Austin retail occupancy increases to 95.5%.
OCCUPANCY INCREASES TO 95.5% Austin retail overall occupancy increased by 20 basis points quarter-over-quarter to 95.3% and dropped 20 basis points year-over-year. Net absorption in the Austin retail market ended Q2 2021 at 340,000 sq. ft.—up from 294,000 sq. ft. year-over-year. Leasing activity—which is comprised of both new leases and renewals—included 634,000 sq. ft. of signed deals during the second quarter, an increase quarter-over-quarter, and from this time last year. The retail market saw overall average asking rates increase by $0.29 per sq. ft., or 1.4%, quarter-over-quarter to finish at $21.41 on a triple-net basis. A year ago, Austin retail average rates were at $21.75, representing a 1.6% decrease.
AUSTIN ECONOMIC INDICATORS The Federal Reserve Bank of Dallas (FBRD) reported that the Austin economy continued to post a strong performance in May, led by declines in the unemployment rate and recent broad-based job gains. Austin’s unemployment rate declined in May to 4.6%, its lowest level since March 2020. This is well below the state’s jobless rate of 6.5% and the nation’s 5.8% rate. Consumer spending in Austin has been strong in recent months. In the metro’s most-populous county, Travis, credit and debit card spending has surpassed January 2020 levels since last July, except for a dip in late November 2020 and during Winter Storm Uri in mid-February. As of May 30, 2021, spending in the county was up a strong 39.5% relative to January 2020, while spending in Texas was up 13.3%.
DEMAND OUTPACED SUPPLY The Austin retail market realized net absorption—the measure of total square feet occupied in existing buildings, (indicated as a move-in) less the total space vacated (indicated as a move-out) over a given period—of 340,000 sq. ft. in Q2 2021. This is the first quarter since Q1 2020 that demand has outpaced supply. Total net absorption year-to-date is 634,000 sq. ft. So far in 2021, a total of 538,000 sq. ft. was delivered to the market with 68% of that space occupied. Of the close to 700,000 sq. ft. still in the pipeline, about 40% of the space is available.
INVESTMENT SALES TRENDS Real Capital Analytics data reports quarterly Austin retail sales volume for Q2 2021 in the Greater Austin area at $115.5 million involving 14 properties, up compared to this time last year at $44.8 million across 10 properties. The capital composition for buyers in 2021 was made up primarily of private investors at 70.9%, and 29.1% institutional investors. For sellers, the majority was 55.5% private investors and 36.5% institutional. Among recent noteworthy transactions in the market included Long View Equity acquiring Parmer McNeil Plaza from Crow Holdings. The company bought the 47,888-sq.-ft. shopping center at 6310 Parmer Lane. Tenants at the center include Chase Bank, Starbuck’s, Wells Fargo, Chi’Lantro and Juiceland. The center is located across from Apple’s $1 billion campus that is scheduled to open in 2022. Other tech giants in the area include eBay, PayPal, and Oracle.
MODERATE GROWTH IN AUSTIN EXISTING-HOME SALES The FRBD reported existing-home sales in Austin grew a moderate 3.3% in May after expanding a mild 0.9% in April. That compares with a 2.9% increase in the state in May and 0.1% in April. In the first five months of 2021, metro home sales were 18.8% higher relative to the same period in 2020. At the state level, sales were up 20.3% for that period. In May, the median price of homes sold was $447,521 in the metro, a 35.1% rise year over year, compared with $293,327 in Texas, a 15.9% increase. The recent slowing of home sales is likely due in part to a lack of supply; in May, there was less than a half-month of inventory available at the current sales rate.
Director of Research
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