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Magnolia Cafe owner discusses South Congress rent increases, businesses priced out

AUSTIN (KXAN) — Businesses continue to open and close in the Austin area. According to the Downtown Austin Alliance’s 2023 State of Downtown Report, since February 2020, 125 storefront businesses closed and 71 opened.

Just up the street on South Congress, Magnolia Cafe Owner Kent Cole said he’s seen some closings and openings in that area as well.

Cole said for businesses lined up along the well-known street, it costs a pretty penny to be there.

“We’re in a situation on the street where we have seen enormous growth within blocks of here and an enormous escalation of the rental prices,” Cole said.

It’s caused some businesses there to close down or move.

“Some of our long established neighboring businesses have left. Some simply relocated out by Ben White, south and other ones have gone east,” Cole said. “Many of them have simply gone home and just stopped or went into another line of business.”

But it wasn’t always like that. Cole said when they first opened in the late 80s, it was empty and cheaper.

“Street was a ghost town here,” he said.

At the time, Cole said his family was able to purchase the property. But that doesn’t leave them completely in the clear.

Cole said the restaurant pays market rent to his family.

So, if there ever came a time when they couldn’t afford it, the restaurant would be in jeopardy of having to move.

“We say, ‘Oh, if I bought the property, everything would be okay.’ No, you just have another set of not problems, another set of requirements,” Cole said.

Prices aren’t up just on South Congress.

According to data provided by Aquila, a commercial real estate company in Austin, the cost of retail market rent increased by 19% from the beginning of 2022 to now.

Cole said that can make it harder for new businesses to set up shop in places like South Congress.

“The barrier to entry has been raised very high,” he said. “It’s very hard for local businesses and startup businesses, particularly under-capitalized or poorly capitalized, to get a foothold,” Cole said.

His advice for businesses? Discover an up-and-coming area instead.

“Find the new South Congress,” Cole encouraged. “Is it in Manchaca? Is that out in Lockhart?”

For Cole, Magnolia Cafe is more than just a business. It’s an experience he offers to his community that he hopes to continue for years and years to come.

“It’s a mission,” he said. “The restaurant for us is a place where there is community, and there is people talking to people.”

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