The Texan city that may become America's next tech capital

Why Tesla, Oracle and others are opening up shop in Austin

A look at Google's downtown Austin office from across the Colorado River. All photos: Willy Lowry / The National

Jake Wegmann, a professor in the school of architecture at the University of Texas, in his home.

A sign in downtown Austin reads 'Keep Austin Beautiful.'

A woman freshens up a mural in downtown Austin.

Price Fallin, founder of Televet, in his office in downtown Austin.

Bryce Bencivengo, director of public relations at Austin Chamber of Commerce.

Price Fallin, founder of Televet, in his office.

Televet, an online company that helps veterinarian clinics to become automated, moved its headquarters from Oklahoma City to Austin to cash in on the city's tech status.

A new house in a leafy neighbourhood of Austin.

A house for sale in Austin.

A woman freshens up a mural in downtown Austin.

A Chuy's Tex Mex restaurant in Austin.

A jogging path in Austin.

The Texas state capitol building in Austin.

Construction is under way on a new high-rise in downtown Austin.

Oracle, one of the world's largest software companies, recently moved its headquarters to Austin.

A 'now leasing' sign hangs from an apartment complex in Austin.

A view of downtown Austin from across the Colorado River.

Austin is known for its food trucks.

A couple row down the Colorado river in Austin.

Austin City Councillor Kathie Tovo.

A newly built house in Austin.

Oracle, one of the world's largest software companies, recently moved its headquarters to Austin.

A new family home in Austin.

Austin City Hall.

The headquarters for Silicon Labs, which makes semiconductors.

The Texas State Capitol building in Austin.

The Austin skyline has grown significantly in the past decade.

The Austin skyline has grown significantly in the past decade, with major companies including Google adding to it.

As Austin becomes a tech centre, the city is fighting to retain its soul with signs such as 'We're still Austin' sprouting up.

A view across the Colorado River looking at downtown Austin.

Kayakers and paddle boarders float along the Colorado River with the Austin skyline in the background.

Paddle boarders float along the Colorado River near Barton Springs.

A mural welcomes travellers to Austin.

A food truck in downtown Austin.

An advertisement encouraging people to sell their homes directly for 'cash'.

A mural in the Barton Springs neigbourhood of Austin.

Price Fallin stares out of the window of his office at the beige dome of the Texas State Capitol Building. The view is the only hint that this budding tech entrepreneur is in Austin, Texas and not New York or San Francisco.

Exposed cinder blocks and metal vents surround Mr Fallin, whose company, TeleVet, operates from a hip communal work space in downtown Austin.

Whiteboards with furiously scribbled notes, slick computer screens and casually dressed colleagues give off a very California-esque start-up vibe.

But Mr Fallin chose not to travel to Silicon Valley to pursue his dreams. Instead, the Oklahoma City native moved 600 kilometres south to Austin, one of the fastest growing cities in the US and one that is vying for the title of America’s tech capital.

“One of the reasons we came to Austin in particular was this is a very, very pet-friendly city,” said Mr Fallin, whose company helps veterinary clinics to automate their services. “It's a tech city as well, so that's a great combination for us.”

Austin is on a winding stretch of the Colorado River, which provides a playground and a natural and easy escape from the summer heat, which can exceed 38ºC.

On a blistering June day, hundreds of paddle boarders drift aimlessly down the river, floating past immaculate glass towers owned by some of the largest companies in the world, including Google and Indeed.

Access to the outdoors was a major selling point for Mr Fallin, whose company has grown from six employees in March 2020 to more than 60.

“There's a tonne of stuff to do outdoors, which is probably the thing I'm most attracted to,” Mr Fallin told The National. “There's a lot of green trails, there's the natural pools, there's places to go out and just enjoy.”

But it’s also full of skilled, tech-oriented people and perhaps, most importantly, offers access to serious money.

In 2021, venture capital funding helped fuel 387 deals worth a city record $4.9 billion, according to Pitchbook.

“Especially when you're having investors look at different start-ups here in Austin, they see it as a great spot to do a start-up versus doing something in a different city that's a little bit smaller,” he said.

Few cities in America weathered the Covid-19 pandemic better than Austin. Its population increased more than 2 per cent in 2021 and has nearly doubled since the new millennium.

But more important than population, are jobs. By July 2021, the city had already recouped 97 per cent of jobs lost during the pandemic, according to the Austin Chamber of Commerce and the city currently has more than 90,000 job openings, which is more than the local population seeking new employment.

“That's largely because of the diversity of our employer base,” said Bryce Bencivengo, director of public relations at the Austin Chamber of Commerce. “I think we do get a lot of publicity for tech and there's a tonne of tech here, but there's also government, advanced manufacturing, even the automotive industry made huge gains.”

Midway through the pandemic, Tesla, Elon Musk's electric car company, shifted its headquarters from Palo Alto, California, to Austin. It was not the only large company to seek the conservative state’s generous tax incentives.

A Tesla Road exit sign on the Toll 130 motorway points to the new Gigafactory in Austin, Texas. AFP

Workers set up for the grand opening party at the new Tesla Giga Texas plant in Austin, Texas. AFP

Tesla's unveiling of the new factory in Austin has highlighted corporate America's growing affinity for Texas, compared with California and other states that are considered to be less tax-friendly. AFP

The parking lot at Tesla's Austin factory is packed with employees' cars. Bloomberg

The construction site of the Tesla Gigafactory in Austin, Texas, in October 2021. Reuters

A closer look at the construction site of the Tesla Gigafactory in Austin, Texas. Reuters

Elon Musk speaks at the South by Southwest Interactive festival in Austin, Texas. Reuters

Oracle, the world’s third-largest software company, opened up a sprawling new site on the city’s outskirts.

Mr Musk cited Austin’s relative affordability compared with San Francisco as a major factor in his decision making.

"It’s tough for people to afford houses and a lot of people have to come in from far away," he said during the company’s annual stockholders meeting in October 2021. "Here in Austin, our factory’s like five minutes from the airport, 15 minutes from downtown, and we’re going to create an ecological paradise here because we’re right on the Colorado River."

Indeed, relative affordability has long been one of Austin’s biggest selling points. According to the realtor site Redfin.com the median house price in Austin is $630,000, which is up significantly from pre-pandemic prices that hovered around $400,000. But it's markedly lower than San Francisco, which has an average house price of $1.52 million.

“In recent history, Austin was very affordable and still is affordable compared with the coasts of the United States,” Mr Bencivengo said.

But as house prices rise, some in the community worry, long-time residents may be pushed out.

“We had just an astonishingly rapid increase, the median house price in Austin went up by roughly $200,000 during the pandemic,” said Jake Wegmann, a professor in the school of architecture at the University of Texas, Austin, whose research focuses on housing, real estate and urban planning.

The city’s unofficial motto is “Keep Austin Weird”, an homage to its artistic and spunky history. The city is a liberal bastion in a deeply conservative state. Its left-leaning politics fuel an open, diverse city with a bustling music scene and expansive restaurant list.

But as the city expands, it’s wrestling with how to retain the spirit and affordability that has made it such a coveted place to live.

“We have to play both defence and offence to get out of this,” Mr Wegmann told The National. “The government putting more money into housing is like playing defence, to help people who can't thrive under the current system. But you also have to play offence because if you're not expanding the overall housing supply, then people are fighting over table scraps.”

It’s not just house prices. Rent has ballooned in recent years. According to rent.com, rents for one-bedroom homes in Austin more than doubled in the past year, more than any other city in the country.

“We've been looking at various ways to confront that,” said Kathie Tovo, an outgoing Austin City councillor. “Building on city-owned land is one, making sure that we're investing in affordable housing, both city sponsored housing, but also that of our non-profits, the city has, has had multiple successful bond programmes, where Austin residents have agreed to tax themselves to create housing for their neighbours.”

Ms Tovo acknowledges the city is in a tough position. “There are no easy solutions to fighting land costs,” she told The National.

She said Austin’s ability to provide “inclusionary” housing for those in need is hampered by Texas’s conservative nature and policies, which preclude some of the necessary strategies to prevent displacement.

While the city explores ways to stay affordable it continues to grow and attract new residents, the question now is, can it retain its “weird” spirit that has made it so popular.