Retail storefronts the Drag across from the University of Texas at Austin.
Cristela Jones/Cristela Jones/MySA
The Drag near the University of Texas at Austin was one of the city’s most coveted pieces of real estate nearly 20 years ago. Today, Guadalupe Street looks very different, with empty storefronts, chain restaurants and only a handful of longtime Austin staples still standing.
Rising rent and property taxes, along with growing demand for fast-food chains, have fueled turnover on the Drag over the past decade. But those aren’t the only reasons local businesses are struggling.
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In May, Texas’ first women’s sports bar said it would have to relocate because of a massive $8 billion city transportation project. In April, Austin’s first bubble tea shop announced it would close its Drag location after more than 25 years on Guadalupe.
At the time, CoCo’s Cafe owner Joyce Yang told MySA in a statement that the business had struggled to adapt to changes worsened by the COVID-19 pandemic. She also cited a lack of parking and delivery access on the Drag, and she’s not alone.
Kerbey Lane’s Guadalupe Street location on the Drag in Austin, Texas.
Cristela Jones/Cristela Jones/MySA
Legacy businesses that have stuck around Austin’s Drag
Austin-based restaurant chain Kerbey Lane Cafe has maintained its Drag location since 2000. Kerbey Lane’s CEO, Mason Ayer, told MySA the Guadalupe restaurant was among the company’s “Big 4” most profitable locations throughout the 2010s, but sales have fallen sharply over the last decade.
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“It’s not our lowest performing, but it’s nowhere near where it was,” Ayer said. Kerbey Lane used to be open 24/7, but Ayer credits declining late-night business before the pandemic as the main reason for ending the service.
“Quite frankly, the Drag has changed a lot,” he explained.
To boost business, Kerbey Lane has offered move-in specials, promotions through UT Housing, and, once, even accepted Bevo Bucks, the university’s former prepaid spending system. Despite changes, Ayer believes the location remains important for introducing students and their families to the locally loved chain.
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“They’re only UT students for four years, sometimes a little longer, but eventually they’re going to move to the suburbs and have their own families, and want to introduce them to their beloved college brand,” Ayer said.
Hole In The Wall is a historic live music venue and bar on the Drag in Austin, Texas.
Cristela Jones/Cristela Jones/MySA
A few doors down, Hole in the Wall, a historic Austin dive bar and live music venue, has operated on the Drag for more than 50 years. Co-owners Courtney Goforth and Mike Lavigne said they pay more than $20,000 a month in rent and property taxes.
“You have to sell a lot of beer,” Lavigne said. “The people of the city, I think, they’d like to see more of these landmarks stick around. I think that the developers of the city would like to see less of these landmarks stick around. I think the city itself sometimes feels like their hands are tied in terms of what they can do because of state law.”
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The pair took over the business nine months ago after it received a $1.6 million grant in 2023 through the Iconic Venue Fund and the Austin Economic Development Corporation, which helped secure the bar’s lease for another 20 years.
Framed wall art inside of Hole In The Wall the bar’s long legacy of owners and employees on the Drag in Austin.
Cristela Jones/Cristela Jones/MySA
“That’s the thing about Austin, there’s usually not a lot of sentimentality for things until they’re gone,” Lavigne said. “So we’re not gonna let that happen here. We’ll let you get your sentimentality out here. This place ain’t going anywhere. It’s too cool to fail.”
Why local businesses are closing on the Drag
Partners Real Estate retail broker Bryan McMurrey, who has leased spaces on the Drag for more than 20 years, said rents have more than doubled. When he started, spaces were leased for $28 to $30 for a triple net lease, where the tenant pays the property’s three main operating expenses—taxes, insurance and maintenance besides base rent and utilities.
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Empty retail storefronts on the Drag across the street from the University of Texas at Austin.
Cristela Jones/Cristela Jones/MySA
This year, he said, recent deals have landed in the $60 to $70 triple net range. For example, for “a 5,000 square foot retailer paying $60 triple net, that’s $300,000 a year,” McMurrey explained.
“And if they need to stay within that threshold of not spending more than 10% on rent, then they have to make $3 million in sales to make that store profitable,” he said.
On the corner of Martin Luther King Jr. Street, all the way down Guadalupe, there are more than a dozen chain restaurants that outnumber local businesses on the Drag. Ayer said that he’s seen more fast food spots toward MLK capture a lot of the business that Kerbey Lane, Coco’s Cafe and Austin’s Torchy’s Tacos, which closed in 2024, once had.
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What was once a pizza joint on the Drag now sits empty and is set to become a new McDonald’s.
Cristela Jones/Cristela Jones/MySA
“The corporate chains have the staying power, because they have 75 different restaurants all across the United States to where, if they have one that maybe isn’t a top performer, but it still is a brand name on UT campus, basically, it’s worth doing,” McMurrey said. “[Compared to] a mom and pop business where they’re like, ‘oh my god, we haven’t made any money this summer, because June, July and August have been totally dead.’ The chain can continue to fund that, while a local family probably can’t.”
McMurrey said the Drag’s seasonality also hurts local businesses. The area slows dramatically when students leave in summer and again during winter break, making the district heavily dependent on the UT academic calendar.
Medici Roasting on the Drag adjusted its regular operating hours to shorter summer hours in May 2026 as the street has less UT Austin student foot traffic.
Cristela Jones/Cristela Jones/MySA
“When that happens, retailers need to staff up when there’s a lot of activity, a lot of customers coming in, and then they also have to compensate and staff down when the students are gone, and there’s not much neighborhood traffic that comes to the Drag when the students are gone,” McMurrey said. “So it’s very student-centric, which makes it one-dimensional in some sense, in terms of the customer traffic that it relies on.”
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How Project Connect will impact the Drag’s future
Last month, 1972: ATX Women’s Sports Pub announced that its building near Hole in the Wall would be demolished as part of Project Connect, Austin’s planned light rail system. The nearly 10-mile route will run through the Drag, East Riverside Drive and South Congress.
The project cleared a federal hurdle and hired a construction company to begin work in 2027. 1972 co-owner Debra Hallum told MySA she knew the project could potentially impact the bar but had hoped to get more time in the space.
1972: ATX Women’s Sports Pub opens on The Drag in the West Campus, Austin neighborhood Wednesday, March 19.
Cristela Jones/Cristela Jones/MySA
“Our plan was, OK, if these people think we’re going to get most of our lease, then it’s a four and a half year lease, but even if we get three years, let’s say it takes them three years, then we’ll be here, we’ll be established, we’ll be profitable by then, and we can make that move without any trouble,” Hallum said.”Our backup plan was if it comes in a shorter timeframe in the next year or two, and we do need assistance, we had already talked to different groups about Small Business Administration funding.”
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Hallum said the bar no longer qualifies for federal SBA funding because it is not 100% owned by a U.S. citizen. In March, the SBA banned foreign nationals and non-citizens from accessing SBA small business loans for U.S. businesses.
A conceptual rendering of Austin’s upcoming Project Connect light rail system, a nearly 10-mile line set to run through the Texas capital.
WAX/Artist conceptual visualization courtesy of Austin Transit Partnership
Dirty Martin’s Place, a 100-year-old burger joint on the Drag, also faced closure before Austin Transit Partnership changed the project’s bus and bike routes in 2024, sparing the restaurant from demolition. ATP told MySA in a statement that the project will “deliver a much-needed new mode of transit offering riders a reliable way to travel to and from businesses along Guadalupe Street,” adding that it’s working to “minimize property acquisitions wherever possible.”
“As design has advanced over the past two years, the project team has reduced the amount of property needed for Austin Light Rail, with most acquisitions now involving only small portions of land,” ATP said through email. “ATP continues to engage with property owners (and tenants as requested) providing information about relocation assistance and maintaining clear communication on timelines and next steps.”
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1972: ATX Women’s Sports Pub has an empowering wall of decorations leading to the bathrooms with Sports Illustrated covers of prominent women athletes including Serena Williams, Simone Biles, Megan Rapinoe and more.
Cristela Jones/Cristela Jones/MySA
The bar has not received an official notice to vacate, according to Hallum, and will stay open as long as possible. They’ve even launched an online fundraiser to help secure funding for a new location. Still, Hallum is hopeful that the new light rail project could benefit the Drag and make it more pedestrian-friendly for current and future businesses.
“I think that would be awesome … to bring more people that are not students to the Drag,” Hallum said. “Hopefully that’s a positive side of the light rail, and that it will do that for those businesses, because they need our support, they need the people of Austin to come out and to get past that perception that ‘I don’t want to be on the campus or near the campus.’”