Share

The experts weigh in on Austin in NAI Partners’ latest Austin Commercial Real Estate Roundtable

Investment Sales

Tyler Jaynes: “High industrial demand in the Austin commercial real estate market has stayed consistent heading into 2021. As the world was already heading toward widespread e-commerce utilization before COVID-19, many businesses were forced to adapt to online sales—accelerating the need for larger distribution centers and/or new locations. There is no doubt there will be lasting effects throughout just about every business moving forward. For the Austin market, we saw a record-breaking number of corporate relocations to the Texas capital from out-of-state and even internationally. Austin has historically been known for its technology; however, the industrial segment is quickly turning into the next major mover for our market. Austin’s natural geography provides a centralized location for manufacturers and distribution centers to access Dallas, Houston, and San Antonio to maximize efficiency for many companies. Austin-Bergstrom International Airport will continue to play a pivotal role in the supply chain of our businesses.”

Ryan McCullough: “The Austin private office and industrial sales market remains resilient. Despite the concern and hesitation throughout 2020, we were fortunate to see a solid stream of transactions throughout the year. Private transactions in the office and industrial market only decreased by about 7% YOY in 2020. As the pandemic continues to shift workforce plans within the Class A sector, the Class B suburban sector remains strong. With hopefully the worst behind us, we believe the market will continue to strengthen throughout 2021. Due largely to historically low interest rates and an outlook with much more clarity, I believe the private sales market will continue to thrive in 2021 and reach pre-pandemic levels.”

Retail

Kevin Murphy: “Overall, retail in the Austin commercial real estate market remains healthy, with back-filling of big box retail to specialty grocers, logistics centers, and repurposed uses to flex and residential. Restaurants are being absorbed through new concepts coming to the market, and we’ve also seen expansions by those operators who were well-capitalized during the pandemic. Essential retailers such as grocers, pharmacies, banks, home improvement stores, and gas stations have done well during the current circumstances and continue to grow and expand strategically. Careful optics toward non-essential retailers such as movie theaters, gyms, apparel and salons will prove to be the turning point of the needle with regards to how well they rebound. Some signs already point toward a rebound in the gym space following reopening, while salons are seeing the same positive upward trend. Overall, the Austin MSA retail market is above 94% occupied and with retail following rooftops, the future looks strong with the influx of business relocations and people to Texas.”

Joe DeCola: “With continued strong population growth in and around Austin, neighborhood retail centers continue to well and new construction continues. Rents for the most part have stayed the same while the price of land and materials have continued at high levels. Retail is always a strong sector, the successful brands are the ones that continue to adapt to the needs of their clients. Examples are patio space becoming more important for restaurants because of the Covid occupancy restrictions. Junior and larger box retailers are offering free ship-to-store options for online orders, driving the consumer into the store where there is the opportunity for impulse buys.”

Multifamily

Gary Hebert: “Austin is one of the fastest-growing cities in the United States. There are approximately 2,500 new units planned downtown and approximately 14,000 new units planned city-wide. This pace of development coupled with the impact of COVID-19 has led to leasing challenges in certain segments of the market.  We believe this to be temporary as the vaccine rollout continues; corporations continue to relocate to Austin; and Austin’s tourism and convention businesses come back online. Austin’s population growth, capital in-migration and low interest rates have created a strong sellers’ market.  With expectations that the government’s COVID-19-inspired multifamily intervention will wane in the coming months, we anticipate multifamily will be a strong performing asset class in the Austin commercial real estate market second half of 2021.”

We Want to Hear From You

  • This field is for validation purposes and should be left unchanged.