High Supply Meets Strong Job Growth in Small Texas Markets

Nearly 147,000 apartment units were underway in Texas at the end of 2nd quarter 2024. And while the Lone Star State’s largest markets may get all the headlines – looking at you, Dallas – plenty of small Texas markets have grown apartment stock significantly or are poised to do so in the near future. After factoring in population growth and job additions, development in these small Texas markets seems like a no-brainer for savvy apartment builders. Here are four small Texas market we’re watching.

Sherman-Denison

Located just a few miles south of the Oklahoma state border, Sherman-Denison has become a haven for semiconductor plants. The market has grown total employment 2.6% in the year-ending June, and more jobs are still forthcoming. With less than 7,000 existing units in the market, according to data from RealPage Market Analytics, even the addition of a couple hundred units can throw off apartment fundamentals in the near-term.

Even though Sherman-Denison’s population grew nearly 9% in the five-year period ending in 2022, according to the latest from the U.S. Census Bureau, gains from these two semiconductor plants had yet to be captured in 2022 data. With nearly 5,000 new jobs promised by Texas Instruments and GlobiTech in 2025, the local economy and population still has plenty of runway to grow.

College Station-Bryan

The true supply story in College Station-Bryan is not what’s on the way, but what has delivered over the last few years. This market had no units underway at the end of 2nd quarter 2024. But that comes after a sustained supply wave hit College Station over the last eight years or so, peaking in 2018 and 2019. Conventional housing is tracked separately from student housing, but Texas A&M’s student housing also saw significant supply volumes during that time period.

Meanwhile, job growth in this marked clocked in at one of the highest ratios of job growth in the nation as of June. Over 71,000 students attend Texas A&M University, one of the largest colleges by enrollment in the nation. College Station-Bryan’s Education and Health Services sector has been adding jobs at a fast clip over the last couple years, along with even stronger gains in the Professional and Business Services sector.

Lubbock

While Lubbock’s fastest growing age cohort is counterintuitively those aged 60-64 years, this college town’s economy is buoyed by Texas Tech University’s 40,000 students. Much like College Station, Lubbock’s economy has grown its Education and Health Services sector at a strong pace in recent years, along with strong job gains in the Leisure and Hospitality Services sector.

Lubbock is also arguably the biggest market in west Texas, making it a hub for everything from health care to services and retail for nearby rural communities, which further stabilizes its jobs economy. A relatively mild volume of units were underway in Lubbock as of 2nd quarter 2024, but that comes on top of a 8% total inventory growth rate in the last five years.

Killeen-Temple

Killeen-Temple is located in the middle of two other fast-growing Texas markets: Waco to the north and Austin to the south. It also encompasses Fort Cavazos (formerly Fort Hood), which is the largest U.S. military instillation in the world at about 340 square miles, with over 34,000 active-duty military (plus another 13,000 civilians and contractors). That easily makes Government jobs the largest employment sector in Killeen-Temple.

Still, most construction activity in this market has happened in the Temple/Belton submarket, which sits more centrally located to Waco and Austin on I-35. As of 2nd quarter, all 446 units underway in this market were in the Temple/Belton submarket. Meanwhile, population here has grown at one of the fastest rates in the state, swelling over 10% in the five-years ending 2022 – and that’s saying something for Texas.