Austin's economic future remains bright despite bleak recession, reports say
The bleak pandemic recession has failed to derail the national buzz surrounding Austin. No less than three recent reports tout, in some form or fashion, the power of the city's economy.
Silicon Valley Bank ranks Austin the second best place in the U.S. for tech workers in San Francisco and New York City who are seeking to move. Raleigh, North Carolina, takes the top spot. The bank based its list on six factors: rent, cost of living, corporate tax rate, price per square foot for office space, state income tax, and access to talent.
Meanwhile, a report from professional services firm PwC and the nonprofit Urban Land Institute (ULI) puts Austin at No. 2 among the top 10 U.S. real estate investment markets for 2021. Only Raleigh-Durham, North Carolina, ranks higher. The forecast from PwC and ULI highlights Austin as one of four metro areas with “less exposure to the industries most affected by COVID-19” and with “pro-growth governments.”
The report also assigns Austin to a group of 10 vibrant “18-hour cities.”
“The 18-hour cities are popular in-migration destinations due to lifestyle, culture, and employment opportunities. They are not necessarily inexpensive markets but are more affordable than the establishment markets, from which they draw many newcomers,” the PwC-ULI report says.
Finally, commercial real estate services giant CBRE ranks Austin third for growth in tech jobs in 2018 and 2019, at a rate of 22.9 percent. Austin was bested only by Vancouver, British Columbia (29 percent), and San Francisco (27 percent).
Erin Morales, senior vice president in the Austin office of CBRE, says Austin has benefited from impressive growth in the tech workforce, yet local office rents are rising at a relatively modest rate.
“As it relates to COVID-19, we do expect to see a correction of rent growth that has occurred over the last decade, primarily resulting from an uptick of sublease space on the market,” Morales says in a release. “However, with Austin’s position as a strong, diversified tech market and continued interest from corporate tech users, the market is poised to recover rapidly and continue with its long-term growth.”
Indeed, the Austin area’s September unemployment rate (6.4 percent) was the lowest among the major metros in Texas, according to the U.S. Bureau of Labor Statistics. The statewide jobless rate was 8.3 percent, and the nationwide jobless rate was 7.7 percent.
Further evidence of the strength of the local job market: The region’s 2.5 percent decline in jobs from September 2019 to September 2020 made it the best-performing place among the country’s 50 biggest metro areas. The 49 other metros saw steeper year-over-year drops in jobs, according to the Greater Austin Chamber of Commerce.
To be sure, the pandemic recession has produced economic pain in Austin. Thousands of people remain out of work, and scores of local businesses have shuttered for good. Yet Austin’s prospects look good. For example, Moody’s Analytics in May rated Austin as one of the top five major U.S. metros best prepared to bounce back from the recession.
This summer, local economist Angelos Angelou offered what the Austin Business Journal called “a glimmer of home” for the city, citing its ability to attract the new $1 billion Apple campus, the new $1.1 billion Tesla factory, and other corporate projects.
“The long-term resiliency of the local economy remains very strong. This dynamic positions Austin among a handful of cities in the U.S. for a quick-recovery growth and when the pandemic is placed under control,” Angelou told the ABJ.