By Alan Stalcup, founder, CEO, GVA Real Estate
Austin’s apartment inventory grew 33 percent from 2020 to 2025, according to data from Marcus & Millichap — the fastest rate in the country. In addition, data from CoStar Group and the U.S. Census Bureau, respectively, show that vacancy is sitting at 14 percent, roughly double the national average.
That’s what happens when every investor in America chases the same story at the same time.
Austin isn’t a bad market. It’s a great city. But the math doesn’t work right now. When vacancy is 14 percent and new supply keeps getting added, buyers aren’t buying yield; they’re buying a prayer.
The opportunities in Texas didn’t disappear; they moved. And they moved to places most investors aren’t looking.
The Places Nobody’s Watching
The Rio Grande Valley has between 1.4 and 1.5 million people, according to Census data. That’s not a small market. It’s a large, underfollowed one. McAllen, Harlingen, Brownsville — these cities have real population bases, stable renter demand and almost no institutional competition.
Rents sit around $700 per month. GVA has been pushing $240 increases — roughly 30 percent — with light improvements. Not gut renovations or repositioning the asset, just new fixtures, updated finishes, better curb appeal — the basics.
That kind of spread doesn’t exist in Austin. Nor does it exist in Dallas. It exists in markets where pricing hasn’t caught up to reality because the capital never showed up. The big funds screen for headline growth rates and migration charts, and these cities never make the cut. So the assets stay cheap, and they stay mispriced. That gap is the whole opportunity, and it stays open precisely because it’s unfashionable. The day these markets show up in a national ranking is the day the spread starts to close.
Stability Over Story
Laredo and Corpus Christi are different plays. They’re not high-growth. They’re not going to be on anyone’s “top markets” list — and that’s the point.
These are income markets. Buy at the right level, collect the rent, manage the asset well. The returns are predictable, albeit not exciting.
Corpus Christi runs on the port, refining and a Navy presence that doesn’t relocate when capital markets turn. Laredo moves a large share of all U.S.–Mexico trade through a single crossing. That trade isn’t a forecast. It’s trucks crossing a bridge every day, and it keeps people employed and renting whether or not the asset trades at a premium.
Neither city will ever be fashionable, and that’s exactly what protects the basis. Fashionable markets price in five years of good news. These markets price in none. When a market already assumes nothing, there’s very little left to disappoint. Downside that’s already discounted is the cheapest downside there is.
After the last cycle, predictable looks good.
A lot of operators learned expensive lessons from 2021–2022. They weren’t wrong about real estate. They were wrong about what they were optimizing for. Too much leverage, too much exposure to rate movement, too much faith that appreciation would cover the math, and when rates moved quickly, the math broke.
That experience taught many investors — this author included — a lesson. Stable markets with in-place cash flow don’t break the same way. They bend. A bend can be managed. A break can’t.
Brownsville Is One To Watch
If there’s one market where the fundamentals are quietly stacking, it’s Brownsville.
In March, President Trump announced that America First Refining will builda $300 billio refinery at the Port of Brownsville, backed by India’s Reliance Industries. The facility will be the first new oil refinery to be developed in the United States in 50 years and the largest energy project in U.S. history. Ground breaks in the second quarter of this year. That’s on top of existing LNG (liquefied natural gas) infrastructure, pipeline investment and SpaceX’s inevitable expanding operations following its explosive IPO (initial public offering) on June 12.
These are not speculative catalysts. They’re permitted, funded and under construction. Thousands of jobs are coming to a market with affordable housing, limited supply and no institutional competition.
When real economic drivers like that show up in a secondary market, the setup turns asymmetric. The downside is a stable income play. The upside is significant rent growth driven by job creation that has nothing to do with tech migration or remote work trends. One depends on a permitted refinery and a launch facility. The other depended on a narrative about where knowledge workers may want to live.
That’s a different kind of bet than Austin in 2021.
The Pattern
Every market described here shares three things.
- First, mid-sized population with stable demand. Not surge demand driven by migration hype. Demand that was there before the cycle and will be there after it.
- Second, limited new supply. Nobody is building 30,000 units in the Rio Grande Valley. The construction pipeline is thin because the institutional money never arrived. That’s the moat.
- Third, operational inefficiency. These properties have been managed the same way for years. Rents are below market. Maintenance is reactive. Leasing is manual. Bring real operations to these assets and the value creation is immediate, not a five-year projection that depends on the market cooperating.
Put those three together and the margin of safety is structural, not borrowed. Investors willing to expand their horizons can buy at 7 caps in markets where Austin investors are fighting over 5 caps. The spread between those two numbers is where the margin of safety lives. It isn’t manufactured with leverage. It’s already in the price.
The Bottom Line
The last cycle taught a lot of investors an expensive lesson about the difference between growth and yield. Growth is a story. Yield is a number. Stories change. Numbers either work or they don’t.
The mistake wasn’t believing in Texas. Texas delivered. The mistake was paying a growth price and calling it a yield investment, then watching rates expose the difference. The secondary markets don’t ask anyone to make that trade. The income is there on day one, and the catalysts, where they exist, come for free on top of it.
The next phase of Texas commercial real estate isn’t about chasing the next Austin. It’s about rediscovering yield in the places investors ignored while they were chasing the last one.
The deals are there. They’re just not where everyone is looking.