According to the latest report from Oxford Commercial, the commercial real estate market in Austin is considered to be more stable and more promising than other commercial real estate markets around the country. In fact, while industrial vacancy rates continue to be a concern, the latest quarterly reports seem to indicate that the retail and office markets are doing quite well.
According to the report, direct vacancies in the office market sector fell for the first time since the third quarter of 2007 during the second quarter of 2010. During the first quarter of 2010, the rates were at 19.44%, but fell to 19.21% during the second quarter. While this is still up when compared to the 18.38% that was seen during the second quarter of 2009, this is certainly an improvement.
“It appears that we are seeing some stabilization and the office market is turning the corner,” said Rick Whitely, who is a partner at Oxford Commercial, in a recent Austin Biz Journals article. “Most of all new construction has come online already so the vacancy rate should stabilize more easily.”
The Central Business District within the downtown area is showing particular promise, as its direct vacancy rate has now fallen for the third straight quarter in a row. In fact, during the fourth quarter of 2010, the rate was at 15.05%, but it fell to 14.98% during the first quarter of 2010 and then to 14.53% in the second quarter.
The retail market is also showing promise, with the Austin retail market being the only major Texas metro to show an increase in its retail occupancy rates during the first half of 2010. At the end of 2009, the retail market was reporting an occupancy rate of 91.5%. By the middle of 2010, the rate was just under 92%.
“While the increase remained small, it was still positive, thanks in part to the continued absorption of major vacancies on the market, as well as a major new project that opened substantially leased,” said Ian Pierce, who is a spokesman for Weitzman.
The largest vacancies within the Austin market were reportedly caused by the failure of the national chain Circuit City, which occurred in 2009, as well as the 2008 failure of national chains Shoe Pavilion and Linens ‘n Things. Many of these retail spaces, however, are now being re-used or have been backfilled. Furthermore, the capital city is on track to add another 600,000 square feet of new retail space in 2010. Most of the new space will be developed in phases and are part of projects that have already been set into motion, such as those involving the relocation or expansion of existing retailers. This still falls short of previous growth, such as the 2.8 million square feet that was added in 2008 and the 1.4 million square feet that was added in 2009.
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