Where we are investing…a spotlight on Texas
We’re often asked by investors, “Which real estate markets are you focused on?” As any seasoned investor knows, location is one of the most critical factors in real estate. It’s the one aspect of a property that can’t be changed—and it plays a central role in long-term value and performance.
So where are we investing?
Market data and long-term trends consistently highlight the Sunbelt region—often referred to as the “smile states”—which includes the Southeast and Southwest. We also see strong potential in the Midwest, where affordability remains attractive and markets tend to experience less volatility during economic shifts.
We’re long-term investors with a focus on demographic and employment trends. Through this lens, we aim to implement a recession-resistant strategy—targeting assets we believe are well-positioned to perform across a range of market conditions.
In periods of economic uncertainty—whether driven by market cycles, rising unemployment, or volatility in public equities—we focus on reducing risk and protecting investor capital. Our goal is to build portfolios that remain resilient and continue to perform, even through broader economic downturns.
With this in mind, we firmly believe that geographic diversification is a key component to achieving sustained and predictable investment performance.
During economic downturns and recessions, real estate markets do not all react the same way. They do not adjust at the same time nor with the same volatility and they do not adjust for the same duration.
Let me just note that no market is perfect, each has pros and cons and we prefer to invest in regions that have several positive attributes.
We look for these key indicators:
1) Population growth – where are people moving? Why are they moving there? Is the trend projected to continue?
2) Affordability and quality of life – can the median area income sustain the median cost of living? Does the region have a high quality of life?
3) Employment trends – Where are companies and jobs growing and relocating to? Is the trend projected to continue?
4) Economic strength – what industry(s) support the local economy? What are the historical and projected economic trends? Growth? Stagnation? Decline?
5) Diversified employer base – what is the job base by industry sector in the region? Is the area supported by only a few industries or is it widely diverse?
One of the top states that consistently meets our key indicators is…
Texas.
We currently have an equity position in over 30 properties in Texas as it continues to attract employees and employers to the region. There are many reasons why we believe it will continue to thrive for many years to come.
Here are a few top level trends and stats on The Lone Star State:
1) As of recently, Texas had an economy worth $1.6 trillion which accounted for 8.9% of the country’s total economy. This is second to California.
2) Texas is the home to over 31,000,000 people and this is projected to rise to 45,000,000 by 2040.
3) From 2020 to 2024 Texas added about 2 million new residents which was the highest number of migrants of any state.
4) Since 2020, over 200 companies have moved their headquarters to Texas. This number includes companies like Tesla, Chevron, and Charles Schwab. In 2021 alone, 137 companies relocated their headquarters to Texas.
5) Texas has a relatively diverse employer base with no one industry encompassing more than about 15% of GDP:
Let’s talk about employment trends:
Companies are opting to move to Texas to take advantage of the regions attractive cost of living, excellent schools, affordable housing and safe neighborhoods and close proximity to a major international airport, but one of the main drivers is that the Lone Star state does not have a state income tax or corporate income tax. This favorable tax structure is directly correlated to the surge of businesses relocating to Texas.
Here are a just a few of the recent company shifts and expansions to Texas:
The PGA recently announced it was relocating to Texas after considered 212 possible locations, including staying in Palm Beach Gardens, Florida. The move will bring about 1,000 jobs to the region and they are now in works on a $500 million 600-acre mixed-use development in North Dallas which will include 2 golf courses, a convention center and hotel which is projected to open in 2022. The relocation is estimated to have an economic impact of more than $2.5 billion over the next 20 years based on a city-commissioned tourism feasibility study. The PGA of America will invest $30 million to build its 100,000-square-foot global headquarters and education facility.
In 2017 Toyota Motor North America relocated more than 3,000 jobs to Plano Texas, a suburb just north of Dallas. These jobs came from headquarters in California, Kentucky and New York. In addition, they hired 1,200 new team members and noted that they found great talent in the local area. The move came with designing and building a massive 100-acre campus encompassing thousands of square feet of work space, a fitness center and 11 different places for employees to eat! North America Executive VP Chris Neilsen noted that the new location assists with integrating into a single logistics network. “We were three time zones apart from the Midwest to California; it’s a challenging way to run a business. Decisions that might have taken six months in the past now take six days”, he said.
Core-Mark, a Fortune 500 company, is the 2nd largest distributor to the convenience store industry with annual sales over $17 billion. They were previously based in San Francisco and recently relocated their corporate headquarters to Westlake Texas, a suburb north of Fort Worth and about 30 miles from Dallas. CEO Scott McPherson noted the fact that Dallas offers more favorable operating costs, lower taxes and a central location for Core-Mark’s nationwide business.
One of Fortune 500’s top 10 largest U.S. company’s, McKesson Corp has also relocated its headquarters from San Francisco to Las Colinas. Los Colinas is located about 25 minutes north of Dallas and right near DFW airport. The company is the nation’s largest pharmaceutical distributor, with more than 50,000 employees worldwide and revenue of over $200 billion. McKesson is one of 24 Fortune 500 company based in the Dallas-Fort Worth region which is third in the country for the number of Fortune 500 headquarters, behind New York City and Chicago.
Apple continues to expand its Austin Texas campus. Apple already employs around 7,000 people in Austin on their 133-acre campus. The new facility will initially accommodate 5,000 additional employees with room to grow to 15,000 jobs including engineering, R&D, operations, finance, sales and customer support. A 65% annual tax break is one attractive reason for Apple choosing Austin in addition to the high quality of life, low cost of living compared and lack of state income tax.
Texas is massive, where is all this growth moving to exactly?
It was recently noted that within Texas, 80% of population and economic growth in the past decade has been centered in what is known as the Texas Triangle. This essentially includes Dallas in the north, Houston in the east and San Antonio in the West.
The triangle contains 4 of the fastest growing cities in the U.S., is over 58,000 square miles and the home of over 21 million people. By 2025 the population is projected to reach 30 million people. Further, even during the last recession, in 2008 the 4 cities in the Texas Triangle were among the top 10 largest for job creation.
Population growth is one of the key indicators we analyze when selecting a market to invest in. Many areas of TX are among the top-10 population gainers in numeric terms, according to the Census bureau. We assumed that most of the population growth has been directly correlated to job growth. But what we found is interesting; the population growth is not simply resulting from people relocating for jobs.
About half of Texas’s growth comes from the fact that births well outnumbered deaths. Texas State Demographer Lloyd Potter recently noted, “Texas is a pretty young state, in terms of our age structure, and we’re also a minority-majority state,” meaning bigger families, Potter explains. “And so the result is, we have a pretty healthy natural increase in the population”.
While Texas continues to benefit from strong growth and positive trends, it also faces meaningful challenges. Rising living costs, rapid development, widening income disparities, immigration and border policy, international trade dynamics, and volatility in the oil and gas sector all remain critical factors that will shape the state’s future and its ability to sustain national leadership in economic expansion.