A California-based multifamily investor, Sunstone Two Tree, recently completed a significant acquisition in the Westchase area of Houston. The 384-unit Villas Del Paseo, located at 3030 Elmside Drive, was purchased for a total of $29 million, equivalent to $75,500 per unit, as reported in a recent press release. The seller in this transaction was Thrive FP, a company based in Austin.

Renovations and Development Plans

The Villas Del Paseo, constructed in 1978 and renovated in 2015 according to the Harris Central Appraisal District, is slated for further improvements. Sunstone Two Tree is allocating $10.5 million for both interior and exterior renovations, equating to approximately $27,000 per unit. These enhancements, which include the addition of dog parks, are scheduled for completion next year.

Sunstone Two Tree’s Strategic Investments

Sunstone Two Tree, a result of a merger between Sunstone Properties Trust and Two Tree Capital in the previous year, specializes in investing, developing, and managing rental communities in high-growth markets. The acquisition of Villas Del Paseo reflects the company’s commitment to expanding its presence in Houston. With 10 other holdings in the Houston metro, Sunstone Two Tree has established itself in various multifamily projects across Rosenberg, Conroe, Baytown, Dickinson, and Galveston.

Westchase: An Atypical Multifamily Market

Despite the surge in multifamily properties in Houston’s western and northwest markets, Westchase stands out as an exception in the otherwise thriving West Houston market. The neighborhood, having one of Houston’s youngest enclaves, seems conducive to apartment construction. However, the multifamily pipeline in Westchase remains dry, with no new units currently in development.

Westchase’s Multifamily Market Overview

Westchase’s multifamily market maintains an 89 percent occupancy rate, consistent with Greater Houston’s overall rate. Interestingly, it witnessed a rare decrease in rent prices year-over-year, dipping by 1.1 percent between the third quarters of 2022 and 2023, according to data from Transwestern. The neighborhood’s average effective rent is approximately $1,150.

Projections for Greater Houston’s Multifamily Market

The Greater Houston multifamily market is expected to perform well in the current year. Signs indicate a slight increase in vacancy rates as record-setting deliveries are anticipated to impact demand. This projection aligns with the overall growth and dynamics of the real estate market in the region.

A Strategic Investment in a Unique Market

Sunstone Two Tree’s acquisition of Villas Del Paseo underscores the company’s strategic vision in strategically investing in unique markets like Westchase. As the multifamily landscape continues to evolve in Houston, such targeted investments position Sunstone Two Tree as a key player in the ever-changing real estate dynamics of the Bayou City.