'Retail Gap' Closing Slowly as East Riverside Develops

May 9, 2016

Austin’s East Riverside Drive has become a hotspot for new housing development. But retailers in the area aren’t keeping pace with increasing demand.


Real estate broker Jim Young started researching the East Riverside corridor for his clients, and he noticed a surprising trend playing out in the area: Residents were spending their money in other parts of the city.

“They call it leakage,” Young says. “And that simply means that people have to drive outside of the trade area to satisfy that need.”

Young is a partner at the Austin-based Longbow Real Estate Group. He pulled data from the research company ESRI, looking at the area within a five-minute drive of 2015 E. Riverside Drive – that’s the location of a strip center that houses the music venue Emo’s.

Young found that residents often had to drive outside that area to find the things they wanted. 

“There’s approximately $92 million worth of additional demand, or what we would call opportunity in that drive time,” Young says. “That’s really significant if you are a retailer or an investor thinking of purchasing a retail center to know that there is opportunity there.”

From luxury condos to single-family homes, new housing developments continue to crop up in the area. But Young says surrounding retailers aren’t meeting the increased demand that stems from that growth. More specifically, there’s a $52 million gap in the area’s general merchandise market – retailers like department stores. Young thinks much of that gap stems from recent demographic changes.

“There’s so many new companies moving into the area that want to go to breweries and restaurants and they would be purchasing clothes to go out on Town Lake or businesses suits, whereas before you had a lower income, and now you’ve got a lot higher income,” he says.

In the near future, Young thinks the neighborhood may see an even bigger retail gap. One of his clients has bought land for a 400-unit apartment complex in the area. The tech giant Oracle also has plans to build a new campus in the neighborhood, and purchase an apartment building to house employees.

“I think it may increase slightly for the next 12 to 18 months or until some developers come in and put up some really interesting new retail centers,” he says.

But Young thinks it’s a matter of time before that gap is closed, and we see even more construction on Riverside. He says there’s just too much opportunity for developers to pass up.