

($, Millions)


15

17

19

21

23

25

Q1 2017 Q2 2017 Q3 2017 Q4 2017

($)

Community Neighborhood Strip Power

MARKETVIEW


CBRE OFFICES

CBRE Austin

100 Congress Ave., Suite 500

Austin, TX 78701

To learn more about CBRE

Research, or to access additional

research reports, please visit the

Global Research Gateway at

www.cbre.com/researchgateway.

AUSTIN RETAIL

CONTACTS

Robert C. KrampDirector, Research & [email protected]

E. Michelle MillerResearch Operations [email protected]

Analee Bivins MichelettiSenior Research [email protected]

Robert BasiliereSenior Research [email protected]

MARKETVIEW

93

94

95

96

97

98

99

(500)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


Q1 Q2 Q3 Q4 Total Annual Net Absorption Class A Occupancy Rate

Retailers flock to new product

amidst tight Class A occupancy



Net Absorption

116,119 SFOccupancy


935,354 SF


Figure 1: Net Absorption and Class A Occupancy


Avg. Asking Rate

$22.49 PSF

BALANCING ACT: BIG BOX CLOSURES AND NEW PRODUCT SPLIT NET ABSORPTION

Like the rest of the nation, Austin retail has had

to face a shift in retailers with several big box

occupiers closing this year. As a result,

absorption levels are lower than last year despite

stable demand and high occupancy rates with a

handful of big box closures including Bealls,

Hastings, Gander Mountain, and Office Max

were a drag on net absorption in Q3 2017 for a

total of 88,000 sq. ft. of negative absorption.

However, high demand for new space led to

64,000 sq. ft. of activity in new product alone

offsetting the closures and bringing the total net

absorption to 116,000 sq. ft.

Class A occupancy has been extremely tight for

over two years and currently sits at 98.1%. The

limited availability has forced tenants into new

retail developments. Retailers aren’t just on the

search for Class A space, overall occupancy is high

as well at 96.2%—the highest retail occupancy in

Texas.

CONSTRUCTION ACTIVITY CONTINUES TO INCREASE

The Austin retail development pipeline continues

to deepen reaching construction activity on par

with 2013 levels. While the majority of

development is smaller strip centers, 64% of sq.

ft. underway is in four main projects. The largest

developments are both mixed-use projects

including Plaza Saltillo in East Downtown and

Belterra Village in West Austin/Dripping Springs.

Both developments follow national trends of

focusing heavily on entertainment and restaurant

to create an experience for consumers.

MARKETVIEW



AUSTIN RETAIL

MarketNumber of

Centers

Net Rentable Area(SF)

Vacancy(%)

Asking Rate,

NNN Avg. Annual($/SF)

Under Construction

(SF)


(SF)

Q3 2017Net

Absorption(SF)

Bastrop County 73 2,293,356 2.9 21.79 0 0 1,749

Caldwell County 17 449,337 2.9 12.50 0 0 0

CBD 63 1,820,166 1.5 26.25 0 0 10,059

Cedar Park 158 7,177,235 4.0 25.36 0 11,200 14,263

Central 184 6,257,830 5.1 21.53 0 0 (22,032)

East 85 2,975,333 1.9 22.00 260,000 13,000 18,577

Far Northeast 80 2,618,156 3.7 19.32 0 12,000 (29,002)

Far Northwest 83 3,403,560 9.8 22.22 0 0 (9,749)

Georgetown 143 4,855,456 5.1 16.92 77,050 0 27,967

Hays County 195 7,547,355 2.3 24.90 263,800 0 14,175

North 157 6,401,585 2.9 20.73 13,650 0 3,791

Northeast 60 2,513,511 6.4 19.73 23,800 0 17,203

Northwest 121 4,584,565 4.1 26.91 17,600 19,000 27,068

Round Rock 163 6,734,598 5.4 23.65 170,900 16,000 10,312

South 225 9,369,887 3.1 23.75 16,000 0 4,858

Southeast 54 2,099,059 1.0 24.17 48,700 11,050 5,553

Southwest 186 7,879,907 2.0 26.26 43,854 14,200 19,379

West Central 33 686,618 0.7 25.00 0 0 1,948

Austin Total 2,080 79,667,514 3.8 22.49 935,354 96,450 116,119


MARKETVIEW

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

55,000

57,500

60,000

62,500

65,000

67,500

70,000

72,500

2011

2012

2013

2014

2015

2016

2017


(5.5)

(3.0)

(0.5)

2.0

4.5

7.0

9.5

12.0

1,000

3,000

5,000

7,000

9,000

11,000

13,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016




AUSTIN RETAIL





HH Income ($)


Source: Texas Comptroller of Public Accounts, Federal Reserve Bank of Dallas, Q3 2017.

0

200

400

600

800

1000

1200

2011

2012

2013

2014

2015

2016

2017

YTD


SF (000s)




0

200

400

600

800

1,000

1,200

1,400

Q1 20

13Q2

2013

Q3 20

13Q4

2013

Q1 20

14Q2

2014

Q3 20

14Q4

2014

Q1 20

15Q2

2015

Q3 20

15Q4

2015

Q1 20

16Q2

2016

Q3 20

16Q4

2016

Q1 20

17Q2

2017

Q3 20

17

($, Millions)


15

17

19

21

23

25

Q4 2016 Q1 2017 Q2 2017 Q3 2017

($)


MARKETVIEW


CBRE OFFICES

CBRE Austin


Austin, TX 78701






AUSTIN RETAIL

CONTACTS

Robert C. Kramp

Director, Research & Analysis

[email protected]

E. Michelle Miller

Research Operations Manager

[email protected]

Analee Bivins Micheletti

Senior Research Analyst

[email protected]

Robert Basiliere


[email protected]

MARKETVIEW

90

91

92

93

94

95

96

97

(500)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


Q1 Q2 Q3 Q4 Total Annual Net Absorption Occupancy Rate

Strong fundamentals fuel

growing development pipeline



Net Absorption

132,360 SFOccupancy


896,004 SF




Avg. Asking Rate

$21.94 PSF

STEADY DEMAND CONTINUES FROM BIG BOX EXPANSIONS

Austin retail demand remained strong

throughout the first half of 2017, absorbing

372,000 sq. ft. Big box retailers including

Austin Couch Potato, Petco, and Rooms to Go

all occupied large blocks in Q2 2017

contributing to positive net absorption in the

Central, Northwest, and Far Northeast

submarkets. As a result, occupancy increased

10 basis points quarter-over-quarter and sits

well above the 10-year average of 94.4%.

These healthy fundamentals have spurred more

construction activity, which hasn’t been this

elevated since 2013. The majority of recent

development activity is strip centers and

second phases of larger projects. The largest

concentration of construction is in Round Rock

with eight projects totaling 217,000 sq. ft. The

largest projects are both mixed-use developments

including Plaza Saltillo in East Downtown and

Belterra Village in West Austin/Dripping Springs.

Both developments are focusing heavily on

entertainment and restaurant tenants.

POPULATION GAINS TRANSLATE INTO GROWING RETAIL SALES

Austin saw some of the fastest population gains in

the nation from 2015 to 2016 which has helped

boost spending. Austin gross retail sales have

steadily increased since 2010, and, 2016 sales

growth increased by 5.6%, according to data

released from the Texas Comptroller. Continued

healthy consumer spending will further sustain

Austin’s stable retail demand.

MARKETVIEW



AUSTIN RETAIL

MarketNumber of

CentersNet Rentable Area

(SF)Vacancy

(%)

Asking Rate,NNN Avg.

Annual($/SF)

Under Construction

(SF)


(SF)

Q2 2017Net Absorption

(SF)

Bastrop County 75 2,795,693 1.9 21.01 0 0 11,623

Caldwell County 17 628,209 3.2 12.51 0 0 0

CBD 64 1,846,167 4.0 26.24 0 0 (6,487)

Cedar Park 153 7,145,523 3.6 25.58 11,200 0 (871)

Central 186 6,672,114 3.7 21.75 0 0 5,812

East 90 3,237,409 2.2 22.00 125,000 0 (6,684)

Far Northeast 77 3,406,905 6.5 18.08 12,000 60,150 62,965

Far Northwest 83 3,199,982 2.7 18.72 0 0 22,494

Georgetown 146 5,182,767 3.8 16.04 125,050 45,000 12,418

Hays County 195 6,964,522 3.7 22.78 251,800 0 37,785

North 157 5,770,765 2.9 20.03 0 0 (28,878)

Northeast 61 2,244,219 4.0 17.41 11,000 0 19,415

Northwest 120 5,612,891 5.2 22.83 19,000 0 46,387

Round Rock 159 5,651,591 3.0 23.07 217,327 24,244 9,935

South 226 8,167,514 4.3 28.17 16,000 0 11,643

Southeast 54 1,953,586 6.8 24.11 59,750 0 (3,037)

Southwest 184 7,974,040 3.1 26.04 47,877 10,021 (59,166)

West Central 34 860,428 2.7 29.75 0 0 (2,994)

Austin Total 2,081 79,314,325 3.7 21.94 896,004 139,415 132,360


MARKETVIEW

(5.5)

(3.0)

(0.5)

2.0

4.5

7.0

9.5

12.0

1,000

3,000

5,000

7,000

9,000

11,000

13,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016




AUSTIN RETAIL





HH Income ($)


Source: Texas Comptroller of Public Accounts, Federal Reserve Bank of Dallas, Q2 2017.

0

200

400

600

800

1000

1200

2011

2012

2013

2014

2015

2016

2017

YTD


SF (000s)




0

200

400

600

800

1,000

1,200

1,400

Q2 20

14

Q3 20

14

Q4 20

14

Q1 20

15

Q2 20

15

Q3 20

15

Q4 20

15

Q1 20

16

Q2 20

16

Q3 20

16

Q4 20

16

Q1 20

17

Q2 20

17

($, Millions)


1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

55,000

57,500

60,000

62,500

65,000

67,500

70,000

2011

2012

2013

2014

2015

2016

2017


15

17

19

21

23

25

Q4 2015 Q2 2016 Q4 2016 Q2 2017

($)


MARKETVIEW


CBRE OFFICES

CBRE Austin


Austin, TX 78701






AUSTIN RETAIL

CONTACTS

Robert C. Kramp

Director, Research & Analysis

[email protected]

E. Michelle Miller

Research Operations Manager

[email protected]

Robert Basiliere


[email protected]

Analee Bivins Micheletti


[email protected]

Documents

Austin Retail MarketView 4Q 2018 - Texas A&M …...Figure 1: Net Absorption and Market Occupancy Source: CBRE Research, Q4 2018. *Arrows indicate trend from previous quarter. ROBUST