For this Field Note, we wanted to share some perspective on a theme that has guided many of our investment decisions over the past decade — our continued focus on suburban growth markets rather than urban core locations.
When we started the company, much of the institutional capital in real estate was still heavily concentrated in major city centers. Over time, however, population growth in Texas has increasingly shifted outward, with many of the strongest demographic trends occurring in the suburbs surrounding Dallas, Fort Worth, Austin, and Houston. Job growth, school quality, housing affordability, and transportation access have all contributed to steady expansion in these corridors.
Our strategy has been to follow that growth rather than compete for assets in fully built, high-priced urban locations. By targeting areas that are just beginning to see meaningful residential and commercial development, we are often able to acquire land at a lower basis and develop projects that are positioned for the next phase of growth rather than the last one.
This approach does not always produce the fastest lease-up or the highest rents on day one. In many cases, suburban projects require patience, especially during the early years when surrounding development is still taking shape. What we have found, however, is that once these areas mature, the combination of lower land basis, limited competing supply, and continued population growth often leads to strong long-term performance.
We have seen this pattern repeat across multiple cycles. Locations that initially felt far outside the core eventually become established submarkets, and assets that once seemed early begin to benefit from the very growth that made the investment attractive in the first place.
Another advantage of suburban projects is flexibility. Larger sites and lower land costs often allow for expansions, additional buildings, or ancillary uses that would not be possible in more constrained urban locations. Over time, these opportunities can add meaningful income and increase overall asset value beyond what was originally underwritten.
Today, we continue to see strong population inflows into the Texas markets where we operate, particularly in the outer suburban corridors where new housing, retail, and infrastructure are still moving outward. While capital markets and interest rates will always move in cycles, long-term demographic trends tend to move more slowly, and those trends remain supportive of the areas where we are investing.
As always, our goal is to stay consistent with the strategy that has worked across multiple market environments — identify growth early, control well-located land, and hold long enough for the fundamentals to catch up.
