Austin is losing businesses to the suburbs. The city's plan to fight back.
A projected $30.8M budget deficit by 2028. Retail leakage to the suburbs. A rejected tax rate election. The city's top economic development official says speed is the weapon.
Austin's economic development chief says the city needs to grow "by necessity, not because we're Austin."
Eric Johnson, the assistant city manager overseeing economic development, planning, housing, and development services, laid out the city's position at ABJ's 2026 Economic Outlook event.
By fiscal year 2028. Growing by roughly $3.7M per year after that without tax base growth.
Five-year average: revenue grows 3.3% annually. Expenditures grow 3.9%. The gap compounds.
Johnson expects elevated vacancies in office and multifamily to take 2-3 years to absorb before the next growth cycle.
Austin is coming off a post-pandemic building surge that drove development while interest rates were at historic lows. That period is over. Fewer people are moving to town, interest rates are elevated, and state laws limit how cities can raise revenue. Voters recently rejected a tax rate election that would have raised property taxes beyond the annual increases allowed under Texas law. That forced the city to cut from its most recent $6.3 billion budget.
At the same time, suburban cities across Central Texas are actively pulling businesses and development out of Austin. Johnson was direct about it: the suburbs are "chopping away" at Austin, and the city needs to respond. His primary strategy is making it faster to develop inside city limits. He called development speed Austin's "number one weapon."
The city is building a 36-month economic development roadmap currently in stakeholder feedback. It could be released in April or May 2026. Johnson said the roadmap will address permitting speed, workforce development, small business support, and how Austin communicates that it is open for business.
This page summarizes and adds housing market context to original reporting by Sean Hemmersmeier at the Austin Business Journal (March 23, 2026). Read the full story at ABJ →
How does this affect you?
Three situations. Three different reads.
A city in recalibration mode means different things depending on whether you own, want to buy, or are comparing Austin to the suburbs.
Voters rejected the tax rate election. The city is projecting a $30.8M deficit by 2028. When the city can't raise tax rates, it needs the tax base itself to grow. That means the city has a direct incentive to approve more development, faster.
- Faster permitting is a net positive for homeowners in appreciating areas. More development activity means more comparable sales, which supports assessed values and resale.
- The rejected tax rate election protects your rate, not your assessment. TCAD can still raise your appraised value. File your protest before May 15.
- Retail leakage is a quality-of-life signal. If businesses are choosing suburbs over your neighborhood, that affects what is walkable, what is convenient, and eventually what buyers will pay to live there.
- Infrastructure projects are a long play. Convention center (2029 reopening), airport expansion, I-35 widening, Austin Light Rail (9.8 miles). These signal the city is investing in itself even during the downturn.
Johnson expects 2-3 years of recalibration before the next growth cycle. Office and multifamily vacancies need to absorb. Interest rates need to stabilize. That window is the current buying environment.
- Recalibration periods are historically when buyers get the best deals inside city limits. Fewer competing buyers, more inventory, and sellers who are motivated by slowed activity.
- The city is about to get faster at permitting. More new construction coming online in the next 2-3 years. If you are buying existing homes, know that new builds will compete for the same buyers when the market turns.
- Suburbs vs. city is a real conversation now. Compare what your dollar buys in Round Rock, Cedar Park, or Pflugerville vs. Austin city limits. The trade-offs are real in both directions.
- The infrastructure pipeline makes certain Austin corridors more interesting long-term. Light rail alignment, I-35 improvements, and the convention center district all create proximity value suburbs cannot replicate.
Central Texas suburbs have been actively luring businesses with lower costs and faster approvals. Austin is responding with a 36-month economic development roadmap focused on permitting speed, workforce development, and communicating that the city is open for business.
- The deficit math creates urgency the city has not had before. A $30.8M gap by 2028, growing $3.7M per year, means Austin cannot afford to lose more tax base to the suburbs. Policy will follow that math.
- Faster permitting compresses development timelines. For investors, the lag between acquisition and income-producing asset gets shorter. It also means more competition from new supply.
- Suburban growth is not slowing down. Round Rock, Georgetown, Kyle, Buda, Pflugerville, and Cedar Park are all actively competing. The question is whether Austin's infrastructure advantage justifies the cost premium.
- The 2-3 year absorption window matters for multifamily. If you are holding rental property in Austin, vacancy rates need to normalize before rents meaningfully recover.
BUYERS The recalibration window is the buying window. When the city flips back to growth mode in 2-3 years, the deals that exist right now inside city limits will not be available.
SELLERS Lead with what city limits offer that suburbs cannot: infrastructure investment, walkability, proximity to downtown, and the light rail corridor. Price with current data, not pandemic-era comps.
HAUS TAKE