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There's a reason why outdated shabby retail centers—that wouldn't get a second look five years ago—now have multiple LOIs on them. Beggars can't be choosers. Tenants are going into the worst of the worst spaces because there is nowhere else to go.  Retail Solutions founder David Simmonds tells us retail tenants in the best locations can expect to pay $36 to $43/SF plus nets, but rates are approaching those numbers even in the outlying suburbs. Developers will have to start building soon because there's not enough space in the market with 96% occupancy, he says.  The problem with Austin, David tells us, is that when people want to turn on the development faucet, the process with the city takes so long. This benefits projects already on the ground and keeps them leased up. When developers want to be aggressive, their most immediate options are these small outparcel deals. They can spend $15 to $20/SF on the dirt and generate $35 to $40/SF in rent, so expect to see more of that. Life's too short to go through the process of a big-box assemblage and the city's permit process, he says.  David says to look for the QSRs (think Chipotle, Einstein Bros Bagels, and Mama Fu's) to continue their growth. QSRs have taken over the smaller outparcel strip retail centers that are dominating new retail development. They're joined by a migration of medical facilities (dentists, urgent care, eye care, etc.) moving out of traditional MOBs. Services like nail and hair salons and dry cleaners are picking up again, too. Another category not taking a breather is mattress store retailers. (After eating at Chipotle, we all need a nap.) When he's not shopping for deals, David likes to hang out with his kids and go fishing; he admits that he's just a big kid at heart. |
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Live Oak Does the Hotel Impossible Financing for full-service hotels outside major CBDs has been almost nonexistent since 2007. But the JV of Phoenix Hospitality Group and 2GR Equity found a way to make a Hilton Garden Inn development deal happen in Live Oak through a public-private partnership with the city, says 2GR Equity principal David Gregory (right, with principals Elizabeth Roll and Isaac Gregory.) In addition to a grant from the city to help subsidize construction, Live Oak is entering into a new 20-year lease for the hotel's conference center that includes an abatement of hotel occupancy taxes.  The newly formed JV will build a five-story, 138-room Hilton Garden Inn at the southwest quadrant of I-35 and Loop 1604 off of Pat Booker Road, across from the Forum at Olympia Parkway (one of the largest shopping centers in Texas), Elizabeth tells us. The hotel will be near 1.5M SF of retail. Next door will be a brand new Starbucks, 54 Street Grill, and McAllister's Deli. Phoenix will oversee development and then manage the hotel. 2GR is also set to close in November on a hospital/MOB in the South Texas Medical Center in Northwest San Antonio. |
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New Supply Won't Slow Multifamily Absorption |
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 With about 10,000 apartment units coming to Austin in the next year, Deverick & Associates managing director Deverick Jordan (left, with IPA capital markets director Brian Adams) thinks rents are heading into uncharted territory. Deverick, who will be among the experts speaking at Bisnow's Austin Multifamily Summit on Oct 30 at the Hyatt Regency Austin, adds that the rise in rents hasn't slowed absorption. Most new 200- to 300-unit projects can expect to be absorbed within six months of opening. |
 One area where Deverick's seen a lot of activity is the Riverside submarket. It's evolved drastically, transitioning from low-cost housing to a trendy alternative to high-priced downtown living, he says. Deverick is working on several apartments in the area from older student-housing developments being rehabbed to new construction. Don't forget to save your place for the Oct 30 (7 am, so you'll feel mighty productive) Austin Multifamily Summit. |
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What You Don't Know About Ben Miller Crowdfunding is taking the capital markets by storm and Bisnow is on the front lines. Tomorrow we're releasing a free video featuring Fundrise CEO Ben Miller to help you understand the impact of this important trend. For now, here are some fun details that you probably don't know about Ben and Fundrise. Memorable project: We did a project with Chatham Development in the Hamptons and raised $1M in 48 hours with the help of many investors. It was a very popular investment because of the location and given Chatham's status as the largest home developer in Long Island. Check back tomorrow for the free crowdfunding video! |
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10 Days Until the Top Under 40 Developers / Investors
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Don't Miss Our Austin Multifamily SummitBisnow is thrilled to announce our fourth annual Austin Multifamily Summit coming up on Oct. 30, where you can hear the experts from ARA, Amli, JLL, Berkadia, HFF, and more discuss the hottest trends driving our market. Are you wondering which developments are in the pipeline or what opportunities are left? Join us as we delve into the depths of multifamily mania, starting with great networking at 7am at the Hyatt Regency Austin. Save your spot by registering now! |
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