Why Isn't 2ND Street An Austin Destination?

Everything in the 2ND Street District has been created to foster a walkable retail-oriented experience in the best new urbanist traditions: city-owned property, ground-floor retail, small boutique shops, a narrow two-way street, an interested and involved handful of landlords.

So why hasn't the district taken off like South Congress or The Domain? The five-block area, originally intended to be local retail, has churned through at least 100 retailers. Storefronts on Austin's priciest blocks still remain empty. And the average tenure of many retailers can be measured in months.

Many of Austin's hot retail spots appear to succeed in spite of the odds. South Congress gained traction even as the street's retail co-existed with local prostitutes. The Domain is 11 miles and suffered early delays and backlash over tax breaks, but has crossed two phases and earned true status as a second major city hub.

Among Austin's new urbanism community, theories abound as to why the 2ND Street District has seen mixed results: insufficient downtown housing, a general lack of appreciation for walkable retail or a failed tenant mix.

CBRE retail broker Sergio Negrete, who has leased the 2ND Street District since the end of 2015, said the concept is strong, but it definitely takes time to mature.

“A lot of these larger projects that come online, that are successful, that still may see some turnover, [are] projects that build all the retail at once,” Negrete said. “They can build synergies and put together a thoughtful merchandising plan.”

The Domain is an example of that. The 300-acre project has been a magnet for retail for the last decade. But drop a couple of hundred thousand square feet of retail on the ground, and a broker can stick to a merchandising plan, hold spaces for certain retail uses and massage the tenant mix to find the best outcome.

Urban retail projects like the 2ND Street District, on the other hand, can cross multiple blocks and multiple owners, and face city requirements such as how to activate the sidewalks, Negrete said. The 2ND Street area rolls in a westward direction, picking up projects such as Northshore, 500 West 2nd, The Independent and Austin Proper, before reaching Seaholm.

Piecemeal development — even if it is the biggest, newest projects in Austin — has not been a friend to 2ND Street District.

“Just as an example, 2nd at San Antonio Street, for the longest time, was shut off,” Negrete said. “It was a dead end until Northshore opened up, 500 2nd Street opened up,” Negrete said. “We talk about creating an environment, and that environment is created when there is much more favorable, walkable streetscape.”

Jeff Kirk's high-end furniture store was an early casualty. Kirk Gallery opened on the ground floor of AMLI on 2nd in 2008 when the retailers of 2nd Street were more in line with Chicago’s design district: DWR, Mercury Design, BoConcept and Ligne Roset.

Then LOFT Home abruptly shut its doors and focused its efforts on its location in The Domain. That was followed by the departures of IF+D Design, The Home Retreat, Area, Savoir Beds and Ligne Roset. Eventually, BoConcept closed and DWR relocated. West Sixth Street has emerged as the location for design businesses. 

Kirk, whose store lasted 13 months on 2nd Street, said the placement of Austin City Hall and Austin City Limits, mid-district, have been more of an impediment than an assistance.

“Walkable retail is possible. The Domain has proven that in spades,” Kirk said. “It’s mainly a question of how to successfully create it, and in The Domain’s case, it has succeeded by making it feel much more compact than it is, thanks to avoiding linear store layouts.”

He admits some businesses — especially those that cater to local residents — have thrived. Royal Blue Grocery now has a chain of boutique mini-grocery stores. Jo’s Coffee Shop, La Condesa and Lambert’s are successes. But that has not translated into increased businesses for daytime retailers.

Not having a single owner or master developer, and not having a cohesive identity for the street has been part of the problem. The official 2ND Street District is only the five blocks owned by the city, which CBRE is leasing.

The 2ND Street District initially was envisioned as a component of the larger Downtown plan. Jana McCann, the city’s former urban officer and principal in McCann Adams Studios, said the early concept was that Second, Fourth and Sixth streets would be pedestrian-intensive. The concept of 2nd Street was a promenade that would stretch from the Convention Center to Seaholm.

But not all owners are opting to participate in the concept of the walkable promenade, a la Minneapolis’ Nicollet Mall. The JW Marriott said it was too late to move its passenger drop-off driveway away from Second Street.

“That just annihilates the street front experience,” McCann said. “They had other options, but they said, ‘We’re too far along in the design process to change anything now.’”

No one in the city had any leverage to force JW Marriott to participate in the streetscape. Rules to encourage pedestrian-intensive development were never adopted by the city. In the end, after negotiating with city officials and the Design Commission, a corner staircase on Congress Avenue was replaced with a patio bar. It is the most popular feature of the hotel.

“We make mistakes if we don’t get ahead and say, ‘Let’s make this into an ordinance,’ in order to watch over the new development that comes in,” McCann said. “These are monumental investments, so you just can’t miss those opportunities.”

But 2nd Street may just need time. Negrete said the identity is evolving as buildings are added to the corridor. AMLI was simply the early adopter of the concept that Austin’s Downtown could work, putting down two apartment complexes on two key blocks on Second Street.

“I will give it to AMLI and the City of Austin,” Negrete said. “AMLI is really the pioneer of residential downtown, and they’ve waited 10+ years to see it mature. They really have been the pioneer of our Downtown community.”

Downtown Austin is changing. Retail is changing, Negrete said. The goal is to be adaptable. Eventually, it is likely South Congress, Second Street and Seaholm would be labeled as one broad retail area of Austin, Nagrete said.

“I’d say Downtown has changed significantly,” Negrete said. “I think we’ll continue to see a little bit of turnover [like the departure of retail tenants and the Austin Children's Museum], but I think it has to do with the environment’s landscape changing all around it. The residential that’s being added, the office that’s being added, the convention business that’s picked up over the last couple of years, I think we’re going to continue to see new and exciting things pop up.”