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AUSTIN-An early look at Austin’s economy in 2003 doesn’t provide much short-term hope for filling the city’s empty office and industrial space. While economist Angelos Angelou predicts job growth of 1.3% next year, that won’t go a long way to replace the jobs that have been lost in recent years.

Angelou, principal in Angelou Economics, said much of the forecast job growth for 2003–about 9,000 jobs–will come from government and won’t have much impact on the private sector. In his preliminary forecast, Angelou said the city’s economy will continue to struggle next year. The city’s technology sector, which drove the city’s hyper growth in the 1990s, will remain moribund before stabilizing in the 2003 second quarter, he said.

The loss of jobs in the past year helped drive negative office space absorption to 800,000 sf so far this year. Just over 22% of the city’s 30.9 million sf is vacant. It could take three or four years to get that space filled up.

In the industrial market, negative absorption has been 1.74 million sf. The vacancy rate is 15.9%. That breaks down to 13% for warehouse/distribution space and 19% for research and development/flex space.

After creating jobs at a pace greater than 5% in 1999 and 2000, growth slowed to 0.4% in 2001 before dropping to a negative rate of 1% for this year. Austin has the highest rate of job loss among major Texas cities this year, Angelou said. San Antonio, with 1% job growth this year, is the only big city to show an increase.

The Austin job losses will mean a slower holiday season for retailers. Angelou is predicting holiday sales could be off 2.4% from last year. Statewide, they could be off 2%.

While the next year or so doesn’t look much better than this one, Angelou said Austin remains poised for long-term growth. The features that have made it attractive in the past, remain. He said the city can continue to build on its high quality of life, skilled labor force, entrepreneurial spirit, strong R&D environment and affordability.

Austin’s tech sector should get a boost when national spending on information technology resumes growing. Longer term prospects are in bio-informatics and nanotechnology.

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