Austin’s growing city limits

When considering the growth of Austin, Texas over a single month or even a year, the figures don’t seem particularly remarkable. However, what is truly extraordinary is just how this growth has been sustained over an extended period of time. Between 2000 and 2010, the population of the greater Austin area increased by 37.3 percent. In comparison, Texas itself only grew by 20.6 percent. Then, from 2010 to 2016, Austin grew by another 19.8 percent, while Texas only posted 10.8 percent growth.

The figures are impressive on a national level as well: from 2006 to 2016, Austin grew by 35.7 percent, while overall the US population only increased by a mere 8.2 percent. By any metric, Austin’s population growth stands out.

This rush of incomers is largely due to Austin’s business focus and evolution as a tech powerhouse, the history of which dates all the way back to the dawn of the semiconductor industry. For many years, Austin was not subject to the same celebrity as Silicon Valley, but now the city is home to some of the tech industry’s biggest and brightest names. That, combined with a relatively low cost of living and impressive cultural resources, has fuelled the expansion of the city to its current heights.

But Austin is now approaching a tipping point. Local infrastructure has not been able to keep up with population growth, and soaring house prices are gradually eroding the competitive advantage the city once held. These issues, teamed with a lingering local resistance to seeing the city drift away from its distinctive 1960s culture and roots, have made change difficult.

Austin is now in the process of defining its future, both as a place in which to do business and as a place to live. However, the city’s particular focus on technology has placed it in a strong position to lead the charge in the development of smart cities.

A story of success
Austin owes its current streak of growth to two main factors: its emergence as a centre for innovation and technology, and its strong counterculture, which developed in the 1960s and has since forged the city’s identity. While these two factors are occasionally at odds with one another, both have played an incredibly important role in Austin’s story of growth and success.

In terms of business, Austin’s current path of innovation and success began in 1977 with the founding of the IC2 Institute at the University of Texas at Austin. George Kozmetsky, the co-founder of technology conglomerate Teledyne Technologies, had moved on from his company to take up the position of Dean at the university’s College of Business Administration. With the unique advantage of having worked in both business and academia, he envisioned an institute that would tie together business, government and higher education with a think tank that would be capable of identifying and funding potential growth industries for the city.

A relatively low cost of living, combined with impressive cultural resources, has fuelled Austin’s expansion to its current heights

His creation, the IC2 Institute, founded the Austin Technology Incubator, the first technology incubator in the state of Texas, and provided a platform for entrepreneurs to receive funding and assistance for their new ventures. This all came at exactly the right time for Austin; the Texan economy was still reeling from the oil crises of the 1970s, with the state suffering under waves of home foreclosures and bankruptcies. The technology companies that were already present quickly latched onto the opportunities being presented.

This all crystallised perfectly for Austin. The city had a relatively low cost of living, strong business support for the technology sector and a wealth of talent coming from the many universities surrounding it. The city’s appeal was only made greater when Dell emerged from a dorm room at the University of Texas in 1984. With IBM, Apple, AMD and many other technology giants having established a large Austin presence in order to take advantage of the talent available there, Austin is now truly at the heart of the US technology sector.

Pat Niekamp is the founder of Texas CEO Magazine and a board member of the Association for Corporate Growth Central Texas. In an interview with Business Destinations, she said Austin emerged as an industry cluster for technology, and many local universities swiftly adapted to meet its new standards: “You have computer scientists, you have electrical engineers, and all of those kinds of folks coming out of the University of Texas and other campuses across the state that also begin to emphasise those kind of programmes, because there are good jobs in Austin.”

Running alongside all this is Austin’s development as a cultural juggernaut, both for the US and the world. The city is home to Austin City Limits, the longest-running music programme in the history of television. Today, the festival continues in its 40th season. In 1991, after it was announced that Austin was home to more live music venues per capita than anywhere else in the world, the city began referring to itself as the Live Music Capital of the World. The SXSW festival of film, interactive media and music also attracts international attention, and has grown every year since it was first held in 1987.

Andy Cantu is Executive Director of Evolve Austin, a coalition of partner organisations across a multitude of sectors formed to unite on policy decisions that prepare the city for the future. He said Austin is also politically unique in Texas: “Texas in the south is obviously incredibly conservative, and Austin is a progressive bastion within that sea of red. So I think there’s always going to be that cultural ethos that values liberal progressives, and… Austin is going to hold on to [that] very dearly.”

Keep Austin Weird
But despite all its successes, Austin’s characteristics have also contributed to a lack of progress in some regards. In the year 2000, Red Wassenich – then an Austin librarian – called up a local radio station to donate towards keeping an offbeat music show on the air. When asked by the person collecting the donation why he was making it, he replied: “I don’t know. It helps keep Austin weird.”

Since that moment, Keep Austin Weird has become something of a rallying cry among residents, aimed at protecting local culture and ensuring larger outside businesses aren’t able to disturb it. With a wider focus than simply tackling gentrification, the movement reflects a broader cynicism towards outside interests that attempt to dictate what Austin is and what it can become. It’s a concept that has spread to other cities as well, most notably Portland, Oregon. Cantu told Business Destinations: “Austin has a unique political culture that was forged in the 1960s, the height of the anti-war movement, that’s really focused on the university. And so there’s still a large contingent of very active individuals who are, for lack of a better word, really sceptical of large corporate interests.”

This mentality has put the brakes on some attempts to push Austin forward; there is perhaps no better example of this than Uber and Lyft’s experience in the city. Ridesharing companies face a fair amount of criticism at the best of times – from destroying local taxi industries and offering employees limited rights to, according to some reports, maintaining thuggish relationships with local regulators, controversy is no stranger to them. But in spite of this, almost all cities have eventually accepted that ridesharing is not going away, and have sought out a compromise.

There is a cynicism towards outside interests that attempt to dictate what Austin is and what
it can become

After launching in Austin in 2014, Uber and Lyft quickly found themselves in hot water. Austin insisted that rideshare companies be subject to the same regulation as the city’s official taxi service, including having all drivers fingerprinted. Uber and Lyft disagreed, and the fight went through to a referendum that would decide whether ridesharing should be regulated by the local government. Uber and Lyft dug in their heels and threatened to leave the city if they did not get their way. They lost, left, and have not returned.

Cantu said the fight over ridesharing was not completely about business practices, but was also about whether the people of Austin would allow themselves to be disrupted by outside interests: “There wasn’t really a substantive conversation around ‘what are those policies that we want?’ It quickly devolved into an us vs. them, little guy vs. corporate overlord dynamic, and it doesn’t have to be like that. Evolve [Austin]’s work is hoping that we can recognise that there’s room for everyone, including companies and organisations, that are looking to innovate.”

This resistance to outside interests that have the potential to change the city has made some of the challenges facing Austin increasingly acute, with little recourse to fix them. Austin’s unemployment rate is extremely low, sitting at three percent at the end of May this year. In comparison, the overall unemployment rate in the US is 4.3 percent. The city’s low unemployment figures mean that companies looking to expand in Austin need to get new people to move to the city first.

This fact is having a significant effect on house prices. Home values in Austin increased by approximately 65.5 percent between 2006 and 2016 – a figure far greater than that of anywhere else in the US. For lifelong residents of the city and people who aren’t on high salaries, this situation is very troubling.

Austin has also failed to keep up with the infrastructure demands of this new and rising number of people, particularly from a road and public transport perspective. According to Cantu: “We want [a robust public transport system] desperately, but there are a number of factors as to why we don’t have that. One of which is our state government – and our federal government, to a lesser extent – really constrained the tools that were allowed to bring in funds to invest in public transit infrastructure.”

In a worst-case scenario, the city has the potential to end up like another tech hub – San Francisco. Here, highly paid tech sector employees launch house prices skywards, while local residents are pushed out. “I think a lot of the same problems San Francisco is having, Austin is sort of just a few years behind,” Cantu said. “This sort of refusal to recognise that growth is coming, people are moving here at a daily basis of around 105 to 110 net per day – that’s a fact of life that I think a lot of people don’t necessarily want to face.”

Forward thinking
Property development and housing is one of Evolve Austin’s main focuses. The organisation is currently working towards helping design a city that has more housing options available, according to Cantu: “We’re actually in the middle of completely rewriting our land development code, and we’re promoting policies that are going to create more opportunities for housing throughout our existing footprint… It’s what we like to call ‘missing middle housing’ – so townhouses, duplexes, triplexes, accessory dwelling units, small apartment buildings. Things like that are mostly illegal throughout most of Austin, but can have a huge impact on affordability if we do it right.”

However, cynicism towards what denser housing might be comes from the same mentality that ultimately drove Uber and Lyft from the city. Cantu said this way of thinking needs to move beyond seeing housing density as a binary of either 50-storey-tall apartment blocks or family homes on large plots of land. “Most people don’t understand that it’s a spectrum. You can have density that’s contextual and that fits within the existing character of the neighbourhood.”

Cantu said the variety of organisations that have come together under the Evolve Austin banner have never really joined forces before, and so the future looks promising: “The status quo – it’s not working. We need to figure out a way to change and adapt in our own unique, Austin way, but still look towards the future and recognise that the past is the past. It’s great and we can remember it, but ultimately we need a forward-thinking, future-orientated vision for the city if we’re going to maintain our special status.”

As well as housing, infrastructure is also on the list of things to be fixed in Austin. Fortunately, the city’s current woes have come at a perfect time, considering the direction being taken by the city’s technology sector.

Niekamp said one particular area that has received growing interest from Austin businesses is the Internet of Things and smart devices – in particular, how they can contribute to smart cities. She said: “Here in Austin, I’m seeing companies that are leading that path. Silicon Labs in Austin is one of the big players inside the Internet of Things industry, and that’s creating more jobs and bringing others into Austin.”

The city’s decision to focus on the technology sector 40 years ago is now proving to be even more beneficial, as technology gradually integrates into cities and creates new ways of managing the modern urban landscape. Niekamp said this trajectory perfectly fits into Austin’s growth story: “Okay – you’ve made chips, you’ve created software, now where’s it going? And we went through mobile and apps and we still have a lot of that here, but now you’re seeing the next wave [starting] from the technology with low-power Internet of Things chips. You’re watching it fan out – the software is being created and the infrastructure is being created.”

As a location facing a multitude of infrastructure challenges across a number of fields, the opportunities for Austin companies to solve the problems on their own doorstep are enormous.

A global business hub
Throughout all these developments, Austin has stood at the forefront of the global business conference landscape. Niekamp said a large number of hotels catering to the corporate traveller have opened over the last few years, and there has also been talk of expanding the city’s convention centre.

SXSW’s shift from a purely music-based event to one that encompasses more business and technology is a sign of this. While still a music event at heart, Niekamp said the development of the technology portion has had a huge impact on its reception: “That was its focus, and the internet side was almost non-existent. It was a tiny little thing.

“So here we are, 20 years later, and it has completely flipped around, and the internet and technology side of it just continues to grow. In the last few years, we have seen health and medicine and medical devices [added to] the agenda, and so it just keeps growing. More innovative ideas keep coming in every year.”

Niekamp added that Austin’s preparations for the future have been tremendously encouraging: “The other part of it is how fast Austin has adapted to using all of this technology for the betterment of our city, of our infrastructure, and all the rest of it. So while we do have challenges, I see solutions coming up on the horizon, and they’re not too far away.”

Austin undoubtedly has its fair share of trials ahead, but the city’s expertise as a technology hub has placed it in a strong position to be an international leader in the fields of technology and design. While the solutions are not simple, Austin is the place where it can be done.