Austin Retail Vacancy Sits Below 3% for a Year Straight

You can shop from your television, your phone and your smartwatch. But some people like to do it the old-fashioned way.

The occupancy rate for Austin retail space hit 97 percent in the first quarter this year, according to CBRE. The hunt for space is even tighter in some areas — downtown, for example, where just 1 percent of space is up for lease.

In all, tenants took some 120,700 square feet more than landlords put on — the 13th straight quarter of positive absorption in the capital city. Average triple net lease rates reached $24.50 per square foot.

“The Austin retail market has shown no signs of slowing down in 2024,” CBRE analysts wrote.

Developers are taking notice. In the opening months of this year, 14 projects came online, adding 445,400 square feet of retail space to the market. Another 41 developments are under construction, set to contribute 1.5 million square feet of space once they’re built. Some prime storefronts will also become available, as upscale grocer and cafe Foxtrot is closing, one year after opening four locations in Austin.

Northeast Austin was the most popular submarket for development, with 600,000 square feet underway. The suburbs around the city and along Interstate 35 will continue to attract retail development, as they are still growing significantly, the analysts wrote. All but one of the developments lie outside the Central Business District, CBRE data shows.

Two of the largest projects underway are H-E-B stores. The San Antonio-based grocery chain has been on an expansion tear, opening gigantic stores in the fastest-growing cities across Texas. Capitalizing on the state’s population boom, H-E-B is opening bigger stores with its own restaurants and shops inside.

Painted Trees Boutique, a decor and homegoods market, signed the biggest lease of the first quarter. It took 42,000 square feet at 5400 Brodie Lane in Sunset Valley in South Austin, occupying what was once a Bed Bath & Beyond.

Retail has been in short supply across Texas, and development is starting to make sense again after years of fears about the rise of online shopping.