Alison Barnwell, a veteran retail real estate broker, turned a few heads when she left Live Oak-Gottesman after only a short tenure. Now she has joined SRS Real Estate Partners as senior vice president working with another veteran, Will Majors, executive vice president at SRS.
Barnwell said there were no hard feelings about her departure from Live Oak and lauded that company for its great culture and leadership. She also praised her former longtime teammate at CBRE Group Inc., Eric DeJernett.
Leaving both Live Oak and CBRE had nothing to do with dissatisfaction. She said she was looking for a new challenge and SRS filled that void. SRS also is in a rebuilding mode after a couple of veterans — Todd Wallace and Robert O’Farrell — left for JLL’s new Austin retail division. Majors was recruited from local development heavyweight Endeavor Real Estate Group to fortify SRS’s Austin presence. T.J. Powell and Carson Hawley now round out the team.
I asked Barnwell and Majors to weigh in on the Austin retail market.
How has retail brokerage changed in Austin in the past three years?
Majors: There has been a lot of movement among brokerage companies. Retail Connection has opened an office here, as has JLL. They both have a large presence. We have also seen the market lease up. Class A retail space is hovering around 98 percent leased and it is tough for brokers to place their tenants in today’s world.
What makes retail brokerage more challenging than office or industrial?
Majors: The deal size is so much smaller than office and industrial, which in turn means that you need to do significantly more volume. However, it is difficult to do the volume. Also there are huge costs associated with getting started in retail due to the fact that you need top-ofthe-line mapping, demographic and marketing materials to compete.
So retail inventory is at a critical low in Austin?
Majors: In a big way. The larger regional shopping centers have not been developed in the last several years due to the lack of big-box retailers expanding on a national level. At the same time the population of Austin is exploding, so demand for retail has grown.
Given the tension between supply and demand, how do lease rates look?
Barnwell: Retail rental rates have increased tremendously over the past couple of years. As Will mentioned, Class A retail space is at a premium these days. There are a lot of tenants either entering Austin or looking to expand, which has created tremendous competition for a dwindling supply of retail space. In addition, land prices have skyrocketed due to the willingness of multifamily developers to pay unprecedented numbers within the urban core.
Historically, we’ve seen retailers fail because they could not withstand increasing rents. In the past, it was not uncommon to see space remain dark for a few months before finding a new tenant to re-lease space at lower rents. In today’s climate, if a retailer shuts its doors, landlords often have a list of qualified tenants from which to choose at even higher rents.
What are the tightest, most competitive submarkets now?
Barnwell: Definitely downtown as well as South Congress and South Lamar. It simply boils down to supply and demand.
How can independent businesses that have defined Austin for so long compete against national retailers with deep pockets?
Barnwell: Austinites are fiercely loyal to their locally owned businesses, but it’s very difficult for a traditional mom-and-pop start-up to be successful due to high rents and construction costs. Location is something a new business should never sacrifice. However, the first location doesn’t have to be in a brandnew, high-profile, ground-up development. A second-generation space in an existing shopping center can save a new retailer thousands in rent and construction costs. Austin also has countless resources to assist new business owners such as the Austin Independent Business Alliance, Downtown Austin Alliance and Austin Small Business Development Program, for example. These organizations provide direction on everything from securing a small business loan, to finding the right contractor, sign builder and real estate broker.