Aerial view of downtown Raleigh from the warehouse district.
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A version of this article first appeared in the CNBC Property Play newsletter with Diana Orrick. Property Play covers new and evolving opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large publicly traded companies. Sign up to receive future editions directly to your inbox.
Historically, Americans have immigrated to find better economic opportunities. But United Van Lines’ annual Migration Report says drivers are now moving from a “go west, young man” mentality where free and open land was an opportunity to more personal incentives like family and affordability.
It found that Americans are not only choosing to live closer to family, but also prefer smaller markets over urban centers for cheaper housing and a better quality of life. This change will have a significant impact on commercial real estate investors and the choices they make going forward.
Oregon is the most popular migration destination for the first time in history in 2025, while Florida and Texas, which saw large inflows during the pandemic and early post-pandemic period, are now seeing a more balanced migration.
Of the top 10 inbound states, six were located in the South and South Atlantic: West Virginia, South Carolina, North Carolina, Arkansas, Alabama, and Delaware.
“Data makes it clear that Americans are looking for a different pace of life, and destinations like Oregon, the Carolinas and the South are delivering on that,” Eilee Cummings, vice president of corporate communications for United Van Lines, said in a release. “While the total number of residential moves will be similar to 2024, the reasons people move are more complex and migration patterns across age groups are becoming more diverse.”
Meanwhile, younger Millennials and Gen Z prefer New Jersey, which is cheaper than New York City. But retirees are moving out of state, making it the top state for out-of-state migration, according to the report.
As the rationale for migration shifts toward basic affordability and easier lifestyles, the commercial real estate needed to support it will likely look a little different than if the primary driver of those migration patterns were more solid economic opportunity, said Ryan Severino, chief economist at BGO, a global real estate investment, financing and services company.
He said the need for more affordable housing, more modest office parks and more retail space for low- and middle-income earners are better options for investors. It even takes into account the industrial real estate that supports it. For example, if people live in small workforce housing, they need self-storage nearby.
Demographic changes are also influencing this theory. According to the U.S. Census Bureau, population growth has slowed, household formation rates have slowed, and migration rates have slowed over time.
“What this suggests to me, especially working as a private equity investor, is that we’re going to have to pick our locations smarter and more carefully from a commercial real estate perspective than we have in recent decades, where people have been operating under the overarching assumption that this migration pattern is durable and accelerating over time. I think the opposite is probably true,” Severino said.
southern swing
Although Americans are still heading to southern regions for lifestyle and affordability, migration patterns now appear to be less stable and sustainable than in the past, and will not necessarily accelerate.
The first years of the pandemic saw a mass exodus to southern states that multifamily housing developers hoped would be a treasure trove for years to come.
“They’re going to buy things thinking they’re going to see 6%, 8% rent increases as far as we can see. And we’re going to mint money and in five years we’re going to double what we paid for this property,” said Manas Clancy, head of data strategy at Lightbox, a commercial real estate data and analytics platform.
But rents are now falling because oversupply has seeped into the system and some people who fled to the South are now relocating.
“The truth is, people were coming to save money, migration was real, but it wasn’t without other factors, like new development and new inventory. New inventory in 2024 was the highest in 50 years, and I think the buyer’s remorse was huge,” he said.
Arizona, Nevada, and Florida are classic examples of states where businesses moved and people moved in search of so-called “improved quality of life,” but are now leaving.
“It wasn’t close to the real-life situation that I know of, and I think a lot of investors and developers took it as a more long-term structural change, an acceleration of a long-term pattern,” Severino said. “So they went out and built a lot of housing in places like Florida, Nevada and Arizona, but then a lot of people didn’t stay there.”
Clancy said snowbirds will continue to move south, but commercial real estate investors need to be more strategic about where they put their money, especially in retail.
“Everyone loves Simon. [Simon Property Group] The high end will do it too, and they are… but they’re very, very selective. Nobody says, “We’re going to build a strip mall to spec because we expect a million people from Illinois, Michigan, and Indiana to come here in the next five years.” It’s just not happening,” he said.
Mr. Clancy said he expects to see more discount grocery stores and brick-and-mortar retailers such as Walmart.
The data shows that younger Americans are making a new move to smaller, more affordable Midwest markets, while older generations are generally choosing to retire in the South, but not as much as in the past.
“Even though the population is growing, the rate of all of these things is slowing down. So I don’t think a lot of people who are even passively looking at commercial real estate would perceive it as a layup,” Severino said.
