Bucking the Pandemic, Austin Is ‘the Hottest Market in the Country’

The Texas city is a hot spot for commercial real estate investment and a magnet for corporations looking to move to a high-tech hub.

By David Montgomery

AUSTIN, Texas — In March 2020, the outlook in Austin was bleak after the pandemic forced business closures, lockdown orders and the cancellation of South by Southwest, the annual festival that brings in millions of dollars for the city.

A year later, optimism has replaced despair. Across the nation, the coronavirus remains a threat and empty office buildings and restaurants have hampered growth, but Austin, the Texas capital, has emerged as a hot spot for commercial real estate investment and a magnet for out-of-state corporate relocations that are strengthening its allure as a center of high-tech industry.

“It’s the hottest market in the country right now,” said Mike McDonald, vice chairman at Cushman & Wakefield who represents pension funds, insurance companies and real estate investment trusts. “Millennials are moving to the Sun Belt and companies are following the millennials. Investors are following the companies.”

The city has become the No. 1 destination in the United States for potential commercial real estate investment, according to the CBRE Group, a national real estate services and investment firm. It displaced Greater Los Angeles as the most preferred market for 2021 because of the resilience in its labor market and an outlook for steady growth, according to an investor survey that CBRE will release this week.

A record 21,864 jobs were attributed to businesses either expanding or relocating to Austin in 2020, according to a report released in January by the Austin Chamber of Commerce.

The city’s prosperity is part of a broad economic wave that has spread across parts of the Sun Belt. The Dallas-Fort Worth area, which ranked No. 2 on CBRE’s investment survey, has also been high on the list of urban centers that have seen stability during the pandemic.

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