As more people and businesses move to Austin, the city will encounter challenges and opportunities that come with an increasingly dense urban environment, say business leaders and academics.

Forbes magazine recently ranked the Austin metro area as the fastest growing city in the United States for the second year in a row. The publication rated cities using economic and population growth projections from Moody’s, an economic analysis agency.

Beverly Kerr, vice president of research at the Greater Austin Chamber of Commerce, said the perception of Austin as a progressive enclave within a low-tax, low-regulation state attracts people and firms from all around the state and
the country.

“Austin benefits from being perceived as a blue island in a red state,” Kerr said. “A lot of growth comes from other parts of Texas. The city’s reputation is very high within the state. Anyone that has had an experience of Austin finds that it’s one of the more attractive places to be. After Texas, the biggest state they come from is California.”

Kerr said UT contributes to the city’s development by fostering an innovative and well-educated workforce.

“Austin has the sixth highest educational attainment in the country because of the high percentage of people with bachelor’s degrees,” Kerr said. “Austin has a creative class and a strong entrepreneurial community.”

As Austin continues to grow, the population of the city’s center will become more dense, said Michael Oden, director of the School of Architecture’s graduate program in community and regional planning.

“Increasingly people like to live in more central city areas,” Oden said. “Baby boomers, most of whose kids have left their house, wonder why they’re still living in a cul-de-sac in the suburbs. And our offspring, the kids that just left the house, have always wanted to live in the central city, especially people that have not gotten to the family planning stage.”

Oden said Austin has a choice: either plan for density intelligently or let density happen in an unappealing way. To plan intelligently, the city needs to boldly commit to a non-automotive transportation system, he said.

“If you let things go on business-as-usual, roads will get more crowded, more congested and it won’t be as much an attractive place to live,” Oden said. “That could kill the goose that laid the golden egg.”

Whether the City encourages alternate modes of transportation or not, Austin’s rising population density presents an opportunity for small businesses and greater ecological sustainability, said Raquel Dadomo, brand manager at Wheatsville Food Co-op.

“Cities are our best bet for sustainability, and there are lots of opportunities for well-run small businesses,” Dadomo said.

Dadomo said the future is bright for Austin’s well-established and yet-to-be-established local businesses.

“BookPeople, Toy Joy, Spider House [Cafe], EcoClean, I Heart Video, Waterloo Records — Austin wouldn’t be the same place without them,” Dadomo said. “Starting a business is still hard and still risky, but for some reason in Austin people are willing to give you the benefit of the doubt, to give you a shot and find a local way of doing something rather than going out.”