“Texas is a state of mind. Texas is an obsession.” So wrote John Steinbeck in “Travels with Charley“ following his epic 10,000-mile road trip in the early sixties.
Today, Texas is more than a state of mind; it is also an economic powerhouse. Its $1.6 trillion GDP surpasses that of Canada, Mexico and Russia. In fact, if Texas was a country, its GDP would rank 10th in the world. Texas is also the nation’s top exporter for 18 years running. The state’s four major metros are Dallas, Houston, San Antonio, and Austin. Together, they account for two-thirds of total economic output.
The Texas Job Boom
Texas jobs have increased for 116 consecutive months. The Texas Workforce Commission calculates the state added almost 1,000 new jobs per day in 2019.
In terms of economic success, Dallas and Houston rank among the nation’s top three metro areas. Dallas’s strategic location at the intersection of east-west and north-south rail lines drove early growth. Dallas is now a major intersection of global commerce. It is home to more Fortune 500 headquarters (23) than any other urban center in the U.S.
It is also home to the nation’s fourth-busiest airport, a sprawling complex as big as Manhattan. DFW International served 75 million passengers in 2019. DFW offers 260 nonstop destinations — 67 international and 193 domestic. Its on-time performance ranks high among the world’s great airports. Ease of access is a major selling point for companies relocating to Dallas. All those nonstop flights also give residents myriad possibilities for weekend getaways and other travel experiences.
According to Texas A&M, Dallas added 94,300 jobs in 2019, a 3.6 percent growth rate. Given the data, Multi-Housing News concludes that Dallas “remains a regional powerhouse and a strong magnet for both companies and skilled workers.” An infographic by the Dallas Regional Chamber of Commerce illustrates the trend of corporate relocations to the Dallas-Forth Worth (DFW) area. In November 2019, Charles Schwab announced it would buy TD Ameritrade in a $26 billion stock swap. It plans to move the combined headquarters to the metroplex.
The local economy benefits from a potent combination of affordability, steady job growth, and minimal government regulation. In Dallas, local industries like construction, real estate, retail, and healthcare keep their costs in check. Other enterprises are taking note, driving even more corporate relocations to the region.
Jobs are also attracting many to Houston. In 2018, net migration of 94,000 placed Houston in the top three major metro markets nationwide. According to the U.S. Bureau of Labor Statistics (BLS), the greater Houston economy generated 80,400 new jobs for the 12 months ending October 2019. This was the 24th consecutive month that Houston’s job growth outpaced increases nationwide.
The Influx of New Multi-Family Housing
U.S. News noted how new residential construction seeks to keep pace with all the new jobs in Texas. It is important to understand Texas housing against a nationwide shortfall. “The current annual rate of construction is about 370,000 units below the level required by long-term housing demand,” according to Freddie Mac. Considering the relationship between the Texas job boom and multi-family housing, it is not surprising that Texas construction jobs are surging, up 7.4 percent in December 2019.
Developers, builders, and investors seek to meet housing demand in the Dallas-Fort Worth metro area. There were 27,588 multi-family units added in 2018. As of July 2019, another 44,249 units were underway. Thanks to a booming job market, demand should readily absorb these new units. The average rent still remains more than $200 below the national average of $1,463.
In Houston, excess inventory in 2014-16 gave way to increased demand following Hurricane Harvey. Vacancies fell 150 basis points for the quarter immediately following the storm. Housing demand has been strong ever since. In 2019, developers brought more than 11,600 units online in greater Houston. Still, Houston’s average rent remains $350 less than national levels.
With the multi-family housing boom comes an increasing demand for luxury apartments, and designers and developers alike vie for the attention of amenity-minded renters. High ceilings, private balconies/patios, upscale appliances, and fireplaces are attractive features for prospective renters. Common-area amenities include resort-style pools, outdoor grilling stations and state-of-the-art fitness centers.
Multi-Family Housing Success Stories
Examples of desirable luxury multi-family properties in the greater Dallas area include St. Paul Square and Crest at Las Colinas Station. St. Paul’s Square illustrates an emerging trend in upscale apartment living. The development invokes a sense of Supetar, a village on Croatia’s Adriatic coast. Residents enjoy Old World ambiance along with McKinney’s strategic location. Thematic architecture and design take expectations to a new level.
Amenities and location also attract prospective renters to Crest at Las Colinas Station. Residents enjoy a modern fitness center, outdoor kitchen and grilling station. There’s also a pool replete with a tanning shelf. DART’s Las Colinas Urban Center Station is integral to the community. Within minutes, electric light rail whisks residents to the sights and sounds of the Las Colinas Urban Center. Easy connections transport passengers throughout the 93-mile DART system.
Sonterra Blue and The View at Encino Commons also speak to today’s active lifestyles. The View at Encino Commons is a north San Antonio planned community. Units feature private patios/balconies, nine-foot ceilings, and fireplaces. It offers residents controlled access via remote. Common area amenities include an upscale pool, 24-hour fitness center and grilling pavilion.
San Antonio’s Sonterra Blue delivers amenities that pique the interest of prospective tenants. Residents enjoy a variety of popular features including high ceilings and upscale appliances. First-floor residents enjoy the privacy afforded by fenced-in backyards. A full-service business center caters to online entrepreneurs, giving residents the opportunity to skip an occasional commute.
A Bright Future for the Lone Star State
There are almost 200 countries in the world, and Texas’ GDP outranks all but nine of them. The sprawling, diversified economy of the Lone Star State is well-prepared to adjust to changing economic conditions. Projections suggest that job growth should sustain demand for new multi-family housing, particularly in Dallas and Houston. In these cities, prospective renters often seek upscale and luxury housing that speaks to their active lifestyles. This strong interest in attractive, amenity-rich housing will continue to drive creative architecture and design.
To learn more about Draper and Kramer’s luxury properties in Texas, visit draperandkramer.com.