Buying Time: Austin’s Retail Market Can Wait Out the Pandemic

Think back in time five quarters or so. At the end of 2019, brick-and-mortar retail was feeling the pinch of e-commerce. Virtually everywhere in the country, landlords struggled as storefronts went dark. Virtually everywhere, that is, but not in Austin. “We were not experiencing pre-pandemic challenges in market demand within the Austin MSA,” said Kevin Murphy, vice president on NAI Partners’ retail services team in Austin. “The increased cost of property taxes was causing downward pressure on rates. Nonetheless, development and demand remained healthy.” The key component of this unexpected performance is population growth. Between 2010 and 2019, U.S. Census figures show that Austin grew by over 177,000 residents, moving up the country’s list of most populous cities from 14th to 11th. Where the people go, so to do physical retailers, even in the age of online shopping. That was 2019; then 2020, of course, altered the trajectory of this and every other asset class. With COVID-19 leaving patrons unable or unwilling to go out to restaurants, stores, bars, bowling alleys and every other type of retail establishment, the sector took a hit. But again, Austin’s retail market proved to be slightly more resilient to the effects of the pandemic. According to NAI Partners data, the metro’s year-to-date retail occupancy rate at the end of October 2020 hovered around 95.2 percent. That’s nearly on par with the year-to-date figures from the previous October, which stood at 95.7 percent. “Austin continues to experience strong population growth numbers,” Murphy said, “with absorption of existing retail and back-filling of struggling tenants being healthy and strong.” Click to read more at