Local News

AUSTIN (Marcus & Millichap) – The prospect of a shallow economic downturn has restored developer optimism in Austin, resulting in a leap in supply this year that will hamper property operations in older assets, according to the 2010 National Retail Report by Marcus & Millichap.

Although anchors are in place at most new developments, including the 500,000-sf Domain II, lenders continue to show restraint when considering small business loans, limiting owners’ ability to fill in-line space.

“Sidelined investors with capital are poised to re-enter the retail market, although significant activity is not anticipated until mid 2010, when a pricing floor will emerge,” said J. Michael Watson, regional manager of Marcus & Millichap’s Austin office.

Some findings from the Austin Retail Research Report:

• Employers will increase payrolls by 2.5 percent, or 19,100 jobs, in 2010.
• Developers are projected to add 1.6 million square feet of retail space to the market this year, more than double deliveries in 2009.
• After a 40 basis point rise last year, vacancy is expected to push up 50 basis points to 10 percent by year-end 2010.
• In 2010, asking rents are forecast to retreat 1.3 percent to $19.68 per sf, while effective rents will slip 4.1 percent to $17.12 per sf.