Dramatic changes are coming to South Congress Avenue, setting up a transformation that some Austinites say threatens the funky fabric of one of the city’s best-known destinations.
A wave of upscale shops, restaurants, offices and boutique hotels is headed to the area — displacing some of the homegrown businesses that many patrons and merchants say have given South Congress the eclectic character that has become synonymous with the city’s identity.
The new development is being driven by market forces that include rising property values and higher rents as the area has grown ever more popular with tourists.
Two mixed-use projects and two high-end hotels are among the planned projects that signal more change for a street that within a few decades has transformed from a seedy red-light district into a mix of mostly local shops, music venues, hotels and restaurants that have helped give Austin its “weird” vibe.
The next stage of evolution is raising questions about whether South Congress can stay true to its roots or whether it will morph into a homogeneous row of high-end national chains.
Numerous mom-and-pop businesses have come and gone since 2000 as rents have continued to rise and developers have bought up properties to build new, pricier projects.
“The whole feel of that street is definitely changing,” said Steve Wertheimer, owner of the Continental Club, a landmark music venue on South Congress for decades. “I hear a sucking sound every day with the soul being slowly drained out of this area. The local folks, who made this street so attractive by breathing new life back in the area, are having a difficult time remaining here. Increasing rents and taxes, along with (parking issues) are taking a toll on merchants’ bottom lines and their livelihoods.”
Those concerns are shared by Jimmy Haddox and Eric Massey, who opened Wet Salon on South Congress 17 years ago. Soon, it will be torn down to make way for a mixed-use project. Haddox said Wet will move to another site farther south on Congress.
The investors setting their sights on the area, Haddox said, “will lose the funky and fun integrity of South Congress once they drive the small businesses out.”
Inez Escamilla owns Ignite Fitnez, a fitness center on South Congress that, along with several other businesses, is being displaced by a planned mixed-use project.
“I just feel like everything that has made Congress hip and funky is going to be gone,” said Escamilla, who will move her gym to a new project being built on St. Elmo Road south of Ben White Boulevard.
Decades of change
The ongoing wave of change on South Congress is just the latest evolution for the avenue.
During the 1920s and 1930s, South Congress was a major highway into Austin, and the thoroughfare became home to dozens of tourist stops, diners and service stations.
In the 1960s, many of the motor courts closed or fell into disrepair. By the mid-1980s – when Guero’s Taco Bar was still a feed store and the now swank Hotel San José was a run-down flophouse – prostitutes and drug dealers were as likely to stroll the avenue as shoppers. There was even an adult movie theater into the 1990s.
If the 1980s were a low point for the avenue, the 1990s marked the beginning of its renaissance. Secondhand stores and vintage shops moved in, drawn by affordable rent, and the area became a magnet for out-of-towners in search of the Austin experience.
In recent years, the transformation continued, with shopping and dining becoming more upscale, boutique hotels opening and trendy national retailers moving in.
Today, the district has something for everyone: The Continental Club, one of the city’s top live music venues; casual and fine dining; high-end fashion and jewelry stores; vintage apparel; antiques and rare books; a soda fountain and old-time confections; novelty toys; folk art and curios from around the globe. You’ll also find a store with every costume imaginable, from the Addams family to Zorro.
Now, an influx of planned projects will further expand the avenue’s offerings. The list includes:
• A mixed-use project including retail, office and restaurant space on South Congress just north of Academy Drive. Several local businesses, including Doc’s Motorworks and Wet Salon, will be torn down to make way for the development. A number of the businesses, including Wet, Texas National Outfitters, Ignite Fitnez and Parts & Labour, have already found new homes on South Congress or elsewhere.
• Saint Vincent, a new three-story project with shops and offices at the former St. Vincent de Paul thrift shop site at South Congress Avenue and East Gibson Street.
• Kimber Modern, a 34-room hotel that will include retail, event space and parking, being developed on Elizabeth Street, behind Guero’s Taco Bar. Rob Lippincott, who co-owns Guero’s, also owns the hotel site.
• Hotel Magdalena, an upscale 89-room hotel at Academy Drive and Music Lane, which will include a restaurant, bar and event space. It’s being launched by hotelier Liz Lambert, who also operates the nearby Hotel San José, Hotel St. Cecilia and the Austin Motel.
Lambert says she wonders about the future of South Congress.
“I don’t know if the block will be able to retain the unique identity it has had until now, I don’t think anyone does,” said Lambert, who also owns the neighboring Jo’s Coffee known for its “i love you so much” mural. “It’s also possible that its identity evolves in a good way. I don’t think change is inherently bad.”
“Obviously some of the future is determined by the real estate market, and that concerns people because we don’t always know who the new people are who are coming in,” Lambert said. “Coming from a company that’s been in this area for close to two decades, I think the most important thing we can do is talk about change, to explore what elements of it are inevitable and what elements we can influence.”
Rising rents, scattering tenants
As the South Congress area has gentrified, it has become more expensive to own or rent commercial property there.
Rising rents are leading to departures of some longtime residents, including Hill Country Weavers, a yarn and fiber arts shop that occupied two bungalows at South Congress and East Milton Street for 22 years.
“The building sold, and my rent was going to triple,” said owner Suzanne Middlebrooks, who recently moved the business to a larger space on Manchaca Road. “I love South Congress – it’s a very creative, inspiring place. But as the rents go up as they are, you need some deep pockets to make sense of it. It’s really hard for a small local business to make it work.”
Matt Green, a local developer, said some rents in the area are topping $60 per square foot. Green, managing partner in Austin for the Kor Group, is developing the planned Saint Vincent mixed-use project on South Congress.
Wertheimer has witnessed the avenue’s evolution for 30 years and experienced its escalating rents and property values firsthand.
“Unless you are an owner-occupant or have a friendly and very understanding landlord, it’s going to be really difficult for someone local, in the vein of the type of businesses that have been on South Congress all these years, to survive,” Wertheimer said.
Wertheimer said his property value soared nearly 40 percent from 2015 to 2016 and his property taxes jumped almost 35 percent, rising to $10,294 from $7,634 in 2015.
Wertheimer leased the Continental Club, now a historic landmark, for a decade before buying it 20 years ago. He said he purchased it for $200,000, “and I thought I’d overpaid.” The property was valued at $425,735 last year by the Travis Central Appraisal District.
Asked if he would ever consider selling the Continental Club, he said: “There’s nothing that would make me even think about it. It’s precious to me. So much of the fabric of what I fell in love with in this town is disappearing. South Congress to me was the last vestige of what Austin used to look like. I cannot imagine that street without a Continental Club down there. I’m trying to save what I can save.”
Making it work
Blair Helgren shares a similar view of South Congress. His family has owned businesses on South Congress Avenue since the mid-1920s, when his great-grandfather opened a barber shop.
His grandfather and brother later opened a hardware and paint store, and eventually the family bought the entire block of 1700 South Congress. Today, the block is home to local retailers including Farm to Market Grocery, Big Top Candy Shop, Avenue Barbershop and Monkey See, Monkey Do.
“I’m a fourth generation, and we have seen the changes firsthand. In the mid-’80s to the mid-’90s there were spaces on the block I could not lease, and we had problems with prostitutes and drug dealers all the way through the ’90s,” he said.
Today, Helgren faces a different challenge: “How do we keep the local culture? We’re not interested in any type of tear down or redevelopment. But as property taxes increase, that’s the hardest thing — finding the right balance to be able to have a local and eclectic tenant that can pay the rental rate. We’re doing our best to make that happen.”
When Helgren’s longtime tenant antique store Off the Wall decided late last year to close its storefront, Helgren said national chains were interested in the space.
But he said he opted to charge lower rent to enable local artisan boutique Parts & Labour, which is being displaced by a new South Congress development, to take the space.
“We were blindsided when we learned our space was being torn down,” said Lizelle Villalpando, Parts & Labour co-owner. Helgren, she said, worked with Parts & Labour to make the move work.
“He told me, ‘I want to do everything I can to keep South Congress the South Congress that we love,’” said Villalpando, who is relocating the store in March. “It was the best possible thing that could have happened to us.”
Will the vibe survive?
Despite the ongoing changes, some South Congress business owners say they are optimistic their neighborhood can weather the next stage without losing its character.
“I do love the funky, keep-it-weird street South Congress is, but it seems change, gentrification and maturation is inevitable,” said Alan Lazarus, co-owner of Vespaio and Enoteca restaurants on the avenue. “I don’t think things can ever stay the same. It’s just evolving into something else, but that’s not necessarily a bad thing. It’s maturing.”
Lazarus was a pioneer on South Congress when he and two partners opened Vespaio 18 years ago.
The changes taking place now on South Congress are part of a natural evolution in a growing city like Austin, Lazarus said — and a boost for its economy and tax base. Through the years, Vespaio and its sister restaurant have made a livelihood for hundreds of employees, he said.
In addition, 40 South Congress businesses alone generated $731,521 last year in property tax revenue for the city and county, according to the Travis Central Appraisal District. That’s an increase of 114.7 percent from five years ago, and a 400 percent increase from a decade ago, based on appraisal district values for those properties in 2011 and 2006 respectively.
Brandon Hodge, president of the South Congress Merchants Association, said the avenue’s future is promising, and said that despite changes over time, it has largely kept its local character and flavor.
“We tend to get concerned over short-term changes, but when you step back and look at South Congress as a whole, it is overwhelmingly composed of locally owned businesses. I think you can still count the chains on one hand,” Hodge said. Hodge owns a novelty/toy store — Monkey See, Monkey Do — and Big Top Candy Shop on South Congress.
Hodge said the “unique collaboration” of businesses on South Congress will “continue fighting to maintain that funky flavor that we all established together.”
Shoppers who frequent South Congress are hopeful Hodge is right, and that the vibe will live on.
On a recent weekday afternoon, a steady stream of passers-by paused to snap photos in front of the “i love you so much’ mural outside Jo’s Coffee.
“The locals will keep it funky,” said Mary Pat Wehmeyer, 21, a native Austinite. “People are moving here for the funkiness and quirkiness.”
Taylor Bensel, 21, visiting from New Orleans, said it was the local businesses that stood out to her.
“Of all the places I’ve seen, I’m not going to remember the chains,” Bensel said. “I’m going to remember Uncommon Objects and the ‘Austiny’ places. Nobody wants chains. People like it weird.”