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.
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