Remote workers no longer tethered to an office are settling in mid-sized cities across the nation, creating new opportunities and headaches for real estate developers and the cities themselves. More than 12 percent of moves between April 2020 and December 2021 were caused by COVID-19, as remote workers have flocked to smaller cities with lower costs of living, lower taxes, and fewer pandemic health restrictions, according to a recent study by professors at Vanderbilt University and the Georgia Institute of Technology.
The study analyzed 360,000 residential interstate moves from the last five years, finding that 70 percent of people citing remote work as the reason for their move earn more than $100,000 annually. Superstar cities in huge coastal metro areas like New York and San Francisco aren’t going away, but they’re losing enough people to impact their tax base.
Much of this migration is caused by highly paid tech workers, as the tech sector grew by 47 percent and added 1.2 million jobs between 2010 and 2019. About half the job creation occurred in eight areas, including San Francisco; San Jose, California; Austin, Texas; Boston; and Seattle. But some mid-size cities are also adding tech jobs at a clip of 3 percent or more annually, including Atlanta, Dallas, and Kansas City, Missouri.
All these migration trends are undoubtedly in the minds of real estate investors. It’s no secret that mid-sized and smaller cities have seen population booms as more people have flocked to the suburbs and the Sun Belt, especially over the past two decades. The pandemic and remote work have added fuel to the fire. The investment outlook for the Sun Belt, suburbs, and smaller and mid-sized cities is increasingly attractive. Company office re-locations and satellite offices in these areas will likely keep growing.