Downtown Austin is currently grappling with a surplus of office space as the post-pandemic world has reshaped working norms. With a significant 2.56 million square feet of new office space constructed and still lacking occupants, the Downtown Austin Alliance (DAA) CEO Dewitt Peart has indicated that the demand for large downtown offices has dwindled with more people working from home. Despite the lowered weekday downtown population, which stands at 63% of 2019 levels, developers and investors are reportedly not hitting the panic button yet. "The developers and the owners and the investors are not panicking at the moment," Peart told KXAN.
In a similar vein, the office vacancy rate has seen a minor uptick to 18%. However, downtown employment surged by 21% last year. Comparing the two sets of data offers a mixed picture of downtown Austin's economic landscape. Despite the contradictory nature of these figures, Austin's Mayor Kirk Watson remains unfazed by the fluctuations, stating that they are part and parcel of the dynamics within a bustling urban hub. "Some of the indicators aren't as strong as we've seen them in the past decade, but that's OK. We expect those types of fluctuations in such a vibrant, lively place," Watson said in a report by KVUE.
On the storefront side, a minor decline was reported with occupancies falling to 88% last year, from 90% the year before. The DAA's report detailed that 68 downtown businesses closed permanently in the previous year, but there was a silver lining as the count for new business openings rose sharply, with 55 new establishments planting their roots in downtown Austin. This enterprising spirit is woven into the launch of a DAA initiative that offers businesses temporary holds on vacant storefronts, offering a no-strings-attached trial to those considering a permanent downtown move. "We have groups that are creating incubator space, art is a big potential user, so having art galleries. Food establishments could test products," said Peart, highlighting the diversity of businesses this initiative is likely to attract.
Addressing public safety concerns, the report from the DAA revealed that nearly half of downtown retailers are preoccupied with the threat of theft or property damage. However, the overall crime rates have remained steady without significant increases. To bolster a sense of security, the DAA has allocated $448,520 towards an overtime initiative for the police, which ensures two additional officers patrol downtown daily. Following the success of a pilot program with overnight security at Republic Square, a full-time program will commence in fiscal year 2024-2025, designed to curb crime and disorder effectively.
