June 21, 2023
San Antonio, TX – June 21, 2023
A Twitter thread caught my eye last October.
On a media platform known for being filled with cynical hot takes, inflamed by the dumpster fire du jour and obsessed with the terrible future unfolding in front of us, Levi Benkert was earnest. Hopeful. Optimistic.
Specifically, the Austin investor made the case for Texas’ unusually strong economic prospects. I was struck by the unusual tone. How dare he be hopeful? On this website? In this economy?
And I was struck by how much his thesis made sense.
He pointed out five unfair advantages Texas possesses that make its economy strong and likely to get stronger. Do we dare join in his optimism? I reached out to him and spoke about these engines of growth.
Since 2000, Texas has had the nation’s second-largest population and continues to boast massive growth. From 2021 to 2022, it added more population than any other state. That same year, six Texas cities dominated the top 15 of U.S. cities with the largest growth in absolute numbers: Fort Worth, No. 1; San Antonio, No. 3; Houston, No. 9; Georgetown, No. 10; Dallas, No. 13; and Frisco, No. 15. Ranked by the largest percentage population increases, six suburban Texas cities dominated the top 15: Georgetown, No. 1; Kyle, No. 3; Leander, No. 4; Little Elm, No. 5; Conroe, No. 11; and New Braunfels, No. 13.
Why do we care? With population growth comes investment, housing, infrastructure spending and opportunity.
You wouldn’t know it living in Texas, but about half of all counties in the rest of the country are shrinking in population, something that brings a whole host of economic problems, such as lower home values, lower infrastructure spending and lower economic opportunity. The population boom of Texas is itself a massive economic driver.
I know, I know. Not everybody finds housing to be affordable anymore, especially in hyper-growth areas like Austin or parts of many other cities. But despite rising prices, compared with most other urban areas of the country, Texas is cheap. And its rural areas are really cheap.
The ability to expand into affordable available land has kept real estate prices very low in Texas in comparison to other states. That, in turn, is an unfair advantage over other places. As Benkert points out, only 25 percent of Texas land is within the urbanizing Texas Triangle of Dallas, Houston, Austin and San Antonio. That leaves 75 percent of the state very rural and very affordable.
He also pointed out a notion I hadn’t considered: “The Texas Triangle is one of only a few regions in the world that could practically stand alone without the help or trade of its neighbors.
Specifically, Austin boasts world-class technology companies and innovation. Dallas-Fort Worth provides banking and skilled labor. San Antonio brings the lower-cost manufacturing. (Sorry, S.A. It’s true.)
As for Houston, I’ll let Benkert’s tweet say it: “Don’t even get me started on Houston. It plays with Austin in tech, Dallas in automation, and San Antonio in manufacturing. And it is a financial capital, not to mention that it is one of the world’s largest energy hubs that happens to be conveniently located on the Gulf Coast, boasting America’s largest port by value. Second only to Germany in machine shop tech. Oh, yeah, and by the way, Houston is the second-largest concentration of Fortune 500 headquarters worldwide.”
He took it another step when we talked.
“Austin, Dallas, Houston and San Antonio might as well be different countries in terms of what businesses they attract,” Benkert told me. That specialization among its largest cities gives Texas an unusually powerful draw for a wide range of industries.
The state’s location, bordering Mexico and on the Gulf of Mexico, is another advantage.
“We’re just really well-located, and that matters more than people give it credit for,” Benkert said. “Proximity to Mexico allows for this incredible opportunity to move goods and services back and forth.”
He sees another geographic asset, too: “The port in Houston — which is doing more than double its volume compared to the time before COVID. We remember the pictures of ships lined up in Los Angeles during the supply chain slowdowns, but one of the main beneficiaries has been Port of Houston.”
These geographic facts undoubtedly contribute to the fact that Texas exports — estimated at $300 billion per year — total more than those from California and New York combined.
The second- and fifth-largest oil fields on the planet are in Texas. Inexpensive, available electricity reduces the cost of living and attracts manufacturing and other businesses that thrive on lower prices. And Texas has been at the center of the United States becoming the world's largest producer of oil and gas.
Benkert does not say this, but it was my main thought as I read his Twitter thread and as we spoke: Maybe a sixth factor is optimism.
Optimism itself is a competitive advantage. If you think your best days are ahead of you, it changes how hard you’re willing to work.
Optimism determines whether you take risks, as there is no risk-free way to make progress. Starting and running a business itself is an exercise in optimism, requiring you to believe that good things not only could happen but are likely to happen if you follow the right steps.
The idea of Texas as an independent economic powerhouse — it would rank as the world’s ninth-largest economy if it were its own country — has been around for a while.
Hearst Newspapers journalist Erica Grieder, in fact, wrote a book on the subject. “Big, Hot, Cheap, and Right: What America Can Learn From The Strange Genius of Texas,” is all about exploring the theme of Texas economic exceptionalism.
If anything, the population boom and shale revolution have deepened Texas’ unfair economic advantages since her book came out in 2014.
So, who is Levi Benkert? He’s not a famous person. He’s an Austin-based real estate entrepreneur who started his investment company a couple of years ago. As private equity investors and companies go, his Harbor Capital is relatively small, boasting nearly $200 million in assets under management. It buys industrial properties primarily in the San Antonio and Houston markets. It’s very unsexy-looking stuff, like decades-old industrial properties, warehouses, and manufacturing and storage facilities.
He concluded his optimistic Twitter thread using investment slang for owning shares in a company: “As the world changes around us, it’s hard not to be long America, and impossible not to be long Texas.”
This kind of optimism, in a cynical world, can seem naive or unsophisticated. And pointing out the incredible opportunities of the present-day reality is to risk an immediate backlash.
I don’t know, though. Given the incentives of a platform like Twitter, or even the everyday discourse of the news media, maybe the bravest, most countercultural statement someone can make is: “Things are currently awesome and likely to get even better.”
Michael Taylor is a San Antonio Express-News columnist, author of “The Financial Rules for New College Graduates” and host of the podcast “No Hill for a Climber.”