A California-based multifamily investor recently made a substantial investment in Houston’s Westchase area. Sunstone Two Tree acquired the 384-unit Villas Del Paseo for $29 million, amounting to $75,500 per unit. This strategic move highlights the company’s commitment to expanding its presence in the thriving Houston market.

Property Overview

Constructed in 1978 and renovated in 2015, Villas Del Paseo is set for further enhancements. Sunstone Two Tree plans to invest $10.5 million, approximately $27,000 per unit, in both interior and exterior upgrades. The renovations, which include the addition of dog parks, are scheduled for completion next year, promising a modern and attractive living experience for residents.

Sunstone Two Tree’s Expansion Strategy

Sunstone Two Tree, formed from the merger of Sunstone Properties Trust and Two Tree Capital, specializes in investing, developing, and managing rental communities in high-growth markets. With a firm foothold in Westchase, the company already holds 10 other properties across the Houston metro area, including projects in Rosenberg, Conroe, Baytown, Dickinson, and Galveston.

In 2016, Sunstone Two Tree acquired the 282-unit Commons at Westchase, reflecting its ongoing commitment to the region. This Class B property, appraised at $30 million last year, witnessed a significant increase in value following a 2018 remodel.

Westchase Multifamily Market Dynamics

While multifamily properties have been on the rise in Houston’s western and northwest markets, Westchase stands out as an exception in the otherwise flourishing West Houston market. Despite being one of Houston’s youngest enclaves, the neighborhood has a limited multifamily pipeline, with no new units in development.

Westchase’s multifamily market boasts an 89 percent occupancy rate, aligning with Greater Houston’s overall rate. Notably, this area witnessed a 1.1 percent decrease in rent prices year-over-year between the third quarters of 2022 and 2023, according to Transwestern. The neighborhood’s average effective rent stands at approximately $1,150.

Projections for Greater Houston’s Multifamily Market

Despite the overall strength of Greater Houston’s multifamily market, signs of slightly increased vacancy are projected for this year. Record-setting property deliveries are expected to impact demand, creating an evolving landscape for investors and property managers alike.

Navigating Opportunities in Houston’s Multifamily Landscape

Sunstone Two Tree’s recent acquisition of Villas Del Paseo in Westchase reflects a strategic move in response to the evolving dynamics of Houston’s multifamily market. With a focus on both property enhancement and market expansion, the company is poised to capitalize on the growth potential of the region. As Greater Houston’s multifamily market undergoes changes, investors and industry stakeholders should remain vigilant and adaptive to seize emerging opportunities.