| TEXAS SNAPSHOT, MARCH 2008
Austin, Texas Retail Market
The New Urbanism philosophy seems to be taking hold in Austin and the surrounding communities. These developments allow for residents to live near the places they work, shop and play. Leander, Texas, recently got its first developer to take on a project inside the city’s transit-oriented development (TOD). Like many cities in Central Texas, Leander is anticipating large growth and urbanism with the commuter rail line that will be up and running to downtown Austin this fall.
With the new State Highway 130, Highway 183A and Highway 45 toll roads becoming operational in 2007, a great deal of retail development along these corridors has taken place. For example, Pflugerville, Texas, has a 1 million-square-foot retail project called Stone Hill Center being planned just off SH 130. The center will be anchored by The Home Depot.
In other trends, the outlying areas of Austin have seen new 150,000-square-foot HEB Plus grocery stores opened in both Leander and Kyle as competition to the Wal-Mart chain.
Other significant developments include 1890 Ranch Shopping Center in Cedar Park, Texas. The 850,000-square-foot retail center is anchored by Super Target, Cinemark, PetsMart, Circuit City and OfficeMax. Located near the new Seton/Triad Hospital off the new Highway 183A toll road and CR 1431, this center is in one of the most active areas in the Austin region.
Hill Country Galleria in Bee Caves, Texas, is a new, mixed-use development by Opus West. This project, which comprises 1.2 million square feet of retail, is anchored by Dillard’s on one end and Dick’s Sporting Goods, a new retailer to the Austin area, on the opposite. Barnes & Noble and Cinemark round out the balance of big box users. This project will now give the residents of the area a choice to shop and obtain services near their residences instead of having to travel into the major retail hubs in the urban areas of Austin.
One of the areas of tremendous retail growth is the Intersate Highway 35/University Boulevard area between Round Rock and Georgetown, Texas, which services the new Texas State campus, Scott & White Hospital and the new Seton Hospital. New shopping in the area includes the Outlet Mall, Ikea and University Oaks.
Each of these retail developments have become retail hubs for their areas, allowing residents the opportunity to shop and find services in close proximity to their homes. These centers all are located on major roadways in suburban areas of the Austin area.
Major retail development has shown no favoritism to any one area. The Domain in North Austin, the Triangle in Central Austin, SouthPark Meadows in South Austin, Mueller Regional Retail Center east of IH-35 and the Second Street retail in downtown Austin have all come on line this year. At the same time, the suburbs have added centers like 1890 Ranch Shopping Center, Stone Hill Center, Hill Country Galleria and the Premier Outlet Mall. Roads and residences are driving the need for this additional retai.
These large retail projects, when combined, constitute several million square feet. Seven large retail projects are scheduled to be built in the next 2 years in Austin, adding an additional 4 million square feet.
Endeavor Real Estate Group, Cencor Realty Services, Simon Group and Opus West make up some of the most active retail developers in Austin. In terms of new retailers, the opening of Neiman Marcus at The Domain in North Austin symbolized the arrival of Austin on the national retail scene. Other recent newcomers to the Austin market include Ikea, Dick’s Sporting Goods and Spec’s Wine & Spirits.
Several large lease transactions have taken place over the past year in Austin, which boasts a vacancy rate of 7 percent. Wine to Water took 214,000 square feet at Sky Ridge Plaza in Round Rock; Hong Kong Supermarket took 55,000 square feet in Vina Plaza located at Palmer and Harris Ridge in far northeast Austin; Taco Bell took 40,075 square feet at Pflugerville Crossing in Pflugerville; and newcomer Spec’s Wine and Spirits took 60,000 square feet at Arbor Walk in Austin
Roads and rail in the outlying areas will have a profound effect on future growth in the submarkets. The toll roads corridors, as well as the upcoming commuter rail corridor beginning in Leander, is where continued new developments will occur. With nine rail stations along the route, residential and retail will be a big part of those TODs. The SH-130 toll road corridor has already spurred retail development in Pflugerville, Hutto, Round Rock and Georgetown, and that activity will continue. An additional area to watch will be SH-130 as it intersects Highway 45 southeast of Austin near the Kyle/Buda area.
— Sue Gravatt is president of Henry S. Miller Commercial in Austin, Texas.
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