Austin, TX Retail Market Report

Market Overview

Austin’s retail market is experiencing tight conditions driven by strong demand and limited available space. The city’s fast-growing population, increasing household incomes, and robust consumption, continues to attract retailers, fueling significant demand for retail space. Ranked as one of the fastest growing cities in the country, much of its expansion is concentrated in the metro’s outer regions. 2.1 million SF of absorption was reported between Q3 2023 and Q2 2024, the third highest total in the U.S. Despite this strong demand, retail space availability remains near historic lows.

 

Austin By the Numbers

• Vacancy Rate: 3.2%
• Rent Growth: 4.3%
• Absorption in SF: 1.6M
• Deliveries in SF: 1.8M
• Sales Volume: $171M | Last 12 Months | Source: CoStar Group

 

Market Performance

Austin holds the country’s highest absorption rate at 1.4%, driven largely by major build-to-suit projects for retailers like Target, Costco, and H-E-B. The current construction pipeline offers little immediate relief to the limited square footage. 2.2 million SF is currently underway, 75% of which is already pre-leased. Rents are rising at a brisk 4.3% rate, faster than the national average of 2.0%, due to the market’s strong fundamentals and expanding retail sales. Owners are increasingly apprehensive about finding the next buyer for the forthcoming wave of completions, putting doubt on their exit plans. As a result, owners are holding into their properties for longer periods of time. While record-low vacancies and healthy consumer spending bolster confidence, owners are still apprehensive about market conditions.