Austin retail strong, but inventory scarceAustin retail strong, but inventory scarcehttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=143562016-08-26T05:00:00Z2016-08-26T15:00:00Z

​​AUSTIN – In its third quarter 2016 market report, Marcus & Millichap says the ​local retail market is "firing on all cylinders" as operations continue to improve and vacancy tightens to one of the lowest levels in the country.

"​​Job and population growth are luring retailers to expand in the metro, and strong growth in suburban communities has created demand for necessities-based retailers nearby," the report said. "This has pushed the vacancy rate below 4 percent for the first time in the last ten years.

"Despite these tight conditions at area shopping centers, construction activity has been limited to mostly build-to-suit single-tenant space, pushing expanding retailers into existing multitenant buildings and driving sizable rent advances."

Marcus & Millichap made the following projections for the remainder of the year:

  • Following the addition of 45,600 positions in 2015, employment in the metro will rise 3.4 percent as 33,500 jobs are generated in 2016. Hiring in the trade, transportation, and utilities industry will lead additions this year.
  • Deliveries will fall for the second consecutive year as builders bring 450,000 sf of retail space online in 2016. Last year, approximately 804,000 sf of space was brought online, with just 56,000 sf of multitenant space completed.
  • Retail vacancy will squeeze 40 basis points from last year, reaching 3.6 percent by year end, one of the lowest rates in the country. In 2015, vacancy plummeted 110 basis points on net absorption of nearly 1.8 million sf.
  • As vacancy compresses further this year, the average asking rent will remain on an upward trajectory, rising 5.7 percent to $21.35 per sf at year end and setting a ten-year high. In 2015, the average surged 9.9 percent.
Marcus & Millichap Real Estate Investment Services
Austin-Round Rock
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