We’re living in a new world. Americans aren’t willing to put up with high taxes, long commutes, extreme crime, and skyrocketing prices. So, what can we call this- a great migration?
How about a Great Awakening? There is an apparent divide between the states that encourage the financial growth of their citizens and the ones who fight it tooth and nail with costly regulations and overhead. So, of course, Americans are moving.
The emerging workplace flexibility and changes in cost of living forced people to reevaluate their locations on a mass scale. It’s no wonder we are seeing millions feeling – while looking for lives in business-friendly states. So, learn where everyone is going and why.
Why Should Businesses Pay Attention to Population Trends
A better question would be: why wouldn’t they??
The market has changed and landed in favor of the job seeker. With low unemployment and increased demand for workplace flexibility, corporations are paying more attention to methods that will make themselves more competitive recruiters. A major way to do this is to get ahead of relocation trends and position yourself where talent bases are. (And beware of dying locations marked by dwindling demand.)
Americans are moving in record numbers. “Some 46 million people moved to a different ZIP code between February 2021 and February 2022 — the most of any 12-month period since 2010 — according to a new analysis by Moody's Analytics shared with Axios and first reported by the Wall Street Journal.”
These moves are longstanding as people look harder at the potential locations for laying down roots. The trend isn’t letting up, so now it's time to consider how population changes affect your CRE.
By keeping an eye on where Americans are relocating, you will receive invaluable insight into the industrial, political, and financial trends that will continue to develop and shape American culture. So, don't get left behind. Earn a competitive advantage by learning about the states with the most inbound moves.
Let's start with the obvious:
1. Texas
Texas gained over 12,700 residents overall in 2021, according to the USPS. And when you look at the stats, it’s a no-brainer why Americans are rushing to build lives in the Lone Star State. Texas has one of the lowest tax burdens in the country:
- 0% Corporate Income Tax
- 0% Personal Income Tax (Top Bracket of Earners
- 8.25% Combined Sales Tax Rate
It also maintains a reasonable living cost throughout the state (even remaining affordable in popular metro areas).
Not only are families and individuals moving to Texas- many Fortune 500 companies have already relocated to Texas or are plotting Texas expansions. Because while individuals can benefit from the low costs and tax burden, the savings multiply for corporations. According to a survey by our nation's top CEOs:
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Texas was named the best state for business for 17 consecutive years. |
Household names you may recognize that relocated or expanded in Texas are:
- Apple
- Oracle
- Tesla
- Hewlett-Packard
- Amazon
- ExxonMobil
- AT&T
The most recent industry giant eyeing a Texas expansion is Amazon. While already overseeing 12 million square feet of space in North Texas, they are planning to build another 1 million square feet in Dallas.
On top of this, its influence is only climbing as the population boost earned the state another two congressional seats. According to Center Square:
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"Texas is projected to grow its population by more than five million residents by the end of the decade as an increasing number of companies are moving their operations to the Lone Star State." |
If you want to go more in-depth about the state's fiscal environment, check out The pros and cons of locating your business in Texas.
2. Florida
The state that was always popular with retirees is now witnessing a new fan base. The Northerners seeking respite in Florida are not driven by the cold (ok maybe, they are in part), but instead, they are looking for an environment where they can lay down roots.
Florida provides low regulations, taxes, and costs that make property ownership a reality for average Americans.
- 5.5% Corporate Income Tax
- No Personal Income Tax
- No Estate/ Inheritance/ Gift Tax
New York, Massachusetts, and New Jersey (to name a few) are some of the Northern states losing residents to Florida. And with these residents goes their income. Over the last 20 years, Massachusetts alone lost $20 billion in taxable revenue to mainly Florida, according to the Boston Herald.
All this population boost, coupled with over 300 financial services firms moving to Florida, has earned the state a record budget surplus for the fiscal year ending June 30, according to the Wall Street Journal.
Not only is Florida gaining billions in revenue, but like Texas, the population increase is driving up their political influence. Due to the recent influx of inbound moves, the state gained a new congressional seat.
As a result, its prestige is only expected to climb further.
3. South Carolina
South Carolina has been up and coming in popularity for years. However, COVID was really the factor that turned the tide and drove people to the state.
Similar to Florida, Forbes explains the South Carolina population boost, “The pandemic has spurred migration to the state through remote work allowing families to move closer together and a strong job market keeping existing residents there. The state saw a net gain of over 10 thousand residents last year.”
Out of all moves the state experienced, 63% were inbound. Many movers were seeking retirement, however, most were drawn in by the affordable cost of living.
Popular areas for a South Carolinian relocation include Charleston, Columbia, Mount Pleasant, (and especially) Greenville.
South Carolina realtors like Rachel Massey have observed this demand, and she explains the trend, "Greenville keeps ranking as a top place to move to because of the cost of living, the food, and downtown Greenville. It's such a draw for people,"
4. North Carolina
Newfound lifestyle flexibility is also the main driver behind North Carolina’s population boost. According to Axios, the state gained 64,970 residents.
In 2021, this leaves North Carolina with a net increase of 9,000 people. Wilmington County, Raleigh, and Charlotte were the main hotspots that drew in out-of-staters.
Downtown Raleigh, North Carolina
The reason for this influx is, in part, the tax environment. The state slashed its corporate and income tax rates this year (with plans to reduce them even further). According to the Tax Foundation, beginning January 1, 2022, the individual flat income tax rate will go from 5.25% to 4.99%. By January 1, 2021, this rate will dwindle further until it reaches 3.99%.
Of course, low taxes are attractive to Americans looking to lay down roots. This speaks to a greater phenomenon. People no longer want to put up with expensive taxes and areas. Businesses should pay attention.
Amazon already has. Like with Texas, they are planning to plant their feet further in the North Carolinian environment. They are expanding their presence and set to add 6,000 jobs in the state. Amazon has already substantially invested in North Carolina with:
- 8 Fulfillment and sortation centers
- 9 Delivery stations
- 16 Whole Foods Market locations
- 2 Prime Now fulfillment centers
- 1 Wind farm
- 1 Solar far
As a whole 60% of the moves the state experienced were inbound compared to 39.8% outbound
5. Tennessee
Tennessee is a right-to-work state with pro-business culture. This is extremely refreshing to Americans exhausted with the expenses and red tape of business-unfriendly states.
Tennessee supports its people and businesses through investments in infrastructure, education, workforce development, and global business relations. According to the Tax Foundation, it also boasts the lowest state and local taxes per capita.
It’s no wonder why the state saw a net gain of over 4,500 families, according to Forbes.
Tennessee also has one of the country's most affordable cost of living metrics. When the national average is 100, Tennessee’s is 89. Even in the most notable areas, the cost of living remains under the national average.
As a result, the power of the dollar is stronger, and consumers are empowered to stimulate their local economies freely.
Forbes Magazine explains, “Tennessee’s low cost of living, low taxes, expanding job market and natural beauty make it a perfect location to call home for many retirees and young families alike.”
Should You Relocate Your Commercial Real Estate?
Now that you know where and why people are moving, you’re faced with a tough question: should you join them?
Of course, there is no one-size-fits-all answer. But it is key to be aware of trends that influence population shifts. These moves do not exist in a void. They are a result of socioeconomic factors that will also influence your business.
So, you don’t necessarily need to relocate your headquarters, but consider opening satellite locations in these states. Or downsizing your space is another move to improve the performance of your EBITDA since the trend is towards workplace flexibility.
Consider too what these mass relocations say about the dwindling demand of metropolitan areas. Upwork found that:
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53% of Americans planning to move wanted less expensive housing and 21% of those planning to move were currently living in a large city |
Americans are fed up with the crime, expenses, and crowded environments of cities. As a result, many moves have been out of metropolitan areas and to the suburbs. Businesses are following suit.
Adam Kamins, a senior director at Moody's Analytics explains the trend, "There is less of a pull to being in a big city or even near a big city because of remote work. You might as well move somewhere cheaper with better weather and keep the same wages you had before."
So, consider how this attitude will affect your CRE. You don’t need to relocate but being aware of increasing suburban demand will give you a leg up on the competition- and first bid for the best space. If you want to capitalize on relocation trends, you can work with a Tenant Rep.
As Tenant Rep real estate professionals at iOptimize Realty®, we always have our eye on population trends that influence commercial real estate demand. We can help you arrive at the most optimal solution for your CRE (whether you’re ready to relocate or not). We are experienced working in all of these states and helping our corporate clients save millions and find the best property.
Subscribe to our blog to learn how you can save millions on your corporate real estate.
If you want to learn more about the latest in CRE relocation trends, you'll love these articles!
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