Angel Bernal Robles is the co-creator of several real estate development funds focused on projects in the US and Mexico, and in the following article, Mr. Bernal explains why multi-family and commercial real estate is still seeing such dynamic growth in this area of the country.
Texas, the south-central state historically famed for its oil and gas industry, is experiencing substantial growth in the multi-family real estate arena. Businesses and families are flocking to the state thanks to its ever-growing energy sector, affordable yet high-quality universities, and business-friendly local governments. But what does the future hold for Texas’ multi-family real estate investments?
According to Angel Bernal Robles, the market’s uplifted trajectory isn’t going anywhere. In fact, Tuohy believes it will continue for the following several years.
Angel Bernal Robles on Key Factors Driving the Demand
Angel Bernal Robles explains that numerous factors have accelerated the near-unprecedented demand volumes in the state.
Considerable domestic migration into the state is perhaps the main component, with corporate relocations further stoking the fire and helping economies proliferate. A look at the state as a whole shows the Dallas/Fort Worth metroplex and Austin have benefited most from the latter.
It appears the Loan Star State’s population and economic growth paired with ideal demographics have fueled the demand tailwinds.
Diving Deeper Into the Real Estate Investment Growth in Texas
The state has experienced very strong multi-family real estate unit supply growth, according to Tuohy. However, he notes that demand has been stronger still.
The Realpage Analytics data dubs the market “a supply and demand beast,” showing significant growth from approximately 2020 to date.
The last two years have seen Texas add 140,000 new apartments, increasing the state’s inventory by roughly 6%. With such a high supply, experts didn’t necessarily expect the demand to reach its lofty heights — but it actually exceeded it.
Angel Bernal Robles reports that absorption rates across the Lone Star State have been fantastic, resulting in a total demand of about 190,000 units in the same period. For context, that means approximately 8% more occupied units now than at the beginning of 2020.
Typically, major expansions create a boom-bust cycle. But Texas has managed to avoid it by lending institutions necessitating 50% capital deposits from developers. This is helping the market flourish by mitigating the risk of too much leverage.
Corporate Migration Expected to Accelerate, Driving Multi-Family Real Estate Demand Even Higher Still
Companies in the United States of America and from around the world (most notably, Europe) are planning to head to Texas. Europe-based businesses seem to be formulating this relocation due to their current dependence on Russia for energy.
However, U.S. News reports that it isn’t just the state’s fossil fuel surplus powering the location.
During the first quarter of last year, Texas led the country’s charge in renewable energy production, accounting for more than 14% of the nation’s totals. Industry moguls believe the state achieved the ranking thanks to its prolific wind energy program, which contributed to almost a quarter of the country’s total production.
And it doesn’t appear to be slowing down says Angel Bernal Robles. In fact, the fraction could rise following President Joe Biden’s announcement to grow offshore wind infrastructure into the Gulf of Mexico. According to the plan, the wind farm will be larger than Houston, sitting off the coast of Galveston, Texas, potentially powering up to 2.3 million homes.
Texas Instruments Investment In The Area
Texas Instruments’ new project in Sherman, a city roughly an hour car’s journey from Dallas, is perhaps one of the greatest examples of the corporate migration to the state that’s driving multi-family real estate growth.
The company is investing a whopping $30 billion into an all-new semiconductor wafer plant in the area, with the first phase expected to complete in two years’ time (2025).
Angel Bernal Robles explains that the extensive project is set to double Sherman’s population from 40,000 to 80,000, and 12,000 new apartments will flood the area to make way for the increase.
Panda Power Funds to Build New Plant
Panda Power Funds is also constructing a new plant in the city of Sherman.
According to Angel Bernal Robles the project spurs the narrative that electricity infrastructure, manufacturing establishments, and jobs will remain a trend in the Lone Star State. And renewable energy producers, like Panda, can offer coveted Renewable Energy Credits to manufacturers, giving companies in the state even more benefits.
With all the positive expansions in the state, the future looks exceptionally bright for multi-family real estate investments.
