Photo by Audrey Spencer

Official: Downtown area a barometer of the local economy

Local real estate experts said a high occupancy rate and thriving businesses on the Square indicate a healthy economy in Georgetown.

A lot of times people will look at a town square as a barometer, said Shelly Hargrove, Georgetown Main Street Program manager. They look at it to see how business is doing citywide.

Vacancy rates on the Square and in the downtown overlay district are low, which is a telltale sign of economic vitality, Hargrove said.

When downtown is healthy, we start running out of [commercial space], she said. Were getting close to that point now.

An active Square has also proven useful for helping attract businesses to the city, Georgetown Economic Development Director Mark Thomas said.

Thomas said the Squares charm has led to businesses such as Tasus Texas Corp., Citigroup data center and Radiation Detection Co. choosing to move to Georgetown.

Tasus, a molded plastics plant, and Citigroup have continued to invest in the community through job creation and added infrastructure, and Radiation Detection Co. is constructing a new headquarters on Snead Drive.

The starting point seems to be the Square, Thomas said. Its a differentiator, something other communities dont have.

Occupancy

Georgetowns total commercial real estate space is about 92 percent occupied, according to data from the CoStar database, used by real estate agents to analyze markets.

The city does not track occupancy rates for the downtown district.

Retail leasing activity on the Square has been brisk in the last four to six months, said David Simmonds, principal and founder of Retail Solutions, an Austin-based leasing and brokerage company. [Its] a telling sign that the retail market is very healthy, even robust.

Commercial occupancy rates higher than 90 percent are considered healthy, he said.

All Things Kids owner Karen Soeffker said the Square is an ideal location for her toy store because of the number of families and grandparents in Georgetown.

We are in the middle of one of Central Texas best destinations, Soeffker said, referring to the Square.

Hargrove said there are a few vacancies that have been on the Square for nearly two years; however, the smaller spaces tend to become occupied more quickly.

Larger spaces such as the 3,939-square-foot former Chupa Rosa building, located at 704 S. Austin Ave., have stayed vacant for longer periods of time because of the risk associated with leasing them, she said.

There [are] several factors that go into how long a property stays [on the market], she said. Smaller properties go fast. Fifteen hundred square feet is a good size [for a business to] start out. Its probably a little less risk than a 4,000-square-foot space.

Chris Foster, city of Georgetown manager of resource planning and integration, said downtown expansion has remained constant or even grown during construction projects.

The downtown overlay district [had] the same slope of upward growth as the entire city does, Foster said. Business growth didnt go down.

Evolution of Square businesses

Georgetown is projected to reach 100,000 residents by 2030, according to the citys Planning Department, and commercial development typically grows with population increases, said Ercel Brashear, owner of Brashear Properties, a Georgetown-based commercial real estate broker.

[Commercial development] follows the rooftops. Most [commercial] space users are following their customers, he said. The Square is different. Its part of a cultural market. It serves as an identity, and its health is measured differently.

Brashear said a narrow niche of users visit the Square for unique items, not for everyday staples that drive most of the nations spending.

A lot of businesses that do well [on the Square] aim at people who come to town and spend the day, he said.

Len Lester opened The Escape Fine Crafts and Gifts on the Square in 1996.

Even as far back as the 90s, any time visitors came to Georgetown the downtown area was always a stop, he said. We felt early on it was a great place to start a business.

Lester said the types of businesses located on the Square have changed as Georgetown has grown. Hardware stores that had operated downtown, for example, closed after The Home Depot opened on Rivery Boulevard.

As Georgetown grew, a lot of those competing businesses came in, he said. Some of those [small] businesses have gone away, but what has come in are some great specialty stores and great restaurants. Georgetown as a whole has changed drastically.

Hargrove said the types of businesses on the Square could shift again as the city tries to bring more lifestyle businesses to downtown.

Lifestyle businesses are usually businesses people will solicit on a daily basis, she said. They would come to that location more frequently than once every two or three months to buy gifts.

Hargrove said a 2013 survey of business and property owners in the downtown overlay district showed an interest in having businesses such as ice cream shops and breweries in the downtown area, as well as more nearby lodging options.

We want businesses that complement each other but dont compete, she said. If its retail, we want something we dont have. Thats our goal: to get a good mix.

Cost to rent

Business owners such as Lester and Soeffker said the cost to lease space on the Square is more affordable than leasing in places such as Wolf Ranch or Austin.

[My wife and I] looked into leasing spaces in other parts of Georgetown and in other parts of the Austin area, Lester said. [The Square] is still a very reasonable place to do business.

Lester and his wife own the space where The Escape is located at 713 S. Main St.

The cost per square foot to lease retail space in any market, however, is subjective, Brashear said.

Total occupancy cost can depend on the age of a building, he said. Construction costs are 18 to 20 percent more than [they were] last year. So many things can move you up or down the scale.

Andrew Perkel, Retail Solutions assistant vice president, said cheaper spaces could cost up to $40 per square foot, which is the high end of cost in Texas, with the added costs of renovations.

The former Chupa Rosa building, for example, has a higher cost per square foot because it has been renovated, Hargrove said.

A lot of these older structures [have] some hidden costs people dont see up front but may run into down the line, she said.