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U.S. migration from domestic and international sources continues to hold profound implications for the country’s economy and demographic composition. It’s also the subject of a new research report from Yardi Matrix.
The report notes that the South, Southwest and West accounted for 80% of the population growth in the country’s top 50 metros between 1970 and 2018. “Migration is a leading factor in the population shift” and is “being driven by a combination of economic, social and technological factors” including lower costs of living and doing business, tax policies, land availability, climate, and cultural and recreation attractions.
“Technology makes both individuals and corporations more mobile than before, and as the economy grows, more service-oriented businesses are less tied to physical locations,” says the report, which was published in PREA Quarterly, a members-only publication for the real estate investment community.
Older core metros that lost populations to domestic outmigration are still holding their own. For example, New York City, Miami, Los Angeles, Washington, D.C., and Boston are top destinations for international migrants who fill jobs and fuel economic growth. “Immigration has been the ace in the hole for primary commercial real estate markets” by compensating for domestic outmigration and declining birth rates among native-born women, the report says. Business, finance and technology opportunities in the cities referenced above, and others such as San Francisco, also are magnets for young, educated workers.
New Work and Lifestyle Options
Along with the policies, social forces and economic trends shaping migration patterns, the report addresses factors affecting the real estate industry such as housing affordability, homeownership and family formation. “Investors must pay attention to developments in lifestyle and technology,” such as exercise rooms, shared space, better food options and other amenities that workers increasingly expect. On the residential side, attitudes about homeownership, commuting and other factors among millennials and members of Generation Z (those born in the late 1990s and early 2000s) will be key influencers of demand for apartments.
Whether in the rapidly expanding South and West or in the older core metros, in large cities or smaller communities, a diversified job base is crucial to economic strength. “No metro is immune from recessions or downturns, but those with strong fundamental characteristics will always perform well over time,” the report says. Those characteristics include strong secondary educational institutions that produce skilled workers, affordable housing, cultural attractions, parks and government/business collaboration on encouraging economic growth.
“Lifestyle and work preferences … always evolve in a way that changes demand, and every property type will be affected,” according to the report.
The article by Paul Fiorilla, director of research for Yardi Matrix, is available for download.
