Rising Rent Costs Strike Sour Chords in Austin

AUSTIN-Musicians, singers and songwriters have been attracted to Austin by many of the same factors that have attracted companies to Austin over the years. Those factors include a low cost of living, a young and educated workforce and the University of Texas.

A new study for the City of Austin shows how making music has made money, which, in turn, has made it hard to make music. The report, put together by the Austin-based economic consulting firm Texas Perspectives, says the music business provides 11,200 jobs and generates about $616 million in economy activity and $11 million in city taxes. And, it brings in tourists and puts them in hotel and motel rooms.

The music industry also plays a key role in the creative nexus between entrepreneurship, technology and the arts that contributes to Austin’s singularity. “What appears to set Austin apart from most other communities is this concentration of creativity,” the report says.

But the economics of the music industry combined with the rising costs of a growing city cause concern. “Rising rents and house prices have put pressure on all lower income groups, including the majority of musicians and songwriters in the city,” the report says. “These pressures have also been felt in the commercial real estate market, further reducing profit margins of club owners who lease their facilities.”

Fifteen to 20 years ago, young, struggling musicians could set up in Austin and concentrate on their music without worrying too much about making the rent, says Jerry Creagh with Southwest Strategies, an Austin-based real estate firm. A day job making sandwiches in a deli usually did the trick.

Managers of music clubs could count on low rents in the downtown and warehouse districts, an area abandoned by the retail base and ignored by residential developers. Steamboat Springs, a popular Sixth Street venue featuring live, original music, closed when its lease rate of about 45 cents per sf expired. The club’s owners opened another club down the street. But, says Creagh, who owned a Sixth Street restaurant, they’re paying market rates of about $1.50 per sf.

In some cases, Creagh says, club owners, focused on their bottom line, are turning to bands that cover the songs of popular artists more likely to bring customers through the door. Bands, working on their own sound, get left out. And they’re the ones who provide the creative current that makes a local music industry, according to Creagh. “The musicians that are going to do something want to be able to present their own music,” he says. “Now there’s going to be less opportunity for that.”

Because of its importance to economic development, the city should find ways that public policy can help the music industry, according to the report. The recommendations include exploring the possibility of applying tax abatements and incentives under the Smart Growth program to music venues; helping bands market themselves to a regional audience in Texas and the Southwest; designating an ombudsman to help the music community communicate with the city; and coordinating services and assistance available to musicians to make sure they get to the right people.

Creagh agrees the city should be involved. “The city needs to be proactive,” he says, “in doing something more to support the music scene because I think the creative, original musicians that make this town important in the music industry are, to some extent, getting priced out. And maybe some of them make a decision not to move here in the first place.