From Oil Fields to Real Estate Capital Markets: How Texas Professionals Are Navigating a Changed Market

Written by:

Steve Marcinuk

Date:

30 Dec 2025

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Texas commercial real estate financing has undergone significant changes over the past seven years, shaped by volatile interest rates, stricter lending standards, and evolving buyer and seller expectations. For professionals operating in this environment, success now depends on both an understanding of recent market cycles and hands-on experience with today’s tighter capital conditions.

Culby Culbertson, founder of Culbertson Holdings, LLC, has followed an unconventional path—from selling drill bits in Midland’s oil fields to arranging hundreds of millions of dollars in real estate loans. His career offers a window into how Texas market participants have adapted, and the strategies and mindset shifts now required to operate in a fundamentally changed commercial real estate landscape.

From Energy to Real Estate

The mid-2010s oil price collapse pushed many Texas professionals to seek opportunities outside the energy sector. Culbertson, who sold Halliburton’s diamond tip drill bits when oil traded above $100 a barrel, faced a stark downturn when prices crashed in 2016.

“At the time, oil had really tanked. Oil even went negative,” Culbertson recalls. “There was going to be a while before people bounced back and really started making money in the oil business. And I was a young cat in my early 20s, trying to figure out what I wanted to do. The last thing I wanted to do was wait around for an industry to bounce back.”

Culbertson shifted to real estate investment and private equity in Dallas during 2018–2019, entering the market as it was nearing its peak. This transition provided exposure to complex deal structures and the fast pace of Texas real estate, laying the groundwork for his later specialization.

Specialization in Real Estate Capital Markets

The complexity of commercial real estate makes specialization essential. Culbertson’s early experience ranged from fix-and-flip projects to commercial transactions, but he found his strength in capital markets.

“You don’t just step into real estate and start being the guy. You have to see a bunch of different types of real estate. You have to meet all different kinds of investors and different third parties because it’s such a broad industry that you could never really get a full taste,” he says.

Specializing in capital markets, Culbertson became the central point between lenders, borrowers, and third parties, gaining a comprehensive view of market trends and deal flow. “You’re so ingrained in the transaction, you understand it much better than even some of the owners. You definitely understand it way better than a lot of the third parties that are out there.”

Interest Rates: A Return to Historical Norms

Interest rates have driven much of the recent change in Texas real estate financing. Culbertson closed his first agency loan in 2019 at just over 5%, then watched rates plunge to historic lows during the pandemic. This period, he says, created unrealistic expectations among both buyers and sellers.

“People got this false sense that these rates they were seeing were somehow going to be just what they were forever,” he explains. “If you were to look back historically, that is far from the truth, because our grandparents were buying houses with 15 to 18% rates.”

Today’s rates, though higher than pandemic-era lows, reflect a return to the long-term average. Understanding this context is critical for borrowers and lenders as they recalibrate their expectations in 2024.

Creative Financing Becomes the Norm

Higher rates and tighter lending standards have forced buyers and sellers to adopt more creative financing strategies. Banks, once comfortable with 80% loan-to-value ratios, now prefer 70–75% on most deals.

“Banks have ultimately de-risked their credit profile. They’re no longer getting to 80% leverage. You can kiss that goodbye,” Culbertson says. “Banks are typically getting to like 70%. You have a pretty good deal on your hands with a pretty good background if you’re getting to 75%.”

To fill the resulting equity gap, buyers are turning to seller carryback financing, preferred equity, and mezzanine loans. These “A piece and B piece” structures supply the extra leverage needed to close deals, but require more sophisticated structuring and negotiation.

Buyers, Sellers, and the Pricing Disconnect

A key challenge in today’s market is the disconnect between buyers adjusting to higher rates and sellers holding onto price expectations from the low-rate era.

“A big thing that buyers are having trouble with at the moment is still getting accustomed to what the rate environment is, and then also dealing with sellers that are still somewhat stuck in the sales environment from a few years ago,” Culbertson observes.

This gap is vast in the multifamily sector, where sellers may price 1970s-vintage properties at $135,000–$150,000 per unit, expecting buyers to justify the price through operational improvements. With rent growth stabilizing and rates normalized, such value-add strategies are more complicated to execute.

Investment Strategy: Focus on Fundamentals

Culbertson advises investors to be cautious about betting on future rate drops. “You can’t buy into the future when it comes to rates. You can maybe buy into the future when it comes to management.”

He sees opportunity in operationally distressed properties with clear paths to improvement, but warns against buying stabilized properties at premium prices based on hopes for lower rates. In his view, disciplined underwriting and a focus on operational value creation are essential in the current market.

Development Offers Yield—But Demands Expertise

Despite tighter conditions, ground-up development remains one of the best ways to generate outsized returns—if done by experienced operators. Construction costs have stabilized as lumber and steel prices, along with labor markets, have stabilized after pandemic disruptions.

“I still think that development is the best way to find yield, because you’re going in at the lowest basis you can and ultimately creating value based on your surroundings,” Culbertson says.

His firm funds land development, ground-up construction, and construction takeout refinancing, with developers achieving returns of 2.5x to 5x on their investments. However, he cautions that success requires detailed knowledge of soft costs, municipal processes, engineering, and utilities—areas where inexperienced developers can stumble.

Texas Submarkets: Where Opportunity Remains

While established markets like Frisco and Plano have become expensive with limited upside, growth continues in emerging Texas submarkets.

“Everything north, like Frisco and Plano, is overgrown. There’s not a lot of juice left,” Culbertson says. “Whereas, if you’re looking in some other markets, like Terrell, Texas, or Midlothian, or DeSoto, or some of these other markets that are still seeing tremendous growth, there’s a ton of opportunity.”

The I-35 corridor between Dallas and Austin and East Texas cities like Tyler offers the potential to acquire properties at reasonable prices and benefit from ongoing population growth and development.

Dallas Supply Constraints and New Product Types

Oversupply in certain Dallas property types, especially Class A multifamily, has made it difficult to obtain permits for new standard apartment projects.

“Right now, you couldn’t go out and just get a permit to build in Dallas because there’s so much supply that’s currently out there,” Culbertson explains. “If you’re going to pull permits to build something, it’s got to be like 55 and up community, senior living, or affordable housing. It can’t just be your super-amenitized ‘I have a spa and a dog park,’ and now you’re going to come pay four bucks a foot in rent.”

This environment has created opportunities for build-to-rent communities and townhome developments that serve families, rather than the amenity-heavy apartments that dominated recent construction cycles.

Looking Ahead: Realistic Expectations and Creative Solutions

Texas commercial real estate capital markets are adjusting to normalized rates and more conservative lending. Succeeding now requires realistic expectations, creative financing, and a focus on operational value—not just rate arbitrage.

For professionals like Culbertson, whose firm has grown from two to six employees and now handles over $100 million in annual loan volume, the key is understanding market dynamics and guiding clients through complex decisions. Historical perspective, up-to-date market knowledge, and creative problem-solving remain essential skills.

As the market continues to adjust, opportunities remain for those who understand the fundamentals and adapt their strategies. Texas’s growth trajectory and manageable financing costs still provide a foundation for commercial real estate activity, but only for those able to navigate today’s market realities.