By any traditional measure, Austin is thriving. The city is today the 11th largest in the United States, fueled by an influx of people and businesses that has made Greater Austin one of the fastest-growing regions in the country. Since 2010, the GDP of the Greater Austin metropolitan statistical area (MSA) has nearly doubled,1 and its population has grown by 36 percent, or the highest growth of any major metropolitan area in the country.2
The region is also a hotbed of idea generation. Abundant talent emerges from a higher-education system of more than 160,000 students in Greater Austin—anchored by the University of Texas—and entrepreneurs and venture capitalists welcome both the ease of doing business and the area’s collaborative culture.3 The result is a thriving business ecosystem: Greater Austin is the headquarters or founding location of more than 20 unicorns—privately held startup companies with a value of more than $1 billion—and venture capital investments in the region have increased fivefold since 2016.4 Many ideas once considered outlandish were born in Austin, from selling computers directly to consumers (Dell) to starting a grocery store chain devoted to selling organic food (Whole Foods).
But growing pains have accompanied this ascendance. Challenges that previously affected Austin alone are now being felt at the regional level. Many residents struggle with Greater Austin’s changing identity, and significant challenges persist around everything from infrastructure to affordability and inclusivity. We believe these issues, which are common for growing metropolises, are surmountable: Greater Austin remains early enough in its evolution to change these trajectories and preserve its unique culture while making the region a pioneer of sustainable, inclusive growth and a frontier for cutting-edge science and technology.
The speed and scale necessary to relieve Austin’s growing pains can be achieved only by bold leaders, visionaries, and policy makers acting together.
Coming together to lead the way
We are not suggesting it will be easy: the speed and scale necessary to relieve Austin’s growing pains can be achieved only by bold leaders, visionaries, and policy makers acting together to conceive and enact innovative solutions—not just for the city of Austin but also for the Greater Austin region. But while it may require previously unrivaled commitment, scale, and cooperation, we know regional leaders are up to the challenge. By taking a nonpartisan and fact-based approach, this community of leaders can amplify existing effective work while galvanizing the broader community to address the region’s tangible problems and set goals for overcoming them.
To understand the state of the Greater Austin area, the scope of its challenges, and potential interventions, we met separately with 100 community leaders within Central Texas, including CEOs, policy makers, heads of not-for-profits, artists, and religious leaders. There was remarkable consensus in their responses: more than 90 percent said affordability was Greater Austin’s top challenge, followed by infrastructure and inclusivity (Exhibit 1). The same percentage of community leaders pointed to the need to act now.
The region has become increasingly unaffordable in the past decade, particularly since 2019, as new residents have flocked to Greater Austin. Housing is in short supply, especially in Travis County, and the average home price in the Austin MSA has rocketed 170 percent since 2010—almost double the national average.5 Other costs, including transportation, healthcare, food, and childcare, have risen faster than housing prices in the Greater Austin MSA. One result has been a shift in the region’s population center as people move farther from the urban core to more-affordable suburbs (Exhibit 2).
As a result of this expansion and displacement, Austin has the second-highest congestion costs per commuter among all midsize US cities, and the situation is getting worse. As more people commute longer distances, the region’s infrastructure is proving it is not up to the task of continued growth.
Stewarding sustainable, inclusive growth
To counteract these effects and steward Greater Austin’s future, leaders will need to come together and focus on three mutually beneficial elements: growth, sustainability, and inclusivity. These elements can work in tandem to drive the region’s future, but reaching that sweet spot will require action across six strategic pillars: economic development and business climate; a talented workforce; affordability; diversity, equity, and inclusion; infrastructure; and environmental sustainability. Read on in the full report to learn how coordinated efforts across these strategic pillars can help steward sustainable, inclusive growth in Greater Austin.
We believe stewarding sustainable and inclusive growth is a core responsibility of leaders in the community—including McKinsey. We hope this report sparks conversation, collaboration, and tangible action benefiting both our community and local businesses. After all, if one thing brings Austinites together, it is genuine care for the future of both the city and the region.