In just three decades Austin has enjoyed three giddy economic peaks followed by three economic hangovers. Is this any way to build lasting prosperity?
A quick history lesson: A large room was packed with lawyers, real estate investors, and bankers, and all eyes were on U.S. Representative J.J. “Jake” Pickle. It was early 1990. Austin’s economy had been brought to its knees by a real estate bust in the high-growth eighties that makes today’s local economic slowdown seem puny by comparison. The “D” word—Depression—was on everyone’s mind and some even dared to say it out loud.
The congressman did his best to calm the fears, but there were still rough times to work through. Too many pieces of land had been flipped by buyers who grabbed it and quickly scouted around for a bigger fool who would pay even more. Commercial lending had been too generous. Speculation had run rampant. The piper had to be paid.
The federal government had stepped in to close banks and savings and loan associations on a grand scale. Federal laws had established new agencies to take over foreclosed real estate and find ways to liquidate it.
The population boom of the mid-eighties had ground to a trickle. In 1990 Austin even lost jobs—something this city had never seen before, according to historical census records. No longer were highways clogged with big rigs hauling construction equipment and building supplies, or dump trucks hauling road-building materials. New subdivisions, platted and permitted in boom times, were chockablock with empty houses built for new arrivals who failed to show up. But those houses were mostly located in out of the way places. Perhaps the most highly visible indicator of those bad times were the see-through vacant office buildings, which everywhere dotted the major highways.
We eventually rode out that bust and slowly, agonizingly slowly, the economy clawed its way out of the basement and began breaking for light. Population growth peaked at an amazing 8.1 percent in 1998—when Austin added nearly 46,000 people in a single year. A new phenomenon had seized our imagination as the dot-com splurge of venture capitalists betting on startup Internet schemes ushered in another boom. In the name of team-building and to attract bright people, companies flew their entire workforce to exotic locations. Then the dot-com bubble burst as many of these startups came crashing down. Once again the cratering of high-flyers put the brakes on population growth.
Flash forward to today. Not that it’s any solace, but at least this time around the slowdown in Austin’s economy wasn’t brought on by overly speculative lending on the local level or excessive exuberance among venture capitalists chasing the next big thing. The financial crisis is pretty much worldwide; it started elsewhere and it will have to cleaned up elsewhere. In the big picture, Austin’s predicament is just collateral damage.
Saturday’s article in the Austin American-Statesman “Are Commercial Failures a Trend?” detailed the sudden surge in foreclosures of high-dollar commercial properties, as well as some residential developments, all slated to go on the auction block on May 4. We can only hope that this is not a harbinger of more see-through office buildings. I’m inclined to think not, given recent successes in recruiting several high-profile companies that will help fill some of those empty office buildings.
Still, I wonder: is it possible for Austin to follow a more sober path of steady growth in the future? Can we learn from the past, or are we doomed to repeat it?
What do you think? Leave a comment to continue the conversation.