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Breaking down why Silicon Valley companies are moving to Texas

Rastegar Property Company CEO Ari Rastegar joined Yahoo Finance Live to break down some real estate investing opportunities that have arisen during COVID-19.

Video Transcript

SEANA SMITH: Home prices in some of the smaller cities are rising at a very rapid rate. And this comes as people look to move out of those big cities because of the pandemic. So for more on this, we want to bring in Ari Rastegar. He's founder and CEO of Rastegar Property Company. Ari, great to have you back on the program.

We spoke last time, and you were making this big push for Austin. And since then, we've had Oracle move its headquarters there. Elon Musk has said that he is relocating there. What has this done to the real estate market in your area, and what makes Austin so attractive, do you think?

ARI RASTEGAR: Look, it's-- I think the joke is Austin is not in Texas, you know, for a lot of folks that are coming from San Francisco and New York. We have a beautiful dialogue between the left and the right. Beautiful trees, great parks, great live music. It's central in the middle of the United States. And we also have Google Fiber, fast internet.

And it's just an all-around a great energy. But we have great music, a great university, where people want to be. And we actually have more parks than any top 10 city in the United States. I think the confluence of those events and the affordability has really made it something special.

ADAM SHAPIRO: I still love New York City, I just got to be honest with you. But I've been to Austin, it's beautiful, but let me ask you this. In your neck of the woods, how many young people are living with their parents? I would imagine with prices going up, it gets harder and harder.

ARI RASTEGAR: I can give you a great statistic that I read the other day. So as of 2020, if you look at individuals aged 18 to 29, forgive me, I'm a data analytics fanatic, so I read every-- this is what I-- you know, we're very much a data company at Rastegar. And so I read something staggering is that individuals aged 18 to 29 in the United States, which is the largest demographic, are 54% of them are living at home, which is the largest percentage ever.

And it's the reason why we've been investing a lot in multifamily and you're seeing rentals a lot is because that's shadow demand. That's the most-- more than the Great Depression, more than the Great Recession, more than any time in history living at home.

SEANA SMITH: So then, Ari, I guess it's a huge opportunity, then, for you. It sounds like you're taking advantage of it. What's the growth potential, then, do you think of that the next couple of years?

ARI RASTEGAR: The growth potential's just started, OK? So people have talk-- I'm born and raised in Austin, as a lot of you know. It's my hometown, although I've lived all through Texas. But, you know, my joke used to be, we're in the second inning of what Austin's growth is.

But when Oracle moved in, and the world literally runs on Oracle, literally, and they already had two big offices, Facebook just took another million square feet, and you have 156 people a day moving in. After Oracle announced they're moving and Tesla bought the 2,000 acres, I changed that thesis that I don't even think they've sung the National Anthem yet.

ADAM SHAPIRO: Love Austin, had great barbecue there. Will this trend be sustainable?

ARI RASTEGAR: Absolutely. And we have a good 20-year run in front of us. And you can look at that based on the leases and the companies that have signed. They are here to stay. Apple's new campus on 140 acres doesn't even open until 2025. Google's new office building, 1.2 million square feet, doesn't even open until 2024.

So you're talking about four, five, six, seven, 10, 15 years, you know. And some of the leases that are being signed are 2030 leases of the biggest companies in the world, which leads me to believe that they're here to stay.