As 2018 came to a close, market fundamentals dipped as a plethora of new product was brought online.
Despite occupancy rates dipping 10 basis points (bps) below 96%, the market remains eager to provide retail services to the ever-expanding population.
Kendra Scott, founder and CEO of the wildly successful homegrown jewelery chain, opened a new flagship store in the heart of the South Congress district in Q4 2018. Customers can valet their cars and enjoy coffee and pastries while they peruse all the products for sale in the store. The store is expected to continue to drive the So-Co district.
Austin’s unemployment rate for October was 2.7%, a full 100 basis points below the state average. With the overall population and purchase power of residents in the metro continuing to climb, it is anticipated that the demand for retail space will remain strong leading into 2019.
With the delivery of approximately 225,000 sq. ft. of new retail product to the market, market fundamentals slipped in Q4 2018 as the average asking rent fell to $20.50 per sq. ft. and total absorption for 2018 registered approximately 435,000 sq. ft.
However, with 565,000 sq. ft. of new product underway, developers continue to demonstrate their faith in the burgeoning retail demand in the Austin metro.