Several of the fastest-growing cities in Texas have many exciting development, acquisition, and repositioning opportunities. Dallas, Austin, Houston, and San Antonio are today some of the most active multifamily real estate markets in the United States. With increases in population and job opportunities, favorable regulatory structures, and continued investment in infrastructure, these cities have attracted the interest of many multifamily property investors.
Let’s take a detailed look at the growth that is spurring investment opportunities in Texas.
The Dallas metropolitan area ranks third on Forbes’ 2018 list of America's Fastest-Growing Cities. Of the 12 largest metropolitan areas in the country, Dallas added the most jobs and experienced the highest job growth rate in the year leading up to November 2017. The area accounts for almost 8 percent of all financial industry jobs in the Southwest region and is home to over 10,000 company headquarters—the biggest concentration in the U.S.
Dallas-Fort Worth was one of the country’s most active multifamily real estate markets in 2016 and 2017. Roughly 40 percent of the area’s population resides in apartments. By 2030, it is projected that Dallas will need an additional 266,000 apartments. In 2017 alone, $5 billion worth of multifamily assets was traded in the Dallas-Fort Worth area. According to Yardimatrix, from November 2017 to January 2018, 13 properties totaling 1,206 units sold in North Dallas and the northern suburbs, and six properties with 1,571 total units sold in the other parts of Dallas. All told, the area’s population and job growth, coupled with the high percentage of apartment residents, are positive signs for multifamily property investors.
The Austin metropolitan area has seen similar growth trends as Dallas and ranks eighth on Forbes’ 2018 list of America's Fastest-Growing Cities list. In 2017, the city experienced a population growth of 2.57 percent, with a 2.75 percent increase projected for 2018. People are moving to Austin due in large part to job opportunities. The city experienced 2.68 percent job growth for 2017, with a projection of 3 percent growth for 2018. The number of Austin residents employed by the city’s 100 largest digital tech companies, including fast-growing start-ups, grew to nearly 60,000 in 2017. That’s an 11 percent bump over 2016 figures. The number of young professionals moving to Austin for high-paying, tech-sector jobs bodes especially well for luxury multifamily property investors.
The Houston housing market has seen a revival since Hurricane Harvey. By the end of 2017, Houston absorbed 17,491 units. This year, the multifamily market is especially ripe for repositioning. Axiometrics estimates 6,422 new units will hit the market in 2018. Experts forecast 2.3 percent population growth in the Houston metropolitan area in 2018.
Job growth in the metro is rising alongside the rental market. If the oil industry continues to bounce back, not only could the Class A market see a boost this year, but also Houston could add around 69,000 jobs. Those new jobs would represent 2 percent job growth, which the city has averaged each year over the past 25 years. Additionally, the strong presence of tech companies in the city earned it the number eight spot on A.T. Kearney’s list of top 25 cities for the future in 2017. The Houston market offers solid multifamily property investment opportunities.
San Antonio has enjoyed 2 percent population growth annually since 2012. In 2016, over 24,000 people moved to San Antonio, which brought its population to 1.5 million. In its efforts to create more jobs, San Antonio continues to entice large businesses to move to the city or to expand their existing footprints. In fact, in December 2017, city officials announced that USAA would increase its workforce in the city by 1,500 people and move 2,000 more employees into buildings it already owns in the city center. In early March 2018, the company confirmed it will relocate 400 workers from its University Park Tech Center to One River Walk this summer and will base 1,000 employees in downtown offices by the first quarter of 2019.
San Antonio has been an acquisition-heavy market. More than $780 million in multifamily assets changed hands between January and July 2017. The steady growth in both population and job opportunities creates a need in San Antonio for both new and repurposed multifamily properties. That, coupled with the incentives it offers businesses, makes San Antonio a city that multifamily real estate investors can set their sights on.
At CWS Capital Partners, we are a fully integrated multifamily real estate investment management firm that offers everything from due diligence and risk management to transaction support and property management. We own multifamily investment properties in each city mentioned above, as well as in major markets across the country. We specialize in assisting our clients with 1031 exchanges, acquisitions, repositioning, and development, and employ a team of experts who can help you hone your investment strategy. For more articles like this one, check out our investment strategy blog posts.
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