Austin had been ranked as a great place to live for several years, however, the city recently dropped out of the top 10 most populous U.S. cities, according to the U.S. Census Bureau. But, don’t count Austin out of the game just yet. For one thing, it is only 6,000 people less than No. 10 (Jacksonville, Florida).
While people or headquarter relocations aren’t moving to Austin at the pace they were in recent years, the city is not shrinking. Tesla is here now; Samsung is expanding with the new Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, which the U.S. Department of Commerce recently awarded the tech giant $6.4 billion to build leading-edge logic, R&D and advanced packaging fabs outside of Austin in Taylor. There are plenty of reasons to keep an eye on Central Texas and the greater Austin area. So, how do we determine what’s next for the region?
Commercial real estate giant CBRE ranked Austin as the No. 3 emerging cluster for life sciences, biotechnology and life science research across Texas. Merck recently established an Austin office to redefine health care with digital innovation and acquired Dallas-based cancer drug developer Peloton Therapeutics for $2.2 billion, according to the Texas Economic Development Corporation.
In the summer of 2023, the University of Texas System Board of Regents announced plans for the University of Texas at Austin Medical Center, which started with two new hospital towers for the University of Texas MD Anderson Cancer Center and a UT Austin hospital. MD Anderson, the nation’s No. 1 cancer hospital, will expand its Houston footprint to Austin by building and operating a new, comprehensive cancer center, while UT Austin will build and operate its new specialty hospital.
This will accelerate and expand UT Austin’s burgeoning medical district into a world-class academic medical center for education, research and patient care. The total investment for these projects is estimated at $2.5 billion.
These facilities are planned to be built on the former site of UT Austin’s Erwin Center, which was demolished in May, near UT’s Dell Medical School. Construction start is anticipated for 2026.
Opportunity Austin is an economic development group focused on growing the life sciences industry in the region. The recently implemented Austin Innovation District is marketing space for a hub of life sciences and medtech companies all located within proximity to the medical school and burgeoning medical facilities.
New scientific discoveries like the GLP-1 for weight loss, antibody-drug conjugates (ADCs) and radiopharmacy are one piece of the puzzle, followed by technological advancements like additive manufacturing and AI. Add to that the growing access to innovative infrastructure networks (i.e. incubators) and these are three key markets driving the growth.
The need for lab availability is growing and more products are coming to market. For many companies, gaining market approval for a new product is the No. 1 priority for medical device companies and from what we are seeing, companies are optimistic about their revenue outlook. In a study from Greenlight Guru, 86% surveyed expect revenue growth in 2024, with those predicting strong growth up by five points from the previous year.
Austin Community College (ACC) has its own Bioscience Incubator inside the former Highland Mall. It’s the first such facility at a Texas community college. The Bioscience Incubator provides much-needed research space for life science companies to develop products such as pharmaceuticals and medical devices while providing educational programs, internships and real-world training to ACC students. Over the past several years, the ACC Biotechnology Program piloted biotech acceleration services with local start-ups while companies use ACC interns and equipment to save time and money during product development.
When it comes to high-tech and mission-critical facilities, we’re seeing enormous interest in Artificial Intelligence (AI) and how it’s impacting the region with the construction of data centers. The AI industry is exploding, and many questions remain about how to use, rein in and control it. We believe this will drive the data center market.
Many data center providers and co-locators have stayed out of Austin because the power and land are expensive. However, Prime, Skybox, Cyrus One, QTS, among others are building data centers here, not to mention that Meta (think Instagram and Facebook) is building big data centers in the Belton/Temple/Killeen area.
We have a big presence here of technology companies like Meta, Google and LinkedIn in downtown Austin. Apple has a huge campus here. Yet, with the exception of Apple, Austin has seen reductions in staffing in this space. This has less to do with the performance of tech companies in Austin and more to do with overstaffing following the pandemic and now they are trying to right-size their workforce.
Despite these reductions, Austin’s reputation and allure still shine for tech firms that appreciate the Austin vibes, hip reputation and Texas economy with no individual income tax and lower taxes, versus the West Coast. We’re still seeing tech companies relocating to Austin because the Texas business climate is simply better.
Circling back to data centers, we have all this demand for power coming from these high-tech companies already located here.
Much of the data center space is coming to surrounding suburbs with $2.7 billion already planned for current phases being built, and we expect more to follow. Not to mention the enormous amount of support development that will follow to meet the needs of the people working for these companies – housing, education and healthcare facilities, industrial warehouses, etc. – will create a wave coming.
Tesla Founder Elon Musk opened his AI division a year ago and raised more than $20 billion for his already profitable electric car company. He, too, cut back on the labor force, but his interest in AI will add more fuel to that already growing industry.
It’s safe to say the medical and high-tech/med-tech industries will continue to expand. We firmly believe these industries will keep Austin’s light shining bright.
AP’s commitment to Austin and the Central Texas region is shown in several additions to our Central Texas staff, particularly John Hicks joining our team as Director of Business Development for Mission Critical Services. He’s been working in the mission-critical construction space in Austin for the last decade and has seen the boon that has followed the high-tech company relocations.
We believe Austin remains a beacon to techies, and medical tech, AI and mission-critical facilities will lead the way.
Eric Churchill has over 20 years of construction industry experience and works with leadership and project teams to engage new and existing clients to foster strong partnerships and identify new business opportunities that align with AP’s culture and growth strategy. He is responsible for all business development efforts, including setting and executing Central Texas revenue and profit goals. Eric believes that a client will only care about what you (or your company) know after they know how much you care about their project or organization.
Eric has developed relationships in the Central Texas area over the last 20 years which have helped significantly grow business in multiple markets including commercial office, multi-family, education, and industrial warehouse. He also has established relationships with city, county and state agencies.
Eric holds a Bachelor of Science in mechanical engineering from Texas A&M University, and serves on the Urban Land Institute (ULI) Management Committee, ULI Austin Advisory Board, ULI Sponsorship Chair and Programs Committee and the ULI Austin P3 Local Member Council. He is affiliated with the Real Estate Council of Austin (RECA) and serves on the RECA Programs Committee. He is also involved with the Society for Marketing Professional Services Austin Chapter, which honored him with its inaugural leadership award in 2015.
