Texas Apartment Boom Poised to Continue as Tech Giants Relocate from California

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Highlights:

  • Tesla, Oracle and HPE’s recently announced moves from California to Texas expected to trigger a rise in apartment demand.
  • There are 126,900 apartments currently under construction in Texas, most of which are in Dallas metro, 49,000.
  • Last decade, half a million new apartments were built in Texas during the past decade;  Dallas metro leads with 177,400.

Against the backdrop of the so-called Bay Area exodus, Silicon Valley is quickly losing ground as the country’s main tech business nexus. The new promised land? Texas.

Already claiming one of the highest job growths in the U.S., Texas is likely to welcome an influx of talent generated by new job openings and relocations. And, even though last year popularized remote work more than ever, many techy Californians might follow their companies. For example, as Tesla is moving to Texas and Elon Musk himself trades the LA lifestyle for Texas, many others are also considering a move — which means Texas needs to be ready to show them some Southern hospitality. But, is the Lone Star State ready to accommodate those willing to relocate?

To find out, we turned to Yardi Matrix apartment data to see what Texas has to offer its potential new renters and what living in Texas might look like.

New apartment construction is thriving in the main Texas metros

Texas is fully prepared to accommodate incoming residents in search of new opportunities. Specifically, the state has 126,900 apartments under construction — this on top of its existing status as the national leader in apartment construction for years. Building new housing at a fast pace is the secret to keeping living costs in check. But, what makes the Lone Star State so special in this regard? “Texas holds the indisputable advantage of land use,” says Doug Ressler, manager of business intelligence at Yardi Matrix. “What’s great about it is that it enjoys an adequate availability to support population growth and migration, from dense cores to available exurban or suburban areas.”

For instance, the Dallas metro area has no less than 49,000 apartments under construction — the highest of all Texan metros — with 11,400 new apartments to be delivered in Dallas proper itself. And just in time too! In 2019, financial services giant Charles Schwab, among others, said they were coming to Dallas. Moreover, just a few months ago, real estate brokerage firm CBRE announced that it would move its global corporate headquarters from Los Angeles to Dallas.

Meanwhile, the Austin metro is in the process of building 31,000 apartments, 22,600 of which are located in the City of Austin — the most to be delivered in any Texas city. Between Oracle setting up camp here and a new Tesla branch said to create 5,000 jobs, they couldn’t come sooner. Although Tesla and SpaceX are still headquartered in California, Musk’s expansion in the Austin area comes with a 4M-5M sq.ft. facility worthy of a newly established tech hub.

Not to be outdone, the Houston metro has 28,600 upcoming apartments. Named one of the most popular places for corporate relocation and office expansion, the City of Houston, in particular, has 17,400 apartments under construction — worthy of the new global headquarters to HPE.

Additionally, the San Antonio metro will welcome 10,900 new apartments. One of the most dynamic startup ecosystems in the country, San Antonio proper currently has 9,300 apartments underway.

The last decade brought half a million new apartments to Texas

Between 2010 and 2020, the state enriched its inventory with nearly 2,000 new apartment buildings, housing a whopping 503,300 apartments across its metros.

Once again, the Dallas metro led the pack with the most apartments delivered last decade — a total of 177,400, with 52,600 rental apartments in Dallas alone. According to the Computing Technology Industry Association (CompTIA), Dallas is 2nd only to Austin for tech professionals and businesses, leapfrogging from the 7th spot it held one year ago, primarily due to a huge number of IT jobs available. “The technical hubs and information centers already in all the major Texas cities only enhance current and future employment growth,” Ressler says. “Tech companies are ultimately evaluating and selecting alternative sites based on the cost and creation of capital.”

Next up is the Houston metro with 131,300 apartments built last decade. The city of Houston is actually the Texas city with the most apartments built since 2010 — 73,000. Already a major recruiting hub, Houston is now the new global headquarters of HPE, one of Silicon Valley’s founding companies with 59,400 employees.

Further north, the Austin metro had 85,900 apartments delivered between 2010 and 2020, including 57,200 in Austin itself. According to CompTIA, Austin was named the best tech town in the U.S. for the second year in a row. Home to Silicon Hills, the cluster of tech companies already established here, Austin placed 1st even when considering remote work adjustments.

Notably, suburban Texas has also grown exponentially in recent years, with fringe areas offering the best of both worlds for renters, such as good Wi-Fi speed and cool amenities away from the noisy downtown. In fact, a recent RENTCafé report cited 8 Texas cities in the top 20 U.S. suburbs that built the most apartments in the past 5 years.

What kind of rentals will Texas newcomers find?

Unsurprisingly, living in Texas is easier on the wallet than Silicon Valley. As such, California tech professionals eager to relocate will have no problem finding suitable accommodations here. Even if they’re not the richest person on Earth, Texas still has plenty of attractive rentals. In fact, there are many high-end apartments with amenities that make trading the West Coast lifestyle a breeze — perfect for a crowd in search of fast Wi-Fi, energy efficiency, roomy floorplans with cool finishes and even private unit entries.

To that end, the Dallas area has the most high-end apartments to choose from — 389,600, followed by 303,800 in the Houston metro and 157,400 apartments in the Austin area.  This selection offers a wider range of choices for newcomers who might be looking for gym, business center and pool privileges among other comfy amenities, like quick access to a community dog park.

At city level, Houston (186,300 apartments), Austin (114,500) and Dallas (113,800) offer the most high-end apartments to those looking for comfort and exclusive amenities. Or, for those in need of a lot of space, smaller cities that tend to offer more square footage — like San Marcos (997 sq.ft), Pearland (990 sq.ft.) and Cypress (984 sq.ft.) — might be the best places to live in Texas.

Texas apartments offer great value for your money. For example, around $1,600 gets you a high-end 2-bedroom 2-bathroom rental in Austin, Dallas, Houston, San Antonio and Fort Worth. Or, for $1,800 on average, you can rent a 3-bedroom 2-bathroom apartment in high-end buildings in any of these major Texas cities. It’s also worth noting that the Brownsville area, home of a new Tesla supercharger facility, has the smallest rent for high-end apartments in the state: just $928 per month.

With the inconvenience of business travel in the face of restrictions and the never-ending need for a tech-savvy workforce, it’s easy to understand why employees would relocate for a company — even when presented with a remote option. Companies like Oracle now have work policies that, along with more WFH flexibility, allow their employees to choose their preferred office location.

If anything, 2020 proved that we can keep the ball rolling no matter the location. But it’s natural to still want to be close to the action. And Texas is slowly cementing its status as one of the top most active corporate move destinations.

Methodology:

RENTCafé is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the United States. Apartment and rent data was provided by our sister company, Yardi Matrix, a business development and asset management tool for brokers, sponsors, banks and equity sources underwriting investments in the multifamily, office, industrial and self-storage sectors.

The report is exclusively based on apartment data related to large-scale buildings containing 50 or more units. Numbers were rounded-up and focus on Texas metropolitan statistical areas, excluding micropolitan statistical areas, such as Kingsville, Corsicana and Waco. High-end refers to apartments in class A & class B+.

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