As he walked on to the stage for his 2005 “State of the City” address, then-Austin Mayor Will Wynn was thinking about making a last-minute drastic change to his speech.
Wynn, a small-scale downtown developer and former head of the Downtown Austin Alliance, was going to call for a goal of 10,000 people living in downtown Austin by 2015. Given that only about 5,000 people lived in downtown Austin in 2005, and there were only a handful of smaller residential towers sprinkled throughout the downtown area, that was a high bar to set.
But Wynn didn’t think the speech went far enough, he recalled in an interview this past week. As he looked out at the audience, he said, he decided that 25,000 people living in downtown Austin in the next decade sounded a lot better.
So that’s what he said.
Former Wynn aide Matt Curtis, who now works for vacation rental company HomeAway, said “jaws hit the ground” followed by wild applause. “People thought it was ludicrous — they thought 10,000 was crazy,” Wynn said.
That 25,000-person goal was picked up by the news media and repeated in a half-dozen American-Statesman articles in the next several years, especially when a new condominium tower was announced. It is even mentioned in the Wikipedia entry for Austin.
Now we’re at the end of 2015, and various estimates peg the current downtown residential population at around 12,000 people.
A report by Michael Knox, who works in the city’s Economic Development office, puts the number at 11,700 people in the area bounded by Lady Bird Lake, Lamar Boulevard, Interstate 35 and 11th Street. That estimate assumes about 1.5 residents per unit downtown, takes into account occupancy rates and doesn’t factor in short-term rentals.
Still, it’s safe to say the mayor fell well short of his goal. Various downtown development experts point to two main reasons: It was a high bar to begin with, and the Great Recession slowed the downtown building boom.
“It was a very ambitious goal,” said Charles Heimsath, president of Capitol Market Research. Unrealistic as it may have been, Heimsath said setting a goal “helps you marshal your resources to support actions that would move you toward that goal.” It put “everyone on notice,” Heimsath said, that the city staff and the City Council were serious about transforming downtown to a livable community with more condo and apartment towers.
Over the next four years, the pace of condo construction did dramatically pick up. There was the 240-unit Milago on Rainey Street in 2006. Two years later, another 432 units came online with the opening of the 360, the slim building off Nueces Street. And then the Spring, about a block away from Whole Foods, brought 248 units online in 2009. On the horizon were three major luxury developments: the W Hotel & Residences, the Austonian and the Four Seasons Residences.
But experts say when the recession finally hit Austin, between 2008 and 2013, both demand and supply took a big hit. It was hard for developers to get financing for their projects. “The financial markets were concerned about over-building of the condominium market and pulled back,” Heimsath said.
It was also difficult for homeowners to sell their homes and gather the necessary hefty down payments for downtown living. Mike Kennedy, a managing director for real estate firm Avison Young, said the required down payments for condos tend to be higher than for single-family homes. “All lending was shut down,” said Kennedy, who lives downtown. “You might be looking at 25 to 30 percent down. On a million-dollar condo, that’s a big chunk of change.”
Between 2011 and 2013, very few apartment and condominium towers opened in downtown Austin, which development experts say is in part a result of the recession. That’s only begun to change in the last two years, as construction cranes sprouted up to build new condo projects like Seaholm and Fifth & West. And then there’s the nearly 8,000 people who live on the outskirts of downtown, in brand-new apartments towers like the Catherine, just south of Lady Bird Lake.
If Wynn had stuck with the first version of his speech calling for 10,000 people living downtown by 2015, he could be gloating now. But considering downtown now has roughly 7,000 more residents than it did in 2005, Wynn still sees it as a victory.
“It doesn’t hurt my feelings at all that there are only 12,000 people downtown by 2015,” said Wynn, who lives in a downtown condo himself. “It’s remarkable that there is.”