In the 1990s, a seemingly unstoppable economic upswing made Austin, Texas, a magnet for the upwardly mobile. According to the city's planning department, the population soared between 1990 and 2000, when Austin's 656,562 residents made it the 16th-largest city in the nation, according to the U.S. Census.

In this boom time, businesses grew and multifamily investors prospered. Apartment vacancy rates stayed at a low of just under 4 percent. Rents were 93 cents per square foot and rising, and concessions were virtually nonexistent. Then the decade ended, and the uneasiness began. Dell Computers laid off 1,700 workers in a single day in February 2001, and the tech-bubble burst that followed caused a ripple effect that is still in motion.

The Austin of today remains a city with a cult-like following of people who will do just about anything to stay. Its mix of culture and cutting edge has attracted residents the likes of Sandra Bullock and Lance Armstrong and delivered recognitions such as a spot on Forbes magazine's "Best Places to Live for Singles" list. Austin also is the "Live Music Capital of the World," with the South by Southwest music festival (the nation's second-largest festival of its kind) and the annual Austin City Limits music festival, which attracts 80,000 people a day. On Thursdays, Fridays, and Saturdays, you can even hear local bands playing live music in the city's new international airport.

TEXAS TOWN: Austin attracts high-tech workers, college students, musicians, and celebrities.
TEXAS TOWN: Austin attracts high-tech workers, college students, musicians, and celebrities.

In the real estate investment market, Austin is equally well known for dramatic ups and downs that rival the most hair-raising bull ride. Those that time it right and stay on for their allotted eight seconds usually win big.

Get a Job Since the tech meltdown, the lack of jobs has proven a particular challenge for this Texas city. Even those accustomed to Austin's trademark shifts feel that the employment scenario has made this downturn a particularly long and painful one. By most accounts, in fact, job growth remains the primary barrier to a healthy Austin economy and a hospitable multifamily investment market.

"Austin is one of those acutely cyclical markets where timing is critical," says Ray Sperring, an acquisition officer with Dallas-based TriVest Residential, a fully integrated operating company specializing in the acquisition, redevelopment, and management of middle-market multifamily communities. "When Austin has the jobs and the economy, it's a great placeto be, but it's a roller-coaster ride the rest of the time.”

Austin's local annualized growth rate of 3.5 percent recorded at the start of 2000 was just one illustration of the market's strength. This figure fell to .64 percent by mid-2004, illustrating its current struggle. According to the Texas Workforce Commission, Austin in 2000 added 37,200 new jobs and had just a 2 percent unemployment rate. Two years later, unemployment hit a high of 5.9 percent. As of mid-2004, it has recovered slightly, to 4.7 percent.

The good news is that the young, educated, active, and diligent still love to work and live here, if they can. Developers and investors feel the same.