Among professionals in the major sectors of commercial real estate, retailers are often the first to spot, understand and respond to emerging trends in human behavior.
Those trends have shifted dramatically 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 consumers in general have been clearly indicating their preference for more “experiential” ways to shop or receive services. That said, smart developers 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.
Jason Thumlert, Endeavor Real Estate Group
The following three trends represent key ways in which consumer demand is driving change in Austin’s retail landscape and illustrate how the market is responding.
Seamless Integration
Consumers want retail options located 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 example 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 project integrates space for major office employers 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.
Michele Gary, Endeavor Real Estate Group
Two other mixed-use projects — The Grove and Saltillo — located in north central and east Austin, respectively, are also shaping up to be popular destinations. 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 delivered apartments, attracted an employer and will soon deliver retail within its 100-acre concept.
Key traits shared by all these projects 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 behemoth retailers like Sam’s Club and Sears shuttering stores have some proclaiming the death of big boxes. But the reality is that these assets can always be subdivided into smaller spaces.
This practice, which is becoming increasingly common, can yield two results. 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 theaters such as Alamo Drafthouse.
The second offshoot is an opportunity to repurpose old, large blocks of space. A key example is the redevelopment 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-footprint tenants. Where J.C. Penney once welcomed shoppers, Austin Community 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 “experiential retail begins well before a consumer arrives inside a store. Creative ways to provide shade, art and trails can boost consumers’ external experience, thereby setting the stage for tenants within.
Changes in volumes and layouts of parking are also likely to emerge. Recently, the region’s dominant grocery chain, H-E-B, rolled out its new curbside pickup program. Now, consumers 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 parking spaces — prime spots are now reserved for curbside customers.
Bottom Line: Adapt
Convenience always has been and always will be the king factor in a successful retail operation, but even the definition and perception of convenience is subject to change. Ultimately, the quest to survive and thrive will boil down to the same thing for retailers and developers alike: an ability to understand emerging trends and creatively adapt to them.
— By Jason Thumlert, principal, Endeavor Real Estate Group, and Michele Gary, vice president, Endeavor Real Estate Group. This article first appeared in the February 2018 issue of Texas Real Estate Business magazine.