Austin is clearly the current darling of the tech industry, but it’s going to take more than charm, “vibe” and inherent popularity to fulfill the city’s potential as a true global tech hub.
Even before name-brand tech companies and their superstar executives set their sights on the live music capital of the world, with 150+ people were moving here every day, a trend that has been remarkably consistent over the past decade according to the latest census figures.
Now with the pandemic shifting renewed attention to warm climates, outdoor space, and room to properly socially distance, Austin is on track to crack the top 10 most populous cities in the U.S. within a year’s time.
As new residents contribute to a rapidly growing tax base, Austin has a profound opportunity to make more of the larger investments needed to support continued growth. Massive housing demand, infrastructure pressure and public transportation are just a few of the areas the city will need to address in a definitive manner if Austin is to continue to attract large-scale projects and corporate expansions. Existing, well-located buildings will also need to be brought up to all-new market standards.
That’s easier said than done, considering the natural growing pains associated with transitioning from quirky, dusty real estate to Silicon Hills-level sophistication.
From beloved town to global superstar
Today, the physical landscape of ‘Silicon Hills’ is proof-positive of the massive, yet disproportionate, changes underway. Many of Austin’s older office buildings are only partially occupied, yet futuristic new towers are springing up everywhere, at previously unheard of scale in what is still a mid-sized city. Austin’s first 700 foot+ towers are now being planned.
Tesla’s $1 billion factory under construction in Travis County, BAE Systems’ $150 million Austin expansion, and the fact that Samsung is reportedly considering our fair city as the prospective home to its new $17 billion semiconductor plant are all further evidence of the rapid pace of change here.
Meanwhile multiple reports show record sales in the housing market, as well as dangerously low inventory levels. And the relative dearth of local suburbs — ATX has three or four, compared with Chicago’s 60 — has prompted major new-to-town corporations to create their own mixed-use campus neighborhoods, from Apple’s billion-dollar investment in the northwest to Oracle’s 40-acre campus just south of downtown Austin. This, in turn, has triggered unprecedented levels of residential development. Almost every lot or outmoded building is fair play and likely is or will be considered as a multifamily, mixed-use or condominium project in an effort to keep pace.
Yet while these new projects are beyond sophisticated in design, many of the existing office and mixed-use buildings surrounding them have a decidedly ’80s vibe and are badly in need of updating or replacement. With the high demand being exerted on all real estate sectors in the Austin market, it is only a matter of time before even these badly dated albatrosses are brought up to spec.
But for all of this private investment in real estate in Austin, there must be a commensurate public sector investment in order to keep pace and to maintain a sense of balance.
Becoming better neighbors—and more successful landlords
The good news is the city is actively working through new development and infrastructure investment opportunities. But it’s going to take time for some of these larger projects to take seed, let alone bear fruit.
The city’s CodeNEXT initiative, for example, aims to improve transportation and household affordability, but it will take several years for the code to come to life physically through design, permitting and building. And the major transportation bond recently passed to expand train service will take 20 years to build out, and it is merely a start. Highways and major thoroughfares are also being expanded and improved, but many argue that these efforts are just not enough to match Austin’s prodigious rate of growth.
In the meantime, business and community leaders can help Austin play the part of a global tech hub by helping existing buildings look the part.
For inspiration on how to bring older structures a major facelift as part of more inclusive live-work-play communities, consider River Park, a massive mixed-use development underway in Southeast Austin. There, the developer is bringing 400 affordable units as well as 10 million square feet of offices, shops, hotels, parks and homes, including the redevelopment of many existing residential structures into modern, more luxurious Class A stock. Complete with a beautiful walking trail along the river, 30+ acres of park space, and miles of bike trails, the development will be integrated into the fabric of the city and eventually be served by Austin’s new light rail system. River East will be a veritable checklist of perks for techies and other modern tenants and will be a truly transformative project that will forever change the complexion of the city south of the river.
Other institutional leaders can borrow from this example with trusted partners. An effective repositioning team comprises not only visionary architects to revitalize antiquated buildings, but also expert project managers who understand market considerations. For example, will a simple refresh to the lobby and the addition of amenities achieve project goals, or is it time for a full-blown rebuilding project? These are pivotal questions that must be asked and carefully assessed.
Creating a growth-friendly community
Austin is changing irrevocably, one soaring new tower at a time. Yet just as every good building depends on a solid foundation, so does the larger community. Austin is at an inflection point between mid-sized city and world-class tech hub. Those in the development community need to do their part to provide firmer footing to the entire city’s growth trajectory.
Touting Austin’s business-friendly credentials was just the beginning. By proactively investing in new infrastructure, enabling our existing buildings to better play the part, and thinking through the complexities of new development we can genuinely ‘walk the walk’ on the path toward becoming the world’s next great tech hub.
Ross Anders is Vice President and General Manager, Austin, for Project Management Advisors Inc., a national real estate advisory firm providing consulting services as the owner’s rep. Matt Silvers is Vice President for Project Management Advisors, also working from the Austin office.