Whole Foods Market plans to open its new grocery store at the Shops at Arbor Trails on June 19.

When it does, the store will save its Southwest Austin customers a trip downtown and employ 150 to 200 people. It will take over the old location of Haverty's Furniture, which itself had moved into the former Stein Mart location.

This jockeying for premium space is unsurprising to local real estate experts. They say the state of the commercial and office real estate market is strong.

There is high demand and low supply of office and commercial space in Southwest Austin. Not many new projects are on the horizon due to the area's environmental challenges and a tough climate in which to borrow money, said Kevin Granger, a partner in Stream Realty Partners LP.

"It is doing really well, a lot more robust than it's been in years past," said Michael Wilt, Real Estate Council of Austin's director of government relations. "We haven't had any [office space] come online in several years. There's pent-up demand."

According to brokerage firm NAI REOC Austin, the Greater Austin area (Austin, Round Rock and Cedar Park) had a 16.9 percent vacancy rate—meaning that 83.1 percent of all office space was occupied in the first quarter of the year.

Finding space

Many people have seen a vacant business space and wished a favorite retailer or restaurant would open up shop there.

Businesses find new properties by working with local real estate brokers, said Edvin Beasley, Stream Realty Partners senior associate. The client identifies his or her needs, and the broker finds properties that meet the criteria.

Like many larger companies, Whole Foods has an internal real estate team that works with local brokers to find locations. The grocery store considers population density, projected sales potential, visibility and parking.

"Store site decisions are based on a combination of factors that include the availability and cost of real estate, population density, education, income and interest in natural and organic foods," Whole Foods Public Relations Director Kate Lowery said. "No one factor is the most important, but the right combination is important."

The goal is to be convenient to as many customers as possible given the economics of building and operating a store, she continued.

Granger said that when lease rates go up in the central business district, the lion's share of relocations go to Southwest Austin.

He said the area is close to Austin–Bergstrom International Airport and that many "decision-makers" live near the city's western and southwestern limits.

Jerry Heare, senior vice president/industrial specialist with NIA REOC Austin, said Freescale Inc. and AMD have generated growth and development.

Granger said there are three types of office space:

• Type A property is well-located and has desirable amenities such as covered parking
• Type B property is well-located but may be older and have fewer amenities
• Type C property is usually an older building with few significant amenities

For property owners, the biggest way to attract businesses is to raise awareness. Beasley said an office building or shopping center needs to be on all of the relevant market lists and reach out to desirable tenants.

Negotiations

Once a company finds a space it likes, negotiations begin. Beasley said negotiations generally take 90 to 120 days but can take longer with national businesses. Those businesses tend to negotiate more aggressively and are keenly aware of their target customers through market research.

"[National businesses] may not just be looking at how many females are in a particular area, but how many females [there are] in a certain age group with this many kids. The larger the firm, the more detailed their data is," he said.

Eventually, all of the terms are hammered out, and the tenant signs a lease.

Whole Foods has a standard lease form it has developed to provide the best possible legal protections, Lowery said.

Heare said there is a lot of interest west and southwest of the city because of those areas' large residential populations.

"An untapped latent area is the Y at Oak Hill," he said. "Businesses are waiting to see what is going to happen there, and then I think there will be some rejuvenation. MoPac, William Cannon Drive and Slaughter Lane have come alive with the new developments."