Since the pandemic, more people are working from home than ever before, leaving many offices in downtown Austin vacant. Now, city leaders and developers are trying to figure out what to do with that empty space to keep the area from becoming a graveyard.
Office vacancies in Austin are at an all-time high, according to a report from real estate adviser CBRE. Jenell Moffett, chief impact officer with the Downtown Austin Alliance, estimates between 20% and 25% of office buildings downtown are vacant.
“There has just been a lot of supply that has been delivered to the market and downtown," she said. "And while leasing continues, these major organizations and corporations are taking up less space.”
Fewer people working downtown means fewer people getting coffee or going out to lunch. As foot traffic has slowed, Moffett said, restaurants, coffee shops and even parking garages have had to adapt to when people are still around — at night and on the weekends.
“What we’ve seen in response ... is some of the businesses – the composition of the businesses – have changed," she said. "Now we might see less coffee shops and more nighttime venues or larger-scale restaurants, more destination-type eateries and things of that nature.”
Catering to that crowd has been a priority, Moffett said.
Mike DeBonville said when he opened Marlow Bar on Sixth Street in 2023 he took into account the shift in office work culture and the need to serve tourists and people on business trips.
"If people are going to hang out together, do a quick little happy hour or quick little meeting from their office before they go home for the day, they are going to want to do so some time between 3 p.m. and 6 p.m," he said. "So that definitely played a role in how we [set our hours].”
The number of office vacancies is expected to continue throughout at least next year as businesses make decisions about what their office space needs are, Moffett said. The concept of the traditional office may never make a full recovery, she said, so the city and developers are going to have to get creative to keep downtown vibrant and alive.
The Downtown Austin Alliance launched a program last year that lets members of the community temporarily rent an open space. That could mean using it for pop-up shops, artisan markets, small businesses and even community events.
"It's really exciting to be able to solve a space problem, or to be able to innovate in a way where we are solving the largest cost, which is real estate cost for any business, to be able to locate downtown," Moffett said.
The goal is to expand the program and bring in more developers and business owners to create diverse spaces.
State lawmakers could also be getting involved. Legislation has been filed that would allow property owners in the state's largest cities to convert office space into residencies by essentially easing zoning rules.
As downtown transforms, Amanda Mullen, who works with property development company AMLI, said the secret sauce might just be developing with multipurpose in mind.
“I do think that the buildings that are incorporating all of the different things – residential, retail, gym facilities that are open to the public, stuff like that, I think is going to become more and more popular," she said.
Austin City Council passed a resolution this month establishing the Downtown Austin Strategic Initiative to help ensure the city is being smart about its resources, especially with the convention center expansion, light-rail project and I-35 widening expected to turn the area into a construction zone.
Council Member Zo Qadri said the initiative will be vital in helping the city navigate and address the challenges and disruptions downtown is about to face.
"A vibrant, well-planned downtown, one that prioritizes mixed-use development and improved public spaces, that drives business success and brings people of all backgrounds into the heart of the city is a downtown that I want to live in and that I want the city to have," he said.
