A🧵

Fantastic #Barnesandnoble has restructured & grown store count - in some ways they're more of a community benefit than just about any retailer. Good stuff happens when you spend time getting lost in the book store.

Unfortunately prime vacant big box spots are very "limited"

https://twitter.com/RetailBrokerHTX/status/1649132029244502023

Overall retail vacancy rates in the major Texas metros are ALL below 5% at this point. Austin at 3.7%

This is not going to change soon. Lenders don't have an appetite to green light overly ambitious spec development. Borrowers have that much less equity to raise, debt to carry.

So as the vacancy of Texas' major metros retail has gone from roughly 16% vacant in 2003 to a 5% vacant this year (that's a 320% reduction over 20 years if you're keeping score)...

..."We" are reacting by building much LESS new retail this year than in any of the last decade...

°Cost of retail specific land ⬆️ 10% just since Covid

°construction pricing spiked 30% for steel, concrete, etc

°White box TIA market is $45 when $30 used to to cut it; lease commissions now budget $15 psf

The list never ends.

You can see why it's unappetizing to build now.

This has created a mindset of retail development scarcity, skepticism, and outright disbelief.

Projects that could be built "today" are pushing out, hoping some of the above gets cheaper as the market cools.

Tenant rep brokers asking for "proof of life" with development sites.

This is not advocating for empty storefronts and higher vacancy.

Clearly robust, well occupied retail benefits the property owner AND Tenants alike.

But a low % vacant is lost opportunities. Many retailers absolutely would expand to Texas, but lack prime entry point space.

If you're still reading this 🧵 clearly you're reacting to this. Agree? Disagree? Typing on a phone is only so rewarding so it is intentionally brief description of a 30 minute dialogue about the retail biz.

Happy to have it. Our firm is here to be all over it in all ways.