Opportunities In West Texas
June 28, 2025
This week I’m writing from west Texas. I’m in the Permian Basin meeting with a friend and real estate investor client to look at properties. Why go to west Texas to look for real estate investments? Opportunity.
First, I believe Texas is probably the best state for real estate investing. The tax situation, the political climate, the incredible growth, and the pro-business attitudes all combine to create a an amazing investment atmosphere. This is not just true for real estate but also for starting or buying a business.
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The Midland and Odessa area of Texas, which is in the heart of the Permian Basin is a place where things are happening. There are huge amounts of money here. And contrary to what you might hear from some very loud, uninformed people, most of the money here is not from big oil. They are here too but the huge amounts of money I’m talking about come from the small, independent business owners that operate the thousands of oilfield service companies that service the 200,000 oil and gas wells, drilling sites, and pipelines.
They are people that went to work in the oilfield, learned a particular skill or niche part of the business and started their own company. These are the people that create and support an economy that produces $182 Billion in gross product and supports over 786,000 jobs throughout the US. According to the Texas Railroad Commission (the state’s oil and gas regulatory body) the Permian Basin produces 40% of all the oil production in the US and 15% of natural gas. That accounts for approximately 25% of the US oil supply needs.
Higher Returns
So while real estate investors gush over finding properties with an 8% cap rate (a rough measure of annual ROI for commercial real estate) in other parts of the country, it’s fairly easy to find 10%+ cap rates in the Basin.
Industrial
There is an incredibly high concentration of industrial properties here. Most are used by oil and gas service companies, some are used for manufacturing and other uses. Most are leased from investors. These are small to medium sized properties.
The most popular industrial property is an Office/Warehouse which is actually a large shop with an office. Five thousand square feet with one acre is the most in demand. They vary from that small size to 70K or 80K square feet and everything in between. As the building size goes up so does the acreage attached.
Retail Is Not Dead!
And of course with thousands of well paid workers living here there is a high demand for retail properties. It seems like the area always has a need for more restaurants. And there is currently a definite shortage of retail properties with drive throughs. It was a great opportunity for retail and office land that we were looking at this weekend.
Office
Office buildings are in demand here as well. When the rest of the country was having high vacancy rates in office properties, west Texas office space was still in demand.
Land
Land for development is surprisingly difficult to find in this area. Most people think that because it’s west Texas there must be land everywhere, right? Nope. There is a lot of what appears to be empty land. However, when you take a closer look you see land that could be crisscrossed with pipelines and dotted with pump jacks and designated drill sites. That’s why we are meeting this week to look at retail and office lots in a mixed use development next to a high density residential development (3,000+ houses and 2 apartment complexes). This is reasonably priced land ready for construction. That’s difficult to find in a lot of markets.
So I guess that’s the long way of saying there are lots of real estate opportunities in the Midland/Odessa area. With energy production being a high priority with the new administration, an already healthy economy is set to grow even more. When interest rates come down real estate and business in general, will likely boom in the Permian Basin. I have worked with clients from California, New York, Chicago, Colorado, and many other states, who all love to buy in west Texas. Even more than investing in their own states. It's a great place to own property.