‘Startup City’: Accelerated Growth Strains Austin

AUSTIN, Texas – A few years ago, a few streets on South Congress Avenue in Austin were home to a wax museum and comic book store, a bar that sold tacos for $1, a car repair shop and, in season, Santa on horseback.

Then came, as in many other places in Austin, the construction cranes.

These neighbourhoods have recently accommodated modern city buildings with shops selling national brands of


to the spirits of Labeau. The Soho House private club and Hermes store, worth over $2,000, are on their way. Office tenants include accounting and consulting firm Deloitte and private equity firm Tritim Partners LLC.

Project developer,

Andrew Goblon,

said he saw a need for national luxury brands in a country with a growing number of top executives. At the following address:

Brad Somers,

Director of Twomey Auto Works, who worked there for 28 years before the end of the rental agreement, it was another reminder that some old Austrians can no longer afford to own their own town.

It hurts me to go on, he says.

In the years of rapid growth and popularity, Austin struggled to preserve its own culture, which not only attracted money and energy to the city, but also led to rising rents and traffic jams.

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The development of Music Lane is one of the projects taking shape on South Congress Avenue in Austin.


Bronte Wittpenn for the Wall Street Journal.

But the pace of change is accelerating as companies and employees move remotely to what they see as the next technology center, sometimes fleeing California. Austin’s a gate town, he says.

J.D. Ross,

General partner of Atomic, a venture capital firm that moved from the San Francisco Bay Area to Austin just over a month ago. Things are changing fast. The airport adds a new gate every year.

Austin is now one of the fastest growing cities in the United States, with a population of nearly one million, up from 675,000 in 2000.

Oracle Corporation.

is the last company to announce the move of its headquarters to Austin, after a series of software and venture capital firms in recent months. A

Apple Inc.

Campus and

Tesla Inc.

The factory will be built on the north and south side of the city.

Elon Musk

recently confirmed that he moved to Texas, too.

Government. Greg Abbott.

stated that he expected Tesla’s presence in the area to eventually be much greater. He said he talked to Mr. Musk about moving Tesla’s headquarters to Texas.

The pandemic was also the catalyst for the move to Austin. Some New Yorkers and San Franciscans who now work remotely have come for the low rents, the good bars and the warm atmosphere all year round. According to LinkedIn, the Austin metropolitan area has the highest ratio of arrivals and departures between April and October.

The arrival of these people gave a boost to the economy as local businesses struggled with the consequences of the pandemic. But they all bring the same high costs and traffic jams to the city as where they come from.

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Alex Caceres trims Brad Tegeler’s beard at the Avenue Barber Shop, which has been located at the South Congress in Austin since 1933.


Bronte Wittpenn for the Wall Street Journal.

These questions are not new. It’s been 20 years since the slogan Keep Austin Weird was introduced in a city that was once home to university professors, civil servants, musicians and lots of beer. Other cities that are experiencing rapid growth and an influx of Californian money, such as Portland, Oregon and Boise, Idaho, are also trying to maintain the local color and affordability.

But what’s happening in Austin now is part of an accelerated schedule. The prospect of transforming a once tranquil city into an overcrowded and ultra-modular San Francisco has sparked intense political debates about zoning, density, transportation, and the city’s social programs.

Many technology managers and employees say clusters are good for innovation, and they wanted to settle in Austin because others did too. Some newcomers say they want to live in a city with a socially progressive reputation, but they also appreciate the limited regulations and the absence of a state tax.

City and state leaders, often at odds with each other, celebrated the influx of people to Austin by arguing over the policies that had caused the influx.

Abbott noted that large companies have moved or plan to move to other cities in Texas, for example. B.


Enterprise Co. recently announced it’s moving its headquarters to Houston. The Republican governor praised the state’s economic policy. Regulation discourages innovation, he said. The leaders of these organizations don’t come to Austin for social-liberal reasons.

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The silhouette of the city has grown, as shown by photos from the Austin City Limits music festival in September 2007 and October 2019.


Getty Images (2)

Mayor of Austin

Steve Adler.

said urban values are well suited to young shoots. It is a progressive social place and truly entrepreneurial, innovative, creative and hospitable. A risk-tolerant place, where it is normal to be different, said the mayor, a Democrat. Adler said he moved to the city in the late 1970s to attend the University of Texas because it was the most appropriate law school for him.

According to census data, more people from other parts of Texas have moved to Austin in recent years than from other states. The city is relatively young, with many families and children. Nevertheless, the influx from Silicon Valley in particular has attracted the attention of the local population.

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Austin Mayor Steve Adler, seen in January 2020, said Texas values make the city a natural place for start-ups.


Bob Demmrich/CUMA PRESS

Charlotte Sanders,

Real estate agent Kuper Sotheby’s International Realty said more than half of the homes she has worked on in the past six months have been sold to Californians. She says she gets one or two new clients every week from California, including hedge fund managers, technicians and celebrities, and now the people of Oracle are joining her.

Patrick McKenna,

a technology investor, moved from San Francisco to Austin last year to be closer to the next wave of start-ups. He dreamed of moving from an apartment to a house with a swimming pool, within walking distance of shops and restaurants.

He bet on two houses and lost. A quarter of an hour later, after visiting another house, he spoke to his real estate agent. I said: This house was sold today, he remembers. She says: This house will be sold within the hour.

He made an offer on the spot: $1.3 million, all cash, for a 2,500-square-foot house, and was ready to close in seven days. He’s got the house. He said there were 12 deputies.

Many old Austin residents find it difficult to stay in their homes, especially in the eastern part of the city where traditionally black and Latino families live. Popular pubs, apartment complexes and expensive converted houses soon came close. Austin is one of the most economically segregated cities in the country, according to an analysis in 2015 by the Martin Prosperity Institute, then part of the University of Toronto.

Elsewhere in Texas, too, there are gentrified neighborhoods and families facing displacement, but what’s unique to Austin is the speed at which it happens, he said.

Heather Way,

a professor at the University of Texas who grew up nearby and co-authored a study on gentrification in the city in 2018.

Many believe the solution lies in more housing and better transportation, arguing that Austin was not built for what it is today. Last year, after years of political battles over the city’s housing code in 1984, city councillors approved a stricter update.

Greg Anderson,

The community director of Austin Habitat for Humanity, a non-profit organization that advocates affordable housing, promised he would not get a haircut until renovations were completed. He’s involved in another lawsuit. Mr. Anderson’s hair up to his upper back.

His personal strike is unusual, but his passion for rewriting housing laws is not. City planners and housing enthusiasts like him see big changes in capital improvement – more types of housing, higher densities and extra units in houses – as a way to save the city from growing unaffordability.

They say they are trying to avoid the mistakes of San Francisco, which has become so expensive in part because it has made the construction of homes so difficult. Opponents of rewriting the code see it as a threat to individual housing and an acceleration of the development that is changing the city.

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San Francisco Housing Value Index*.

Percentage change compared to last year

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San Francisco Housing Value Index*.

Percentage change compared to last year

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San Francisco Housing Value Index*.

Percentage change compared to last year

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San Francisco Housing Value Index*.

Percentage change compared to last year

Austin has many new homes, in fact more per 1,000 people than any other American city except Washington, D.C., according to

Barbara Byrne Denham,

Senior economist at Moody’s Analytics REIS.

This has not been enough to meet demand, and many of them are for people on high incomes. Texas law does not allow zoning that imposes a certain percentage of new development on low-income residents. Austin proposes an exemption from some restrictions to encourage developers to add such devices, but these are still missing.

This year, the pace of change in Austin has contributed to a change in residents’ attitudes to public transport. Despite years of complaints about traffic congestion and frustration about the need for newcomers to buy cars, voters have twice rejected proposals to build trams, in 2000 and 2014.

Some people did not want to urbanis the city and preferred to spend the money on roads. Or they feared that public transport would encourage more people to come to Austin.

But in November, voters overwhelmingly approved a permanent increase in property tax to fund a $7.1 billion public transport plan that would see the construction of three rail lines, one of which would run through the core of the city through a tunnel.

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Many construction cranes look out over the once sleepy Austin.


Bronte Wittpenn for the Wall Street Journal.

Mark Littlefield,

the political advisor and researcher who worked on the proposal said growing congestion has convinced some voters. He added that the track is also intergenerational and changeable.

Unless you’re in your 40s, you’re more likely to support him, he said. The city has changed since [previous attempts]. The city’s younger now.

Austin, who has proclaimed himself world capital of live music, has also suffered the loss of musicians and stages, many of whom were unable to survive rising rents.

Rebecca Reynolds,

an Austrian who heads the Austin Music Venues Alliance, said that the city was surprised by the speed of growth and what it means for the concert halls.

She is optimistic that the promoters are beginning to take an interest in saving the city’s famous music scene. After working with them for years, she says she is hearing more and more about how keeping Austin’s music venues open can be beneficial for development.

What happened in San Francisco with the technology boom, no one saw until it was too late and no one watched what happened to our history and culture. Mrs. Reynolds. But we’ve done the work, and there’s an agreement.

Charles Milligan,

The owner of Docks Backyard Grill, once located in the Southern Congress district where Soho House is now located, felt a change in the city’s development. He grew up in Austin, a place his parents moved to in 1973 after his father retired because it was cheap. His house was worth $27,000. He recently saw it back on the market for over $500,000.

South Congress Dock’s rent from 2005 to 2016 was approximately $30 per square foot per month, plus property taxes, building insurance and maintenance, which were passed on to tenants. Rents in the area are now about $110 per square foot, he says – well out of reach for a communal picnic table and a shuffleboard that serves three Lone Star pulls picks.

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Good change in Austin or bad change? Take part in the discussion below.

Doc had a second location in the north of town, but that too got too expensive, and Mr. Milligan closed it last year. The bar is now outside the city, on the south side, where it tends to attract a family crowd. He lives in the northern suburbs and drives through the city on his way to and from work.

Mr. Milligan said he would like to return to a location closer to the city to attract regular pedestrian traffic, but he does not know if he will find another location. The new development bothers him, but it’s part of the city, he says.

I don’t want to be a grumpy old man, Mr. Milligan, 53. Maybe it’s not cool for me, but I’m sure my daughter sees it that way at school. She can’t afford it, but I bet she thinks it’s cool.

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Tesla Factory Construction Site in Austin. Governor Greg Abbott said he expected Tesla’s presence in the area to eventually be much greater.


Bronte Wittpenn/Bloomberg News

Email Elizabeth Findell at [email protected] and Conrad Putzier at [email protected].

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