For the past five years Austin's retail real estate occupancy has hovered well above 90 percent. It is a trend Karen Judson, vice president of marketing and research for commercial real estate firm Transwestern, does not see relenting any time soon. High demand, expensive land prices and little room to build in Northwest Austin leave retailers with few options. But developers are finding success in building small infill developments, adding retail to multifamily housing and breathing life into aging centers populating US 183. "The trend is toward small retail [and] mixed-use," Judson said. "Everyone wants to emulate The Domain. You won't see any Barton Creek or Lakeline malls. Those are dinosaurs."

Minimal new build

The growth of jobs and rooftops usually dictate demand for retail centers. With many residents having more disposable income and recent drop in gas prices, Judson said the timing is prime for retail growth. Location is still key, but even with little land on which to build, Northwest Austin's stock of housing could be beneficial for small centers with a handful of retail tenants, she said. "We'll drive all the way downtown to work, but you're not going to drive all the way downtown to go to dinner. You want to go to dinner where you live," Judson said. Additional retail construction is underway at The Domain—headed by Endeavor Real Estate Group—as part of its Phase 3 with anchor tenant Nordstrom planning to open a 123,000-square-foot store in fall 2016. Outside of The Domain only one other shopping center is under construction in Northwest Austin. Two businesses, Orangetheory Fitness and Firehouse Subs, have already opened at Arbor Town Square on Research Boulevard at Braker Lane, and Phase 2 broke ground in February. "Demand has been tremendous," said David Simmonds, president of real estate firm Retail Solutions, which is handling leasing of Arbor Town Square. "The owners have a luxury of being really picky with which tenants to put in the development. They wanted to create a synergy of tenants feeding off each others' traffic." A veterinarian and salon will occupy the two remaining spots in Phase 1, and space is still available in Phase 2, which will open this summer. Not nearly enough retail space is being delivered to handle demand in Austin, Simmonds said, especially centers that are referred to as power centers. These are centers with more than 250,000 square feet and with several large anchor tenants, such as big-box stores. For developers to feel comfortable enough to build, Simmonds said oil prices will need to be stable, which is usually a sign of a stable economy. Developers will also be watching interest rates and tax laws. In Austin he said the No. 1 drawback is delays in the city's Permitting and Development Review Department. "I hope Mayor [Steve] Adler fulfills his promises and really fixes the problems we have with the permitting process," Simmonds said. "People dread having to build here in the city of Austin."

Attraction toward older centers

Even older centers—especially those located on US 183 between Lake Creek Parkway and Balcones Woods Drive—are seeing more vacant stores leased. "In baseball terms, it's probably in the top of the eighth [inning] for these centers filling up," Simmonds said. "It's really amazing." This success mainly comes from tenants having no other options, he said, because of low supply and high demand. Teacher Heaven owner Susan Savoie is moving her North Austin store May 4 into the Barrington Oaks shopping center, occupying 11,000 square feet in the former True Value Hardware store. She said her former location at 8868 Research Blvd. did not draw in enough passerby traffic. Besides increased traffic farther north on US 183, Savoie said the center has wide enough array of other tenants and is located far enough from her competition. "If you look at the makeup of the center we're moving into, it's made up of people who truly care about children from a cultural standpoint," she said. "It's dentists, a nail salon, bakeries, grocery stores—everything a family needs." Other aging retail centers, such as the Market at Lake Creek—formerly known as the Anderson Mill Center and once anchored by H-E-B—are finding a second wind with a new facade and new tenants. Ernie Beltz Jr. and his wife, Debbie, were hesitant at first to sign a lease at Market at Lake Creek for their new business, Little Land Play Gym, an indoor play area designed with physical and occupational therapy in mind. After hearing about the vision the new owner has for the center, they were sold, Beltz said. "The newer centers don't have the parking and real estate," he said. "Older centers have easy landmarks and are well-established." The couple occupies 4,300 square feet of space in a former Hollywood Video Store and is already in discussions to expand into an adjacent suite within 12 months. The Beltzes' goal is to increase to 10,000 square feet and add an indoor zip line and a multisensory environment with a dark room and fiber optics to stimulate children's senses. However, Endeavor Vice President Michele Gary said she does not attribute the success of the Market at Lake Creek to the revamp but to nearby demographics. About 91,000 residents live within 3 miles of the center, and that is attractive to prospective tenants, she said. Of the 170,000 total square feet, the former 82,000-square-foot H-E-B store and an adjacent 37,000-square-foot spot are vacant. H-E-B vacated its Lake Creek location in November 2012 and moved into a new larger store in Lakeline Market about 1 mile north on US 183. Gary said a contract is in the works for a national retailer to occupy 30,000 square feet in the H-E-B, and there has been interest in leasing the 37,000-square-foot spot. Exterior renovations on those suites will not be finished until new tenants build out the space. Patrick Terry, owner of Austin chain P. Terry's Burger Stand, confirmed April 6 he signed a lease to build a new sit-down restaurant with a drive-thru adjacent to Taco Bell near Market at Lake Creek. That restaurant will open in 2016. Gary said names of other new tenants, including one new tenant that will occupy two 1,200-square-foot suites next to Little Caesars Pizza, could be released by June. "There's fewer fish in the pond when it comes to tenants ranging from 20,000 to 60,000 square feet," she said. "We're taking the time necessary to put our finger on the right tenant."