Real estate keeps Texas thrifts in the hole. Some of Houston's office buildings may end up as storage space, while the Texas real estate glut goes on - and continues to drain the resources of the state's struggling bank and thrift industry, more and more of which is in the hands of ousiders.

ALONG one of this city's busier commercial strips stretches a low-lying building, its walls plastered with black-and-white ``to lease'' signs. All the top-floor windows, and most beneath, are covered with brown paper. This is one of Houston's ``permanently vacant'' buildings, a term recently coined by the area's discouraged appraisal community, says James Gaines, vice-president at the Rice Center, a research-and-development think tank. Unlikely to find or keep business tenants, these buildings will be doing well to be converted and used for storage.

As much as 10 percent of the office space built in Houston, about the same in Dallas, and even more in Austin, is ``junk'' that was built during the Texas real estate boom, Mr. Gaines says. Vacancy rates in Austin hover around 39 percent; in Houston, Dallas, and San Antonio, they are 30 percent.

The owners of nearly all the foreclosed lots and buildings are the state's already hard-hit banks and savings-and-loan associations.

``They're in a mess because of it,'' says Paul Hardy, a principal with Dallas-based Commercial Banc Group, which specializes in distressed asset management. ``Most of the S&L's are running the property values down holding onto them, and they can't wait five or six years to get the values back to previously inflated prices.''

But if they put their real estate holdings on the market now, ``they would take such a huge slash, it could knock them below the poverty line,'' he says.

Institutions in Texas built into their portfolios an extremely high percentage - as much as 80 percent in some areas - of real estate loans, says Angelous Angelou, chief economist and director of international business development at the Austin Chamber of Commerce. He says institutions in Austin have gotten that down to just under 60 percent, and regulators are urging them down further to 50 percent.

When oil prices, the mainstay of the Southwest's economy, shot through the roof between 1972 and 1982, income flowed into the state. Many lenders furiously made commercial and residential loans on the basis of future expectations rather than current values, says Bernard Weinstein, director of the Center for Enterprise at Southern Methodist University in Dallas.

Falling commodity prices led to a decline in all other areas, and when people and their money stopped moving into the state, the demand for retail space and real estate dried up.

``When rents and property values went down instead of up,'' says Professor Weinstein, ``there wasn't enough cash flow to service the loans. ... They wound up foreclosing.''

Most economists, and the Federal Home Loan Bank Board, which oversees S&Ls, insist there will be no fire sale, no dumping of large amounts of low-value real estate.

``What they will try to do is market that real estate, liquidate it a little at a time, and get money gradually back into the earnings stream,'' says Texas Bank Commissioner Kenneth Littlefield.

The Federal Asset Disposition Association, an agency the regulators set up several years ago to move some of the foreclosed property, has had little success. It has been criticized for slowness and wrapping interested buyers in unnecessary bureaucratic red tape. Some of this, Mr. Hardy says, can be blamed on the difficulty of selling real estate from a national office.

How quickly individual companies can turn their nonperforming assets into earnings by getting foreclosed real estate back into the market depends in part, and especially for S&L's, on how fast the economy recovers and pushes up real estate prices. That could take as little as three years in some markets, and as long as 10 years in others.

Mr. Angelou expects the recovery of financial institutions to take about 12 or 16 months to catch up to the real estate situation, since it took about that long to feel the impact of falling prices.

One threat looming over the system, however, is the prospect of rising interest rates. The US League of Savings Institutions expects capital rates and short-term interest rates to stabilize. But they detect a hint of ``anticipatory inflation fever'' driving recent Fed actions.

``If the Fed does raise the prime rate another point or two, [Texas institutions] are going to lose a lot of money because of their nonperforming assets,'' says Mr. Littlefield.

Many economists think the worst is over for Texas banks, and that in 1989 some of the major companies should start turning in profits.

The bank portfolios of bad real estate are only about a fifth as large as those held by the S&Ls. The bulk of their loans fall in the agricultural and energy sectors, and for the biggest banks, in loans to less-developed countries, says Gary Bechtol, banking analyst at the state comptroller's office in Austin.

Nationally, things are looking up for commercial banks, which posted profits of $10.5 billion in the first six months of 1988.

Although losses continue in Texas, at the rate of $2.9 billion in the first six months of this year, as much as $2.3 billion of that was lost by First RepublicBank Corporation of Dallas alone. But regulators expect things to improve, now that First RepublicBank has received $4 billion from the Federal Deposit Insurance Corporation (FDIC) and is owned by the NCNB Corporation of North Carolina, and all but two of the other 10 largest Texas banks have been recapitalized or bought by other companies.

So far this year, 173 banks have failed or received FDIC assistance, and 55 of those, plus 42 First RepublicBank subsidiaries, are in Texas, according to the regulator.

Recent reports also indicate that the only truly Texan giant left, MCorp, is not going to remain independent without some kind of assistance or buyout.

The fact that the overhaul of the Texas financial system has left only one of the five biggest indigenous banks independent disturbs some proud Texans, but few bankers. Dr. Weinstein says the outside banks ``brought in a broader range of banking expertise that's going to be good for us in the long run.''

And the superregional NCNB, which bought First RepublicBank Corp. of Dallas, is expected to bring in some very competitive banking services, says Lawrence Connell, president of United Savings of Texas in Houston and a lawyer in Washington, D.C.

The banks' sister savings-and-loan institutions, however, continue to teeter, especially in the Southwest.

About 31 percent of the nation's 3,118 S&Ls, and 77 percent of Texas' thrifts, are unprofitable. To date, the Federal Savings and Loan Insurance Corporation (FSLIC) has borrowed $10.1 billion to prop up the industry's weakest links, but the expense of cleaning up the rest could cost as much as $75 billion.

Unlike the FDIC, FSLIC has tried to keep troubled S&Ls open by grouping them by region and merging the new institution with a healthy thrift if possible. Critics argue this strategy costs too much, that it would be cheaper to close the most hopelessly insolvent thrifts and pay off the insured deposits.

In general, Texas seems to have bottomed out and real estate prices should begin to recover, if slowly, says Thomas Plaut, senior economist at the State Comptroller's Economic Analysis Center in Austin.

Signs of improvement, he says, are a net gain of 116,000 jobs, which is almost half what the state lost during the 1986 and '87 recession.

Construction, banking, and real estate continue to decline, however. Jobs have shrunk by a total of 27,500 in 1988.

Because of the boost manufacturing has received from the lower dollar, trade is starting to come back, Mr. Plaut says, especially in Houston and the Gulf Coast areas, with their petrochemical and export-related manufacturing.

Real estate expert Hardy says investors are not only buying failed thrifts and banks to ``make a killing on the real estate later on,'' but also buying real estate to use it. ``When you see users coming in, you usually see speculators coming in behind them.''