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Retail storefronts the Drag across from the University of Texas at Austin.<\/p>\n
Cristela Jones\/Cristela Jones\/MySA<\/p>\n
The Drag near the University of Texas at Austin<\/a> was one of the city\u2019s 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.<\/p>\n 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\u2019t the only reasons local businesses are struggling.<\/p>\n Article continues below this ad<\/p>\n In May, Texas\u2019 first women\u2019s sports bar said it would have to relocate<\/a> because of a massive $8 billion city transportation project. In April, Austin\u2019s first bubble tea shop announced it would close<\/a> its Drag location after more than 25 years on\u00a0Guadalupe.<\/p>\n At the time,\u00a0CoCo\u2019s 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\u2019s not alone.<\/p>\n Kerbey Lane’s Guadalupe Street location on the Drag in Austin, Texas.<\/p>\n Cristela Jones\/Cristela Jones\/MySA<\/p>\n Legacy businesses that have stuck around Austin\u2019s Drag<\/p>\n Austin-based restaurant chain Kerbey Lane Cafe<\/a> has maintained its Drag location since 2000. Kerbey Lane\u2019s CEO, Mason Ayer, told MySA the Guadalupe restaurant was among the company\u2019s \u201cBig 4\u201d most profitable locations throughout the 2010s, but sales have fallen sharply over the last decade.<\/p>\n Article continues below this ad<\/p>\n \u201cIt’s not our lowest performing, but it’s nowhere near where it was,\u201d\u00a0Ayer 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.<\/p>\n \u201cQuite frankly, the Drag has changed a lot,” he explained.\u00a0<\/p>\n To boost business,\u00a0Kerbey 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.<\/p>\n Article continues below this ad<\/p>\n “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,”\u00a0Ayer said.<\/p>\n Hole In The Wall is a historic live music venue and bar on\u00a0the Drag in Austin, Texas.<\/p>\n Cristela Jones\/Cristela Jones\/MySA<\/p>\n A few doors down,\u00a0Hole in the Wall<\/a>, a historic Austin dive bar and live music venue, has operated on the Drag for more than 50 years. Co-owners Courtney\u00a0Goforth and Mike Lavigne said they pay more than $20,000 a month in rent and property taxes.<\/p>\n “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.”<\/p>\n Article continues below this ad<\/p>\n The pair took over the business nine months ago after it received a $1.6 million grant in 2023<\/a> through the Iconic Venue Fund and the Austin Economic Development Corporation, which helped secure the bar\u2019s lease for another 20 years.<\/p>\n Framed wall art inside of Hole In The Wall the bar’s long\u00a0legacy of owners and employees\u00a0on the Drag in Austin.\u00a0<\/p>\n Cristela Jones\/Cristela Jones\/MySA<\/p>\n “That’s the thing about Austin, there’s usually not a lot of sentimentality for things until they’re gone,”\u00a0Lavigne 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.”<\/p>\n Why local businesses are closing on the Drag<\/p>\n Partners Real Estate retail broker Bryan\u00a0McMurrey, 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\u2014taxes, insurance and maintenance besides base rent and utilities.<\/p>\n Article continues below this ad<\/p>\n Empty retail storefronts on the Drag across the street from the\u00a0University of Texas at Austin.<\/p>\n Cristela Jones\/Cristela Jones\/MySA<\/p>\n This year, he said, recent deals have landed in the $60 to $70 triple net range.\u00a0For example, for \u201ca 5,000 square foot retailer paying $60 triple net, that’s $300,000 a year,\u201d McMurrey explained.<\/p>\n \u00a0\u201cAnd 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.<\/p>\n On the corner of Martin Luther King\u00a0Jr. 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<\/a>, once had. \u00a0<\/p>\n Article continues below this ad<\/p>\n What was once a pizza joint on the Drag now sits empty and is set to become a new McDonald’s.\u00a0<\/p>\n Cristela Jones\/Cristela Jones\/MySA<\/p>\n “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,”\u00a0McMurrey 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.”<\/p>\n McMurrey said the Drag\u2019s 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.<\/p>\n 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.\u00a0<\/p>\n Cristela Jones\/Cristela Jones\/MySA<\/p>\n “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,”\u00a0McMurrey 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.”<\/p>\n Article continues below this ad<\/p>\n How Project Connect will impact the Drag’s future\u00a0<\/p>\n Last month, 1972:\u00a0ATX Women\u2019s Sports Pub<\/a> announced that its building near Hole in the Wall would be demolished as part of Project Connect<\/a>, Austin\u2019s planned light rail system. The nearly 10-mile route will run through the Drag, East Riverside Drive and South Congress.<\/p>\n The project cleared a federal hurdle and hired a construction company to begin work in 2027. 1972 co-owner Debra\u00a0Hallum told MySA she knew the project could potentially impact the bar but had hoped to get more time in the space.<\/p>\n 1972: ATX Women’s Sports Pub opens on The Drag in the West Campus, Austin neighborhood Wednesday, March 19.<\/p>\n Cristela Jones\/Cristela Jones\/MySA<\/p>\n “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,”\u00a0Hallum 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.”<\/p>\n Article continues below this ad<\/p>\n 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. \u00a0\u00a0<\/p>\n A conceptual rendering of Austin’s upcoming Project Connect light rail system, a nearly 10-mile line set to run through the Texas capital.<\/p>\n WAX\/Artist conceptual visualization courtesy of Austin Transit Partnership<\/p>\n<\/p>\n
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