As Austin's economic recovery from the COVID-19 pandemic rolls on, downtown continues to expand with a vibrant cultural and entertainment scene, an ever-changing skyline, and more demand for services from its growing population and workforce—all while contending with lingering challenges such as affordability and mobility.

Those findings and more are highlighted in the 2022 State of Downtown report from the Downtown Austin Alliance, which represents downtown property owners and manages improvements in the area. The organization's report on business, housing, hospitality and future planning noted that, while still contending with negative effects of COVID-19, Austin is rebounding and still outpaces many other major cities in terms of growth and vitality. Thousands of new residences and millions more square feet of commercial space are now in the downtown development pipeline, as dozens of smaller businesses and venues also bounce back.

"The year 2021 reminded us that all the best parts of Austin are found in downtown. Whether it’s parks and open spaces offering respite and recreation, a vibrant and interactive nightlife, or the ever-changing skyline, Austin is amplified by its downtown. It’s the heartbeat and pulse of this thriving region," Dewitt Peart, Downtown Alliance president and CEO, said in the report. "Downtown is growing rapidly, and several upcoming opportunities highlight how important people-centric placemaking is to ensure this growth is realized without changing that feeling."

Downtown Austin is welcoming more people and new development within the Central Business District, and as of this year is home to an estimated 13,648 residents and more than 106,000 employees—particularly in professional and technical services. The new report also identified the downtown activity sector as a contributor to Austin's shift to an "18-hour" city atmosphere with events and amenities running throughout the day and night, which attract more than 5.1 million visitors each year.

Despite a dip in downtown visits and hotel stays due to COVID-19, those numbers are trending upward, and the hospitality sector is pushing ahead on expansion for future tourism growth. More than 1,000 new hotel rooms are expected to be added downtown over the next few years, adding to the more than 13,000 now on the ground.


Business and development

Day-to-day business activity also continues to surge, according to the new report. After experiencing a downturn through the past two-plus years, both employment and development are recovering. And while statistics such as daily foot traffic and active office space use remain below pre-pandemic levels, those metrics are rising as well.

Austin's college-educated workforce downtown has grown by nearly 270,000 in the past decade, and major employers continue to draw new talent to the area—and require new facilities for them. Commercial construction downtown remains on a steady uptick with more than 2.16 million square feet of new construction underway, building on an estimated 19.52 million square feet of existing office space as of late 2021.

On the residential side, even more housing is on the way with an estimated 5,968 apartments and 1,595 condominiums now either under construction or in planning as the area attracts more full-time residents. Downtown is already dotted with nearly 5,900 multifamily spaces and 4,300 condos.


"The demand to live or work downtown has pushed the size and scale of real estate developments to new heights," the report stated.

That demand has also come with affordability concerns as asking rents spiked, an issue that continues to confront residents across town—but that also signals the market's overall strength, according to the alliance.

"People live, work and entertain themselves all within a half-mile of where they live. Which is a trend, honestly, most cities would like to be seeing," Peart said in an April interview.

Downtown's storefronts took a big hit as a result of COVID-19, although recovery in that space is also underway. Amid downturns in COVID-19 cases and increased vaccination rates, the organization tracked 60 total new storefronts that have opened downtown as of February. Those additions include 29 new eateries, 19 bar or entertainment venues, and 12 retail spaces.

Those gains come after the alliance confirmed the closures of nearly 90 retail spaces and identified dozens more vacancies last year, with between 20%-25% of all storefronts there closing from 2020 into early 2021.

In the nightlife sector, business also jumped beginning last spring across downtown's four main entertainment districts with increasing visitation and alcohol receipts tracked along Rainey Street, West Sixth Street, East Sixth Street and in the Red River Cultural District. More than 70% of businesses and venues in those areas are now in operation with several new additions now in place.


Looking ahead

While it still experiences fallout from the pandemic, the alliance's report outlines a Central Business District that is poised to grow for years to come. With its development and population boom well underway, Peart said planning for infrastructure and an influx of new residents must also be a priority for stakeholders.

"As the region flourishes, the demand for transportation connections and well-maintained park space continue to grow. Major infrastructure investments such as Austin Transit Partnership’s Project Connect will link downtown to the rest of the city. ... Also, the official funding of the $4.9 billion Capital Express Project will offer us a once-in-a-lifetime opportunity to lower the central-city highway and connect our city like never before," Peart wrote. "These and other initiatives will transform downtown for generations to come."

Peart previously told Community Impact Newspaper that the current pace of new development will "conservatively" double downtown's skyline, population and hotel room count in the next decade. Alongside that comes a need for a doubling of infrastructure, including Project Connect and a redesign of I-35, and considerations for retaining longtime residents and workers who may be priced out—which transit systems, local amenities and public safety could play into.


Peart also said he believes Austin is well-positioned to withstand possible recession conditions in the immediate future while growth continues, although downtown's prospects amid any more significant and longer-term downturn remains uncertain.

"The advantage that we have is we continue to have tech companies moving here. We have tremendous university systems that are churning out really great talent. I think the answer to workforce shortages globally is more technology. And so I think Austin is positioned that way," Peart said. "What would concern me a little bit more is you’re beginning to hear economists talk about a depression in 2030. So if I were a betting person, that’s where my focus would be, would be the year 2030 and beyond. ... The cycle that we’re in, what we see in the pipeline, easily continues for the next eight years.”