real estate

Make room: Retail real estate heats up in Austin

Austin ranked as the No. 1 commercial real estate market for potential deals, per a CBRE investor survey earlier this year.
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Neighborhood Goods

· 3 min read

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.

Everything’s bigger in Austin, including demand for commercial real estate space.

Texas’s fourth-most populous city is a hotspot for many industries, and retail is no different: 22,000+ jobs were added to Austin from companies expanding or moving into the city in 2020, compared with 13,562 in 2019, according to the Austin Chamber of Commerce.

  • The city overtook Los Angeles as the No. 1 commercial real estate market for potential deals, according to an investor survey from CBRE Group earlier this year.

“By the end of 2020, we were pretty busy, but we hadn’t returned to the same level of activity that we were at prior to the pandemic beginning,“ John Heffington, a retail service broker at CBRE’s Austin office, told Retail Brew. “What we saw in February or March of this year was just an explosion of activity and new retailers looking to enter the market along with current retailers who are looking to expand within our market.”

  • Deals that were put on hold because of the pandemic were pushed over the finish line once retailers were confident in reopening, Heffington said.

Retail Brew spoke with retailers in the Austin area to discuss the market’s strengths and how their stores have performed during the pandemic.

Hello, neighbor

Department store Neighborhood Goods opened its new Austin location days before lockdowns were put into place last March. CEO Matt Alexander said since reopening in June 2020, Austin has been one of the retailer’s best performing stores.

  • During the pandemic, the company debuted a marketplace concept in its Austin store, featuring DTC brands like Fly By Jing and Parlor Coffee.
  • “One of the things that’s shifted is we’re just seeing a lot of the brands, founders, and partners that we would typically associate with being in New York or LA spending a lot of time in Austin,” Alexander said.

Crown jewel: Jewelry brand Kendra Scott has been based in Austin since it was founded in 2002. The company’s three Austin stores (plus 21 other shops in Texas) reopened earlier than its other US locations, close to Mother’s Day 2020. The company hasn’t looked back since.

  • CEO Tom Nolan told Retail Brew the Austin market was very receptive to new initiatives Kendra Scott introduced as a result of the pandemic, including curbside pickup.
  • “We’re seeing traffic levels in our retail stores even exceeding levels of 2019 and [the same in] a lot of regional areas right now,” Nolan said.

Looking ahead: Austin was an emerging market before the pandemic, Anjee Solanki, national director of retail service at Colliers, told us. Should demand continue to increase, rent prices will rise while labor costs will fall.

But the question now is how the broader Texas market will fare after passing its new anti-abortion bill; some workers are already planning to relocate and companies worry it will impact recruitment.—KM

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.