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In January 2020 – just before COVID-19 unleashed its wrath – Austin-based Tso Chinese Delivery raised $ 2 million in venture capital and had big expansion plans.
The company with two locations is preparing to open a third store in South Austin, with further openings to follow.
“We put everything on hold,” said Min Choe, CEO of Tso Chinese. “Suddenly it was a matter of guaranteeing the safety of our employees and having everyone tested on a regular basis. We spent over $ 15,000 on rapid tests. We have provided personal protective equipment, invested in nano-spray disinfectants, and introduced new practices. “
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Now that the pandemic promises to be easing – and with a careful look at the COVID Delta variant – Tso Chinese Delivery is ready to pick up where it left off.
Plans for the Chinese grocery chain – which has no indoor seating and uses an online platform for deliveries and takeaway orders – include a new location on South Congress Avenue, with more coming soon in Round Rock, Cedar Park and Southwest Austin.
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“Both of our locations are doing well and we are optimistic about growth,” said Choe. “Now that the time is right and we can move forward with new locations, the future is really bright.”
After a year of forced many traders to take a hiatus as they struggled to survive, the restart of the company’s expansion plans is an optimistic sign for Austin’s leisure and hospitality sector, which has been hit by COVID and is in its early weeks pandemic has cut more than 60,000 jobs in the year.
At the national level, Americans spent more on clothing, electronics, and restaurants last month when the economy opened and there were fewer pandemic restrictions, according to the U.S. Department of Commerce.
US retail sales rose 0.6% month-on-month in June, surprising Wall Street analysts, who expected sales to decline slightly.
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“For the past 16 months, people have not been able to eat out or have to buy a new outfit just to watch Netflix. So it’s not surprising that restaurants, bars, and clothing did well in the economy reopened, ”said Erez Katz, CEO of data markets firm Neuravest Research.
Even with the economic uncertainty remaining in 2021 – including the potential impact of the spread of COVID variants – Austin is on the radar of brands looking to enter new markets, said Sam Tenenbaum, director of analytics at commercial real estate company Costar.
“Austin is high on the list of national retailers and restaurants looking to expand,” said Tenenbaum. “The reasons for this aren’t surprising – just look at technology growth, population growth, and income growth. There are only a handful of other cities in the country. “
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Tenenbaum points to automaker Tesla’s choice for Austin for its $ 1 billion assembly facility, software giant Oracle moving its headquarters here, and Apple’s $ 1 billion office campus under construction. Meanwhile, Samsung is considering two locations in central Texas – one near its existing facility in northeast Austin, and another near Taylor in Williamson County – as potential locations for a $ 17 billion chip manufacturing facility.
Austin lost a number of local treasures during the pandemic, including Threadgill’s, Magnolia Cafe on Lake Austin Boulevard, Shady Grove, and Maria’s Taco Xpress.
But with the help of Paycheck Protection Program loans and, in some cases, landlords willing to work with tenants, the mass exodus of local shops and restaurants has been avoided.
“Everyone feared at the start of the pandemic that every large taco shop in Austin would be replaced with a chipotle,” Tenenbaum said. “It’s pretty clear now that most of what makes Austin unique has made it through the pandemic. In fact, we’ve seen people add locations that you wouldn’t necessarily expect in the midst of a pandemic to support their local businesses. “
The demand for office space in downtown Austin is “amazing”
Local and national brands looking to grow in Austin are likely to face challenges when it comes to finding space, according to a new report from commercial real estate company Weitzman.
In mid-2021, Central Texas had a retail occupancy of 95%, making it the strongest retail market for large metro in Texas in terms of occupancy, according to the report. That’s the same rate the Austin market saw in early 2021, and declined slightly from 96% in early 2020.
Part of the reason Austin’s occupancy has remained relatively stable over the past 18 months is the lack of new retail buildings prior to the pandemic.
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Austin typically built several million square feet annually in the 1990s and early 2000s, growing up to 4 million square feet annually. But new retail building construction began to decline in the mid-2000s and hasn’t reached the 1 million square foot threshold since 2016. In 2020, Metro Austin added approximately 402,000 square feet of space in new and expanded retail projects.
This year is another year of limited construction, with Weitzman forecasting 475,000 square feet of new retail space. Meanwhile, some retail space is being taken off the market, including the 191,000-square-foot Arboretum Crossing, where much of the former North Austin mall is being converted into offices.
The slowdown in construction meant that retail space was extremely scarce before the pandemic broke out. During the pandemic, when restaurants and shops closed, the space was quickly replenished by those looking to expand, said Matt Epple, executive vice president of Weitzman.
Now that the economy reopens, competition for this space is fiercer than ever, he said.
“The demand from local and national tenants is amazing,” said Epple. “We are seeing record rents and an almost high occupancy rate. It’s overwhelming that the challenge before COVID was finding space. Then more than a year with COVID and there is still no place. “
In addition to space constraints, retailers and restaurant owners are struggling to hire workers.
“The biggest challenge is that we don’t have enough manpower for entry-level jobs,” said Mark Sprague, who follows the economy and housing market both locally and nationally.
“You hear people stay home because the government gives them more than they can make,” said Sprague, state director of information capital at Independence Title Co. Paid jobs find other jobs in tech. Not necessarily tech jobs, but maybe warehouse jobs with advantages. “
For example, online retail giant Amazon announced last July it was opening a sorting center in Kyle that will bring more than 200 jobs to the city south of Austin.
The jobs are in addition to 1,000 planned for a facility in Pflugerville that Amazon said opens this year, as well as hundreds more that the Seattle-based Austin-Round Rock company plans to add while it continues here expands. Amazon has more than 20,000 employees nationwide.
Companies hoping for the “next wave” of people to return to downtown Austin
The pandemic has hit Austin’s central business district hard, forcing some businesses to close and for many months emptying the streets, closing storefronts, restaurants and nightclubs.
When large numbers of employees in downtown offices switched to remote work and tourism fizzled out, it was a double blow for local businesses, said Jenell Moffett, vice president of strategic initiatives for the Downtown Austin Alliance, a group of retailers and property owners.
But leisure travel is back, with bachelorette parties, wedding groups, and tourists crowding the sidewalks. Now the traders are hoping the workers will return, she said.
“The weekends are getting closer to what we saw before the pandemic,” Moffett said. “But the day is still lagging behind. That lunchtime crowd isn’t there, and restaurants and retailers are following that timeframe. They’re still waiting for the next wave to return to the office.”
Shelley Meyer, co-founder of Wild About Music, a music-themed art and gift shop located at 615 Congress Avenue, is one of those retailers eager to return downtown.
“From Friday to Sunday we are overwhelmed with tourists. It’s 100% like 2019,” said Meyer. “It used to be just day-trippers from Dallas and Houston. Now we see tourists from all over the United States, as well as international visitors. It was a great relief.”
But that doesn’t make up for the absence of office workers who kept traffic flowing Monday through Thursday, she said.
In June, Meyer was so confident that downtown would reopen that she traveled to the industry’s gift and apparel markets to stock up on new merchandise.
“We were so optimistic, but that was before the Delta variant shot up,” she said. “Now we’re back to watching and waiting, hoping we don’t go backwards. That’s all we can do.”
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