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Q&A: Transwestern’s Pumper Explains Why Houston is So Hot (for CRE Investment)

Don’t miss the first ever Connect Houston event scheduled for February 26, 2019 at The Houston Club. For more information — or to attend — click here.

As we eagerly await the event, Connect Media asked Steve Pumper, executive managing director of Transwestern, to give us an advance preview of his conference panel, Money Keeps Rolling In: Capital Markets at Work, which will feature some of the biggest investors in Houston.

Q: Houston continues to attract the attention of private equity, institutional investors, and international funds, as more and more new players continue to enter the market. What’s so appealing about Houston?
A: Houston has experienced tremendous population and job growth over the past decade. The economy is bigger and more sustainable because it’s supported by more than just oil and gas—we also have the Texas Medical Center, which is the largest medical campus in the world, and the Port of Houston, which has been extremely beneficial. Residents here have a low cost of living and a high quality of life.

Q: Houston went through a period where institutional and international money turned away from the city. That’s certainly not the case now. Who’s actively investing in Houston today?
A: Houston has an interesting mixture of capital—institutional, international, and private. If investors don’t have Houston on the radar, they need to because the trajectory is heading up. People who invest in Houston over the next year or so will be glad they did.

Q: What kind of opportunities are investors looking for in Houston?
A: We’re seeing investors active in the value-add and core to core-plus space. For core buyers, Houston is in the top 10. And I’d pick Houston and Northern Virginia as the top markets for value-add, particularly multifamily. Houston needs more workforce housing, which creates opportunities for apartment investors.

Q: Has anything surprised you about Houston’s investment market?
A: Given the office market dynamics, specifically the vacancy level, I’ve been pleasantly surprised by the number of office trades that have occurred over the past 18 months. Brookfield’s acquisition of Houston Center was an exciting deal, and now the company owns more than 10 million square feet in Houston’s CBD. That’s a huge endorsement for the city, because Brookfield is an intelligent investor who buys high-quality assets.

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