Texas Real Estate Business

FEB 2018

Texas Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in Texas.

Issue link: https://texasrealestatebusiness.epubxp.com/i/935994

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Page 16 of 32

16 • February 2018 • Texas Real Estate Business www.REBusinessOnline.com M A R K E T H I G H L I G H T: A U S T I N THREE MAJOR CONSUMER-DRIVEN CHANGES IN AUSTIN'S RETAIL LANDSCAPE Jason Thumlert Principal, Endeavor Real Estate Group Among professionals in the major sectors of commercial real estate, re- tailers are often the first to spot, under- stand and respond to emerging trends in human behavior. Those trends have shifted dramati- cally the past few years, and retail real estate in Austin has certainly felt the ripple effects, from downtown to the suburbs and across the emerging "nodes" in between. For some time now, American con- sumers in general have been clearly indicating their preference for more "experiential" ways to shop or receive services. That said, smart develop- ers know that the experience begins well before shoppers enter a retailer's doors. And understanding how to best cater to emerging demands helps breed success, not only for tenants, but also for the project as a whole. The following three trends represent key ways in which consumer demand is driving change in Austin's retail landscape and illustrate how the mar- ket is responding. Seamless Integration Consumers want retail options lo- cated within close proximity to where they work and live — all the better if the property housing these needs can be one and the same. Just as Austin has grown regionally, so has demand for retail space, giving rise to mixed-use projects throughout the city. In downtown Austin, this growth has ensured that almost every new high-rise project features some amount of ground-floor retail space. One ex- ample is the Seaholm Power Plant redevelopment. The condo high-rise attracted the trendy, health-focused True Food Kitchen restaurant concept on the street level to accompany other nearby retailers — the wildly popular Trader Joe's, an eyeglass shop, a local pet store and upscale salon. Roughly 12 miles north of that is The Domain, a mixed-use development that has become known as Austin's second downtown. The 300-acre proj- ect integrates space for major office em- ployers like Amazon and HomeAway, a sizable amount of shopping and substantial volume of housing. Many locals actually prefer it to downtown itself, as it enables people to work and live a stone's throw away from all the shopping and dining their wallets can handle. Two other mixed-use projects — The Grove and Saltillo — located in north central and east Austin, respectively, are also shaping up to be popular des- tinations. While smaller in scale, both projects aim for the same kind of all- inclusiveness. Some may think such projects are only for the core areas of the city. But those skeptics need look no further than Presidio in Cedar Park, roughly 20 miles northwest of downtown, for a true suburban example of an emerging mixed-use project that's already deliv- ered apartments, attracted an employ- er and will soon deliver retail within its 100-acre concept. Key traits shared by all these proj- ects include: ample on-site parking, a pedestrian-friendly environment and a unique atmosphere that helps evoke an authentic identity. Big Boxes Trending Down Recent headlines involving behe- moth retailers like Sam's Club and Sears shuttering stores have some pro- claiming the death of big boxes. But the reality is that these assets can always be subdivided into smaller spaces. This practice, which is becoming in- creasingly common, can yield two re- sults. First, while big boxes previously served as anchor spaces, there's been a dramatic pendulum swing, to the point where popular local restaurants and entertainment are now considered a hot draw. Examples of users that fit the bill for these spaces include food halls, public markets, gyms, family entertainment centers and dine-in the- aters such as Alamo Drafthouse. The second offshoot is an opportu- nity to repurpose old, large blocks of space. A key example is the redevelop- ment of the former Highland Mall. The latest plan for the 81-acre site calls for a robust college campus surrounded by apartments, office space and a fresh generation of retail with smaller-foot- print tenants. Where J.C. Penney once welcomed shoppers, Austin Commu- nity College now welcomes students. Omni-Channel Interaction As retailers offer more creative ways to serve customers online, in-person and on their cell phones, the question of what this new manner of servicing means for centers themselves should be considered. As noted above, demand for "expe- riential retail begins well before a con- sumer arrives inside a store. Creative ways to provide shade, art and trails can boost consumers' external experi- ence, thereby setting the stage for ten- ants within. Changes in volumes and layouts of parking are also likely to emerge. Re- cently, the region's dominant grocery chain, H-E-B, rolled out its new curb- side pickup program. Now, consum- ers can go online, place their orders and determine a time to pick up their merchandise — without leaving their cars. This change in delivery has been coupled with a reallocation of park- ing spaces — prime spots are now re- served for curbside customers. Bottom Line: Adapt Convenience always has been and always will be the king factor in a suc- cessful retail operation, but even the definition and perception of conve- nience is subject to change. Ultimately, the quest to survive and thrive will boil down to the same thing for retail- ers and developers alike: an ability to understand emerging trends and cre- atively adapt to them. Michele Gary Vice President, Endeavor Real Estate Group Highland is a new Austin neighborhood emerging from the former Highland Mall. The project combines apartments, retail and office space, as well as a new high-tech campus for Austin Community College in a vibrant, mixed-use environment. With more than 100 retail and dining options, The Domain, a 300-acre mixed-use development located on Austin's north side, has become a popular shopping and entertainment destination among residents. Photo courtesy of Kenny Braun

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