The multibillion-dollar growth of commercial and industrial investment in Texas has brought hundreds of thousands of jobseekers to the state. Texas is now home to the largest number of Fortune 500 company headquarters in the country.
Or is it the other way around?
David O’Reilly, CEO of The Howard Hughes Corp. (HHC) based in Woodlands, Texas, says American employers are, in fact, following the path of skilled workers moving to the state for its low crime, affordable housing and access to nature.
Either way, it’s good news for residential developers. The demand for quality residential housing in Texas has never been higher.
Recent announcements by major developers indicate supply is expanding in response.
One of the most significant comes from Dallas-based Megatel Homes. The company broke ground last month on Saint Tropez, a $2 billion community spanning 1,000 acres northeast of Houston.
Saint Tropez will offer 4,500 single-family homes ranging in size from 1,500 to 4,000 square feet, priced between $350,000 and $700,000. Two and three-bedroom multi-family rental units will begin at $1,200 per month.
Central to Saint Tropez are the numerous community amenities, including a manmade lagoon with white sand beaches, paddle boarding, kayaking, swim-up bar, FlowRider surf simulator, water slide tower, playground, cabanas, soundstage, splash park and much more.
“Lagoon communities have proven to be an extraordinarily popular residential option throughout Texas, with heavy demand for these amenity-rich developments,” Megatel co-founder Zach Ipour said in a media release.
Saint Tropez is not unique by any means. Megatel has announced similar lagoon-styled communities in Anna, Forney and West Dallas over the last year alone.
However, while home ownership is more affordable in Texas than many other parts of the country, there is a growing trend towards build-to-rent (BFR) homes across the state.
For example, at Howard Hughes’ 925-acre master-planned Bridgeland community in the Cypress area north-west of Houston, construction has begun on 263 new BFR homes.
The new Wingspan development, situated on 27 acres within the Prairieland Village, will offer the same high level of lifestyle amenities seen in the company’s build-to-own developments. These will include a pet park, playground, pool, state-of-the-art fitness center and covered outdoor spaces complete with grilling stations.
“By adding Wingspan to our diverse housing options in Bridgeland, Howard Hughes is responding to the unwavering demand for turnkey homes with all the benefits that come with living in the master planned community,” said Travis Guinn, vice-president of vertical development for HHC, in its news release.
The company has had BFR developments in mind for some time.
During a Q2 2021 investor call last August, Howard Hughes president L.J. Cross explained the typical renter might be an executive looking for a short term residential solution or single parents, young couples and families seeking rental housing while they save for a down payment in order to buy their first home.
“The thesis is to provide tenants with the flexibility of renting while still having access to many of the offerings a traditional home can provide, such as three- and four-bedroom configurations, private outdoor space and an attached garage.”
Cross’ remarks might seem prophetic today with mortgage rates rising across the country. For many, renting may prove to be more viable over the longer term than full ownership.
In fact, according to Rent Café, BFR home construction starts nearly tripled from 2020 to 2022 across the country. Dallas, Houston and Austin currently rank third, fourth and 13th nationally in terms of metropolitan cities with the most single-family rentals.
Although future BFRs in Bridgeland are in question, more are on the way elsewhere.
Coastal Ridge Real Estate, a national multifamily investment, management and development firm is partnering with Florida-based Halstatt LLC on its latest Texas development in Round Rock, north of Austin. Built under its Stillwell brand, the 225 new BFR homes on the 20-acre development will feature a resort-style pool, clubhouse, walking trails and fitness center as part of the larger 1,200 acre mixed-used Avery Centre.
Further north in Fort Worth, HPI Real Estate Services and Investments has acquired 55 acres where it intends to build 636 multi-family rental units. Another 193 will be single-family rental homes with attached garages and yards. Amenities will include clubhouses, resort-style pools, pickleball courts and walking trails.
“The demand for rental product continues to accelerate with growth in renters by choice and as home buyers battle rising interest rates paired with historically high home prices,” said David Davidson Jr., co-founder of Dallas-based realtor DB2RE.
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