Austin Dominates: Leading the Nation in Retail Space Completion Relative to Inventory!
In the realm of retail construction, Austin, Texas, stands out for its robust activity, defying its 37th rank in U.S. retail square footage. Remarkably, it claims the fourth spot in ongoing construction and square footage completed in the past 12 months.
Major completions in recent times, such as a 160,000-square-foot Costco in Georgetown and a 106,000-square-foot H-E-B grocery store in southwest Austin, underscore the city’s retail development surge.
The surge in construction is a response to escalating consumer demand, fueled by consistent in-migration and positive consumer sentiment. Austin’s suburban magnetism, driven by expanding job opportunities in manufacturing, healthcare, and education, coupled with a favorable cost of living, propels this trend.
Retailers are strategically aligning with this demand, with Manor, Georgetown, and Kyle contributing over 1 million square feet under construction, constituting 44% of the entire development pipeline.
Austin leads the nation in completed retail space as a percentage of inventory over the past 12 months, standing at 1.8%. The next-closest market, Miami, lags at 1.2%. Notably, the current pipeline, at 2.4 million square feet, exceeds the 2013-2022 average by 65%.
Despite the construction boom, the pace of retail groundbreakings witnesses a slowdown. This quarter saw a modest 125,000 square feet in construction starts, marking an 80% decline from the 657,000 square feet recorded in the fourth quarter of 2022. Factors contributing to this deceleration include restrictive lending standards, higher interest rates, and elevated construction costs.
As the retail sector navigates shifting demographic and economic trends, sales showcase resilience amid heightened inflation and shifting purchasing power, reflecting the industry’s adaptability.
Author: Alex Navarro
Ref. CoStar