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.
90
91
92
93
94
95
96
97
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 2018
Occupancy (%)Net Absorption (SF, OOOs)
Net Absorption Occupancy
Avg. Asking Rate$20.50 PSF
MARKETVIEW
Q4 2018 CBRE Research © 2018 CBRE, Inc. | 2
Source: CBRE Research, Q4 2018.
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
Asking Rent, Avg. Annual N/A 9.25 9.25 9.25 9.00 9.00Delivered Construction (SF) - - - - - -
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)
Asking Rent, Avg. Annual N/A 22.00 26.00 26.00 22.25 22.25Delivered Construction (SF) - - - - - -
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)
Asking Rent, Avg. Annual N/A 23.00 24.00 24.00 22.00 22.00Delivered Construction (SF) 11,050 38,700 - 38,700 10,000 87,400
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)
Asking Rent, Avg. Annual N/A 26.00 28.00 28.00 29.75 29.75Delivered Construction (SF) 56,390 11,000 - 25,600 47,000 83,600
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)
Asking Rent, Avg. Annual N/A 28.75 32.00 32.00 29.75 29.75Delivered Construction (SF) - - - - - -
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
1,750
2,000
2,250
55,000
57,500
60,000
62,500
65,000
67,500
70,000
72,500
75,000
77,500
2012
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
10.00
15.00
20.00
25.00
30.00
Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018 Q4 2018
Asking Rates ($/SF)
Community Neighborhood Strip Power Lifestyle
12.50
15.00
17.50
20.00
22.50
25.00
Q4 20
14
Q2 20
15
Q4 20
15
Q2 20
16
Q4 20
16
Q2 20
17
Q4 20
17
Q2 20
18
Q4 20
18
Asking Rates
0
100
200
300
400
500
600
700
Q4 20
14
Q2 20
15
Q4 20
15
Q2 20
16
Q4 20
16
Q2 20
17
Q4 20
17
Q2 20
18
Q4 20
18
SF (000s)
Source: CBRE Research, Q4 2018.
Figure 5: Asking Annual Rents by Center Type, NNN Avg.
Figure 3: Asking Annual Rents, NNN Avg. Figure 4: Deliveries
Source: CBRE Research, Q4 2018.
Source: CBRE Research, Q4 2018.
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
Austin Retail, Q3 2018
Q3 2018 CBRE Research © 2018 CBRE, Inc. | 1
166,046 SF 199,096 SF96.3% 655,890 SF
Figure 1: Net Absorption and Market Occupancy
Source: CBRE Research, Q3 2018.
*Arrows indicate trend from previous quarter.
89
91
93
95
97
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 YTD 2018
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)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
Rentable Building Area (RBA)
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
Q3 2018 CBRE Research © 2018 CBRE, Inc. | 2
AUSTIN RETAIL
Source: CBRE Research, Q3 2018.
Figure 2: Historical Market Statistics
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
Rentable Building Area (RBA)
Occupancy Rate (%)
Delivered Construction (SF)
Occupancy Rate (%)
Delivered Construction (SF)
Occupancy Rate (%)
Absorption (Net, SF)
Delivered Construction (SF)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Delivered Construction (SF)
Occupancy Rate (%)
Delivered Construction (SF)
Occupancy Rate (%)
Delivered Construction (SF)
Occupancy Rate (%)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
AUSTIN RETAIL
Figure 2: Historical Market Statistics
Source: CBRE Research, Q3 2018
Q3 2018 CBRE Research © 2018 CBRE, Inc. | 3
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
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Rentable Building Area (RBA)
Occupancy Rate (%)
AUSTIN M ARKET TOTAL
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
WEST CENTRAL
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
SOUTH & SOUTHEAST
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
SOUTHWEST
Absorption (Net, SF)
Delivered Construction (SF)
Occupancy Rate (%)
Absorption (Net, SF)
Delivered Construction (SF)
AUSTIN RETAIL
Figure 2: Historical Market Statistics
Source: CBRE Research, Q3 2018
Q3 2018 CBRE Research © 2018 CBRE, Inc. | 4
MARKETVIEW
Q3 2018 CBRE Research 5
AUSTIN RETAIL
© 2018 CBRE, Inc. |
1,500
1,750
2,000
2,250
55,000
57,500
60,000
62,500
65,000
67,500
70,000
72,500
75,000
77,500
2012
2013
2014
2015
2016
2017
2018
Median HH Income Population (000s)
Figure 7: Population Growth and Purchasing PowerPopulation (000s)
Source: Moody’s Analytics, Q2 2018.
HH Income ($)
Source: Real Capital Analytics, Q3 2018.
400
500
600
700
800
900
1,000
1,100
1,200
1,300
Q1 2
014
Q2 2
014
Q3 2
014
Q4 2
014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q1 2
016
Q2 2
016
Q3 2
016
Q4 2
016
Q1 2
017
Q2 2
017
Q3 2
017
Q4 2
017
Q1 2
018
Q2 2
018
Q3 2
018
($, Millions)
Figure 6: Retail Investment Sales Volume
10.00
15.00
20.00
25.00
30.00
Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018
Asking Rates ($/SF)
Community Neighborhood Strip Power Lifestyle
12.50
15.00
17.50
20.00
22.50
25.00
Q3 2
014
Q1 2
015
Q3 2
015
Q1 2
016
Q3 2
016
Q1 2
017
Q3 2
017
Q1 2
018
Q3 2
018
Asking Rates ($/SF)
0
100
200
300
400
500
600
700
Q3 2
014
Q1 2
015
Q3 2
015
Q1 2
016
Q3 2
016
Q1 2
017
Q3 2
017
Q1 2
018
Q3 2
018
SF (000s)
Source: CBRE Research, Q3 2018.
Figure 5: Asking Annual Rents by Center Type, NNN Avg.
Figure 3: Asking Annual Rents, NNN Avg. Figure 4: Deliveries
Source: CBRE Research, Q2 2018.
Source: CBRE Research, Q3 2018.
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
CONTACTS
MARKETVIEW
Asking rents, occupancy hit new
expansion cycle high point
Austin Retail, Q2 2018
Q2 2018 CBRE Research © 2018 CBRE, Inc. | 1
536,181 SF 540,739 SF96.4% 739,713 SF
Figure 1: Net Absorption and Market Occupancy
Source: CBRE Research, Q2 2018.
*Arrows indicate trend from previous quarter.
89
91
93
95
97
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 Q2 2018
Occupancy (%)Net Absorption (SF,000s)
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
Q2 2018 CBRE Research © 2018 CBRE, Inc. | 2
Source: CBRE Research, Q2 2018.
Figure 2: Historical Market Statistics
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) -
Delivered Construction (SF) - -
Occupancy Rate (%) 97.1 94.2
CENTRAL BUSINESS DISTRICT
Absorption (Net, SF) 9,080 (3,482)
Delivered Construction (SF) - -
Occupancy Rate (%) 98.7 98.7
CEDAR PARK
Absorption (Net, SF) 394,795 20,210
Delivered Construction (SF) 372,515 -
Occupancy Rate (%) 96.8 97.0
CENTRAL
Absorption (Net, SF) (35,491) 1,045
Delivered Construction (SF) - -
Occupancy Rate (%) 94.2 93.7
EAST
Absorption (Net, SF) (28,767) (1,700)
Delivered Construction (SF) 32,600 -
Occupancy Rate (%) 97.4 97.1
FAR NORTHEAST
Absorption (Net, SF) 71,182 514,100
Delivered Construction (SF) 112,872 522,531
Occupancy Rate (%) 96.8 98.1
FAR NORTHWEST
Absorption (Net, SF) (4,542) 5,052
Delivered Construction (SF) 15,000 -
Occupancy Rate (%) 92.2 94.3
GEORGETOWN
Absorption (Net, SF) 69,161 19,179
Delivered Construction (SF) 58,200
Occupancy Rate (%) 95.4 96.2
HAYS COUNTY
Absorption (Net, SF) 68,409 (13,211)
Delivered Construction (SF) 26,000
Occupancy Rate (%) 98.0 97.8
NORTH
Absorption (Net, SF) (36,779) 17,518
Delivered Construction (SF) 27,988 13,650
Occupancy Rate (%) 97.1 96.6
NORTHEAST
Absorption (Net, SF) 19,660 (93,468)
Delivered Construction (SF) 11,000 -
Occupancy Rate (%) 94.0 91.1
NORTHWEST
Absorption (Net, SF) 125,701 10,446
Delivered Construction (SF) 36,600 -
Occupancy Rate (%) 96.8 97.2
ROUND ROCK
Absorption (Net, SF) 91,810 61,001
Delivered Construction (SF) 171,194
Occupancy Rate (%) 93.6 94.3
SOUTH & SOUTHEAST
Absorption (Net, SF) 3,623 1,687
Delivered Construction (SF) 11,050
Occupancy Rate (%) 97.3 97.3
SOUTHWEST
Absorption (Net, SF) 7,149 (5,261)
Delivered Construction (SF) 56,390
Occupancy Rate (%) 97.7 97.8
WEST CENTRAL
Absorption (Net, SF) (3,063) 2,990
Delivered Construction (SF) - -
Occupancy Rate (%) 99.1 98.3
AUSTIN MARKET TOTAL
Absorption (Net, SF) 733,942 540,739
Delivered Construction (SF) 931,409 536,181
Occupancy Rate (%) 96.3 96.4
MARKETVIEW
Q2 2018 CBRE Research 3
AUSTIN RETAIL
© 2018 CBRE, Inc. |
1,500
1,750
2,000
2,250
55,000
57,500
60,000
62,500
65,000
67,500
70,000
72,500
75,000
77,500
2012
2013
2014
2015
2016
2017
2018
Median HH Income Population (000s)
Figure 7: Population Growth and Purchasing PowerPopulation (000s)
Source: Moody’s Analytics, Q2 2018.
HH Income ($)
Source: Real Capital Analytics, Q2 2018.
400
500
600
700
800
900
1,000
1,100
1,200
1,300
Q1 2
014
Q2 2
014
Q3 2
014
Q4 2
014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q1 2
016
Q2 2
016
Q3 2
016
Q4 2
016
Q1 2
017
Q2 2
017
Q3 2
017
Q4 2
017
Q1 2
018
Q2 2
018
($, Millions)
Figure 6: Retail Investment Sales Volume
10.00
15.00
20.00
25.00
30.00
Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018
Asking Rates ($/SF)
Community Neighborhood Strip Power Lifestyle
12.50
15.00
17.50
20.00
22.50
25.00
Q2 2
014
Q4 2
014
Q2 2
015
Q4 2
015
Q2 2
016
Q4 2
016
Q2 2
017
Q4 2
017
Q2 2
018
Asking Rates ($/SF)
0
100
200
300
400
500
600
700
Q2 2
014
Q4 2
014
Q2 2
015
Q4 2
015
Q2 2
016
Q4 2
016
Q2 2
017
Q4 2
017
Q2 2
018
SF (000s)
Source: CBRE Research, Q2 2018.
Figure 5: Asking Annual Rents by Center Type, NNN Avg.
Figure 3: Asking Annual Rents, NNN Avg. Figure 4: Deliveries
Source: CBRE Research, Q2 2018.
Source: CBRE Research, Q2 2018.
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
CONTACTS
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
Occupancy (%)Net Absorption (SF,000s)
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
Austin Retail, Q4 2017
Q4 2017 CBRE Research © 2018 CBRE, Inc. | 1
Net Absorption246,856 SF
Occupancy96.3%
Under Construction883,232 SF
*Arrows indicate trend from previous quarter.
Figure 1: Net Absorption and Class A Occupancy
Source: CBRE Research, Q4 2017.
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 $29.7 billion in 2018, a 6%
increase from 2017. Similar sales growth is
projected to continue over the next five years at an
annual rate of 5.6%, higher than the U.S. average.
NEW NEIGHBORS: TEXAS ADDS 400,000 OF THEM SAYS U.S. CENSUS
Once again Texas population gains grew faster
than any other state between July 2016 and July
2017. This reflects 190,000 net migrations from
elsewhere into Texas, according to recent data
from the U.S. Census Bureau. Growth in the
technology industry has contributed to
population gains in Austin which are
concentrated in suburban submarkets like
Williamson County.
MARKETVIEW
Q4 2017 CBRE Research © 2018 CBRE, Inc. | 2
Source: CBRE Research, Q4 2017.
AUSTIN RETAIL
Figure 2: Market Snapshot
MarketNumber of
Centers
Net Rentable Area(SF)
Vacancy(%)
Asking Rate,
NNN Avg. Annual($/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
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
Median HH Income Population (000s)
(2.0)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
10,000
14,000
18,000
22,000
26,000
30,000
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Annual Sales Growth (%)Retail Sales ($,Millions)
Gross Retail Sales Retail Sales Growth
Q4 2017 CBRE Research © 2018 CBRE, Inc. | 3
AUSTIN RETAIL
Figure 3: Asking Annual Rents, NNN Avg.
Source: CBRE Research, Q4 2017.
Figure 6: Population Growth and Purchasing PowerPopulation (000s)
Source Moody’s Analytics, Q3 2017.
HH Income ($)
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)
Source: CBRE Research, Q4 2017.
Figure 4: Construction
Source: Real Capital Analytics, Q4 2017.
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
($, Millions)
Figure 5: Retail Investment Sales Volume
15
17
19
21
23
25
Q1 2017 Q2 2017 Q3 2017 Q4 2017
($)
Community Neighborhood Strip Power
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 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
Occupancy (%)Net Absorption (SF,000s)
Q1 Q2 Q3 Q4 Total Annual Net Absorption Class A Occupancy Rate
Retailers flock to new product
amidst tight Class A occupancy
Austin Retail, Q3 2017
Q3 2017 CBRE Research © 2017 CBRE, Inc. | 1
Net Absorption
116,119 SFOccupancy
96.2%Under Construction
935,354 SF
*Arrows indicate trend from previous quarter.
Figure 1: Net Absorption and Class A Occupancy
Source: CBRE Research, Q3 2017.
Avg. Asking Rate
$22.49 PSF
BALANCING ACT: BIG BOX CLOSURES AND NEW PRODUCT SPLIT NET ABSORPTION
Like the rest of the nation, Austin retail has had
to face a shift in retailers with several big box
occupiers closing this year. As a result,
absorption levels are lower than last year despite
stable demand and high occupancy rates with a
handful of big box closures including Bealls,
Hastings, Gander Mountain, and Office Max
were a drag on net absorption in Q3 2017 for a
total of 88,000 sq. ft. of negative absorption.
However, high demand for new space led to
64,000 sq. ft. of activity in new product alone
offsetting the closures and bringing the total net
absorption to 116,000 sq. ft.
Class A occupancy has been extremely tight for
over two years and currently sits at 98.1%. The
limited availability has forced tenants into new
retail developments. Retailers aren’t just on the
search for Class A space, overall occupancy is high
as well at 96.2%—the highest retail occupancy in
Texas.
CONSTRUCTION ACTIVITY CONTINUES TO INCREASE
The Austin retail development pipeline continues
to deepen reaching construction activity on par
with 2013 levels. While the majority of
development is smaller strip centers, 64% of sq.
ft. underway is in four main projects. The largest
developments are both mixed-use projects
including Plaza Saltillo in East Downtown and
Belterra Village in West Austin/Dripping Springs.
Both developments follow national trends of
focusing heavily on entertainment and restaurant
to create an experience for consumers.
MARKETVIEW
Q3 2017 CBRE Research © 2017 CBRE, Inc. | 2
Source: CBRE Research, Q3 2017.
AUSTIN RETAIL
MarketNumber of
Centers
Net Rentable Area(SF)
Vacancy(%)
Asking Rate,
NNN Avg. Annual($/SF)
Under Construction
(SF)
Delivered Construction
(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
Figure 2: Market Snapshot
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
Median HH Income Population (000s)
(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
Annual Sales Growth (%)Retail Sales ($,Millions)
Gross Retail Sales Retail Sales Growth
Q3 2017 CBRE Research © 2017 CBRE, Inc. | 3
AUSTIN RETAIL
Figure 3: Asking Annual Rents, NNN Avg.
Source: CBRE Research, Q3 2017.
Figure 6: Population Growth and Purchasing PowerPopulation (000s)
Source Moody’s Analytics, Q3 2017.
HH Income ($)
Figure 7: Austin MSA Retail Sales
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
Under Construction Delivered Construction
SF (000s)
Source: CBRE Research, Q3 2017.
Figure 4: Construction
Source: Real Capital Analytics, Q3 2017.
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
($, Millions)
Figure 5: Retail Investment Sales Volume
15
17
19
21
23
25
Q4 2016 Q1 2017 Q2 2017 Q3 2017
($)
Community Neighborhood Strip Power
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 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. Kramp
Director, Research & Analysis
E. Michelle Miller
Research Operations Manager
Analee Bivins Micheletti
Senior Research Analyst
Robert Basiliere
Senior Research Analyst
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
Occupancy (%)Net Absorption (SF,000s)
Q1 Q2 Q3 Q4 Total Annual Net Absorption Occupancy Rate
Strong fundamentals fuel
growing development pipeline
Austin Retail, Q2 2017
Q2 2017 CBRE Research © 2017 CBRE, Inc. | 1
Net Absorption
132,360 SFOccupancy
96.3%Under Construction
896,004 SF
*Arrows indicate trend from previous quarter.
Figure 1: Net Absorption and Market Occupancy
Source: CBRE Research, Q2 2017.
Avg. Asking Rate
$21.94 PSF
STEADY DEMAND CONTINUES FROM BIG BOX EXPANSIONS
Austin retail demand remained strong
throughout the first half of 2017, absorbing
372,000 sq. ft. Big box retailers including
Austin Couch Potato, Petco, and Rooms to Go
all occupied large blocks in Q2 2017
contributing to positive net absorption in the
Central, Northwest, and Far Northeast
submarkets. As a result, occupancy increased
10 basis points quarter-over-quarter and sits
well above the 10-year average of 94.4%.
These healthy fundamentals have spurred more
construction activity, which hasn’t been this
elevated since 2013. The majority of recent
development activity is strip centers and
second phases of larger projects. The largest
concentration of construction is in Round Rock
with eight projects totaling 217,000 sq. ft. The
largest projects are both mixed-use developments
including Plaza Saltillo in East Downtown and
Belterra Village in West Austin/Dripping Springs.
Both developments are focusing heavily on
entertainment and restaurant tenants.
POPULATION GAINS TRANSLATE INTO GROWING RETAIL SALES
Austin saw some of the fastest population gains in
the nation from 2015 to 2016 which has helped
boost spending. Austin gross retail sales have
steadily increased since 2010, and, 2016 sales
growth increased by 5.6%, according to data
released from the Texas Comptroller. Continued
healthy consumer spending will further sustain
Austin’s stable retail demand.
MARKETVIEW
Q2 2017 CBRE Research © 2017 CBRE, Inc. | 2
Source: CBRE Research, Q2 2017.
AUSTIN RETAIL
MarketNumber of
CentersNet Rentable Area
(SF)Vacancy
(%)
Asking Rate,NNN Avg.
Annual($/SF)
Under Construction
(SF)
Delivered Construction
(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
Figure 2: Market Snapshot
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
Annual Sales Growth (%)Retail Sales ($,Millions)
Gross Retail Sales Retail Sales Growth
Q2 2017 CBRE Research © 2017 CBRE, Inc. | 3
AUSTIN RETAIL
Figure 3: Asking Annual Rents, NNN Avg.
Source: CBRE Research, Q2 2017.
Figure 6: Population Growth and Purchasing PowerPopulation (000s)
Source Moody’s Analytics, Q2 2017.
HH Income ($)
Figure 7: Austin MSA Retail Sales
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
Under Construction Delivered Construction
SF (000s)
Source: CBRE Research, Q2 2017.
Figure 4: Construction
Source: Real Capital Analytics, Q2 2017.
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
($, Millions)
Figure 5: Retail Investment Sales Volume
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
55,000
57,500
60,000
62,500
65,000
67,500
70,000
2011
2012
2013
2014
2015
2016
2017
Median HH Income Population (000s)
15
17
19
21
23
25
Q4 2015 Q2 2016 Q4 2016 Q2 2017
($)
Community Neighborhood Strip Power
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 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. Kramp
Director, Research & Analysis
E. Michelle Miller
Research Operations Manager
Robert Basiliere
Senior Research Analyst
Analee Bivins Micheletti
Senior Research Analyst
Top Related