Regional Migration Trends in CRE Forecasting

Regional migration trends are reshaping the U.S. commercial real estate (CRE) landscape. Here's what you need to know:

• Migration Impact: People are moving across states due to job opportunities, housing affordability, and climate concerns. The South is the top destination, attracting 46% of movers in 2024.
• CRE Opportunities: Population shifts drive demand for multifamily housing, industrial spaces, and retail developments. For example, Florida gained 2.2 million residents since 2020, fueling housing shortages and rent growth.
• Key Drivers:
  • Jobs: States like Texas and Virginia are gaining workers due to strong employment growth.
  • Housing: High-cost areas like California are losing residents, while affordable states like South Carolina see an influx.
  • Climate: Areas with stable weather, such as northern cities, are becoming "climate havens."
• Tech Tools: Platforms like CoreCast help CRE professionals track migration trends, forecast market changes, and identify growth areas using real-time data and scenario modeling.

Migration patterns are shaping property values, rental demand, and investment strategies. Understanding these trends is essential for staying ahead in the evolving CRE market.

How Changing Behavior Is Reshaping CRE

Main Drivers of Regional Migration in the United States

Understanding what drives migration can help commercial real estate (CRE) professionals identify areas where demand is likely to grow. Three key factors influence these migration trends: job opportunities, housing affordability, and climate-related concerns. Each of these elements affects various CRE asset classes differently, offering opportunities for those who can interpret the shifts effectively.

Job Growth and Employment Opportunities

Job growth is a powerful driver of migration and directly influences demand across CRE sectors. Employment opportunities often act as a magnet, drawing people to regions where wages are higher. For instance, research shows that a 10% wage increase in a potential destination can lead to a 7.8% rise in migration to that area. On the flip side, a similar wage increase in someone's current location reduces their likelihood of moving by 3.5%.

Foreign-born workers have played a significant role in workforce growth. Between 2000 and 2022, they accounted for nearly three-quarters of the growth in the prime-age labor force. By 2023, foreign-born workers made up 18% of the 171.9 million U.S. civilian labor force. This influx of talent not only boosts the labor pool but also sparks demand for office spaces, housing, and retail services in areas where these workers settle.

The economic ripple effects of migration are substantial. According to the Congressional Budget Office, higher immigration levels expected between 2024 and 2034 could add $8.9 trillion to the GDP. For CRE professionals, this means sustained demand across asset classes as growing workforces need homes, offices, and shopping centers.

Regional job growth patterns also play a role in shaping migration. States that successfully build strong employment bases tend to attract new residents, while areas losing major employers often face population declines. This directly impacts industrial and office properties, as demand for these spaces is closely tied to employment density.

Cost of Living and Housing Affordability

Affordability, particularly in housing, is another major factor influencing migration patterns. Rising housing costs are increasingly pushing people to relocate, often to smaller or less expensive markets. In fact, declining internal migration rates in the U.S. are largely due to households being less willing to move when faced with high housing prices.

The pandemic accelerated this trend, with migration from large, expensive metro areas to smaller, more affordable ones tripling during this period. Coastal markets with high home prices have seen significant net losses in homebuyers, while more inland and southern metro areas have gained. The financial motivation is clear: on average, the median home price in the top ten metro areas losing residents is $144,000 higher than in the destinations attracting them.

Tax policies add another layer to this equation. States with high income tax rates are seeing more people leave, while tax-friendly states like Texas, Florida, and Tennessee are becoming popular destinations for both individuals and businesses.

The housing affordability crisis has ripple effects across CRE. As residential costs rise, demand for multifamily housing grows in more affordable markets. Retail spaces often follow population shifts, while office demand may depend on whether companies relocate or adapt to remote work models.

Climate Change and Weather Factors

Climate concerns are becoming an increasingly important factor in migration decisions. Natural disasters displace millions of Americans every year. Over the past two decades, approximately 3.2 million people in the U.S. have moved to escape flooding alone. In 2023, the U.S. faced a record-breaking 28 climate and weather disasters, each causing damages of $1 billion or more.

As temperatures and weather extremes intensify, migration patterns are shifting. Vulnerable areas prone to wildfires, extreme heat, or windstorms are seeing residents leave, while some older industrial cities in the North are branding themselves as "climate havens" to attract new residents and businesses.

The impact on CRE is significant. Properties in high-risk areas face higher insurance costs, potential devaluation, and reduced demand. Conversely, regions with greater climate stability could see unexpected growth, offering opportunities for investors who recognize these trends early.

"We'll likely see population shifts in the US in the coming decades because of climate change. Not everybody is necessarily going to go far. But we could see significant movements, probably away from the coasts and toward the north." - Alex de Sherbinin, Director of the Columbia Climate School's Center for International Earth Science Information Network

Together, these three factors - job opportunities, housing affordability, and climate considerations - interact in complex ways to shape migration patterns. For CRE professionals, understanding these dynamics is key to predicting where demand will grow and which types of properties will thrive.

How Migration Affects CRE Demand by Asset Class

Understanding how migration influences commercial real estate (CRE) allows investors and developers to make smarter, data-driven decisions about where and how to allocate resources. Shifting population patterns create distinct opportunities and challenges across various property types, shaping demand trends.

Multifamily Housing

Population growth from migration often drives up demand for rental housing, making multifamily properties a standout performer in certain regions. The Southeast, particularly Florida, has become a hotspot for this trend. For example, in 2023, Tampa saw net operating income (NOI) growth of over 7%, while Florida overall added just 370 new housing units per 1,000 new residents. This imbalance between supply and demand has been fueled by the migration of approximately 2.2 million people to Florida and the broader Southeast since 2020, contributing an estimated $100 billion in new income to the region.

As noted by Harvard University's Joint Center for Housing Studies, "The biggest difference in 2022 relative to 2019 is that in 2022, the population gains in Southern states grew larger, while losses increased in states along the Pacific coast and in the Northeast".

Investors are targeting markets where population growth outpaces housing supply and where rising wages can support higher rents. States like Idaho and South Carolina, for instance, led domestic migration growth between 2021 and 2025, each seeing their populations increase by more than 3%. The pandemic also accelerated interest in rural and suburban multifamily developments, with application activity in non-metro areas jumping by 80% since the pandemic began.

Tools like CoreCast's data integration help track these shifts in real time, offering valuable insights into multifamily trends. These dynamics also set the stage for understanding how migration impacts other asset classes, such as office, industrial, and retail spaces.

Office and Industrial Spaces

Migration patterns are reshaping the office and industrial sectors, with primary and secondary markets seeing gains as workers and businesses move away from pricier gateway cities.

States like Virginia, Texas, Georgia, South Carolina, and Tennessee are attracting workers due to strong job markets and lower living costs. For example, office absorption in Austin, TX, rebounded significantly, rising to nearly 1 million square feet after experiencing a decline of 1.3 million square feet the previous year. Similarly, Columbia, SC, saw office absorption climb to 1.0 million square feet from a previous negative absorption of 250,000 square feet.

These shifts have led to stronger rental growth in cities like Orlando, Fort Lauderdale, and Raleigh, contrasting with declining rents in traditional hubs such as San Francisco, New York City, and Washington, D.C..

Industrial spaces are also benefiting from these trends. Population growth in secondary markets is driving demand for distribution centers as e-commerce companies expand to meet same-day delivery expectations. Additionally, hybrid work models and reduced urban congestion are enabling more efficient use of industrial spaces.

As these changes ripple through office and industrial sectors, migration also significantly impacts retail and mixed-use developments.

Retail and Mixed-Use Developments

Migration is reshaping retail demand, driven by shifts in wealth and changing consumer preferences. Between 2020 and 2021, $68 billion in wealth moved from cities to rural areas, creating new opportunities for retailers.

The South has emerged as a key growth region, experiencing a population surge of 5.6%, or over 7 million people, since the pandemic began. Its economy has also expanded rapidly, with an average annual GDP growth rate of 4.3% from 2020 to 2024, outpacing the national rate of 3.6%. The combined GDP of Texas and Florida alone now rivals significant portions of the Northeast and Midwest economies. Housing affordability in the region further supports migration, with the median new home price in the South at $376,200 in 2024, compared to the national median of $420,300.

Millennial migration has added another layer to retail trends. Between 2020 and 2021, 85% of homebuyers aged 31 to 40 opted for suburban or small-town homes. In major metropolitan areas, buyers and renters paid premiums - 34% and 41%, respectively - for walkable neighborhoods. These preferences are fueling demand for mixed-use developments that combine residential, retail, and office spaces, appealing to both millennials and Generation Z.

From 2019 to 2024, the South’s labor force grew by 6.4%, significantly outpacing the national growth rate of 2.8%. During this period, 78% of all new jobs in the U.S. were created in the South. To thrive in these evolving markets, retailers must rethink their inventory strategies, brand positioning, and pricing to meet the needs of increasingly affluent and selective consumers.

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How to Use Migration Data in CRE Forecasting

Incorporating migration data into commercial real estate (CRE) forecasting involves combining various data sources, analytics, and scenario modeling to turn population movement trends into actionable investment strategies.

Using Real-Time Data Platforms

Real-time data platforms are essential for leveraging migration insights effectively. These tools provide immediate access to population movement patterns and their potential economic effects, enabling CRE professionals to identify trends as they emerge.

For instance, CoreCast's integrated system tracks migration patterns alongside property performance metrics. By analyzing historical data, it identifies links between population shifts and asset performance. Additionally, its competitive landscape mapping helps assess how migration impacts local markets. Users can monitor deal pipelines while evaluating how demographic changes influence market dynamics.

These platforms are particularly useful during sudden migration surges, such as corporate relocations that spike office demand in secondary markets. By merging migration insights with property-level analytics, investors can pinpoint which submarkets are poised for growth and adjust their acquisition strategies to capitalize on these opportunities.

Integration of migration data with employment and housing statistics further strengthens risk assessments and investment decisions.

"Real estate data integration is crucial for a comprehensive and accurate view of properties, enabling better decision-making, risk assessment, and strategic planning".

This approach allows CRE professionals to connect migration trends with local job markets, housing supply constraints, and broader economic factors, creating a more detailed picture of market dynamics.

Combining Public and Private Data Sources

To forecast migration effectively, it’s important to blend public demographic data with proprietary market intelligence. This combination provides a more complete and timely understanding of investment opportunities.

Public sources like the U.S. Census and the Bureau of Labor Statistics (BLS) offer foundational migration trends. However, these datasets often lag behind real-time market conditions, making private data sources critical for up-to-date insights.

Private data sources - such as records from moving companies, utility connections, and commercial lease activity - deliver more immediate indicators of population shifts. By harmonizing these datasets using tools like Placekey, geographic accuracy across different data systems is ensured.

"Universal identifiers, like Placekey, play a crucial role in harmonizing disparate datasets, acting as a cohesive link across different data systems".

Adding geospatial integration further enhances analysis. Overlaying migration trends on detailed property maps helps investors identify specific neighborhoods or corridors experiencing significant demographic shifts. This level of detail is invaluable for targeting areas ripe for development or acquisitions.

Ensuring data quality is critical when working with multiple sources. This involves verifying public records for accuracy, validating methodologies from third-party providers, and cross-referencing proprietary data outputs. Maintaining consistent standards across datasets minimizes discrepancies and ensures seamless integration.

Once these data sources are unified, they provide a solid foundation for scenario modeling and risk assessment.

Scenario Modeling and Risk Assessment

Scenario modeling transforms raw migration data into actionable forecasts by testing how different population movement patterns could impact various asset classes and markets. This method helps CRE professionals prepare for multiple potential outcomes rather than relying on a single prediction.

Stress-testing investments under diverse migration scenarios uncovers both risks and opportunities. For example, a scenario modeling the continued urban-to-suburban migration driven by remote work policies could help investors gauge long-term demand for suburban office parks versus urban high-rises. Similarly, analyzing migration shifts caused by climate change could highlight the resilience - or vulnerability - of regional portfolios.

Typically, scenario modeling explores three key possibilities: a continuation of current trends, an acceleration of migration patterns, and a reversal due to economic or policy changes. Each scenario generates unique projections for asset classes like multifamily housing, office space, industrial facilities, and retail properties.

Advances in technology, including automation and machine learning, enhance the accuracy of these forecasts by uncovering patterns that manual analysis might miss.

"Data science integrates alternative data sets, machine learning technologies, and predictive analytics to extract new knowledge from data and amplify the ability to forecast and nowcast".

From this process, risk mitigation strategies naturally emerge. For instance, if a market heavily relies on in-migration to sustain rent growth, investors might diversify geographically or focus on asset classes with steadier demand. On the other hand, markets that show resilience across multiple scenarios may warrant concentrated investment.

To refine forecasting models further, it’s essential to validate integrated datasets for accuracy and use data visualization tools to reveal patterns and insights. This iterative process improves the predictive power of models, making them more practical for guiding investment decisions.

Key Takeaways for CRE Professionals

Regional migration trends play a major role in shaping commercial real estate (CRE) performance. Immigration alone accounts for about 45% of the U.S. population growth and is projected to drive over half of net new housing demand in the coming years. For CRE professionals, understanding these shifts isn't just useful - it's critical for staying ahead in a fast-changing market.

Main Insights for CRE Stakeholders

Breaking down the current market dynamics, several key insights emerge for those in the CRE space:

• Migration Patterns and Investment Returns: Migration trends are closely tied to investment outcomes. Regions experiencing population growth tend to have lower cap rates, signaling reduced risk and stronger demand. Conversely, areas with population decline often see higher cap rates, reflecting increased risk. For savvy investors, spotting these patterns early can unlock significant opportunities.
• Demographic Shifts and Rental Demand: Changing demographics are reshaping rental markets. Hispanic renters now account for over 20% of renters in several metro areas, such as San Antonio (53.1%), Miami-Ft. Lauderdale (46.9%), and Riverside (45.9%). Similarly, Asian renters make up more than 10% of renters in places like Honolulu County, Hawaii (31.4%) and San Jose-Sunnyvale-Santa Clara, CA (30.9%). These trends highlight the need for targeted strategies tailored to specific demographic preferences.
• Aging Population Trends: The U.S. Census Bureau projects that over the next decade, the number of people aged 25–54 will grow by 12 million, while those aged 70 and older will increase by 15 million. This shift calls for diverse asset strategies, ranging from multifamily housing for younger professionals to senior living and healthcare facilities for older populations.
• Impact of Remote Work: The rise of remote work has reshaped the fundamentals of commercial real estate. Urban areas are seeing higher office vacancy rates and declining rents, while suburban retail and industrial properties are experiencing increased demand.
• Repurposing Vacant Spaces: Empty office and retail spaces are being converted into residential, healthcare, or mixed-use properties to meet evolving market needs. Investors who identify these opportunities early can capture considerable value.

How CoreCast Enhances Regional Migration Analysis

CoreCast is designed to turn migration data into actionable insights, helping CRE professionals make informed decisions. Its integrated mapping tools provide a clear view of migration patterns alongside property performance metrics and competitive landscapes, offering a level of analysis that's difficult to achieve manually.

One of CoreCast’s standout features is its real-time data integration. Unlike public sources like the U.S. Census, which often lag behind, CoreCast pulls from multiple data streams to deliver up-to-date insights. This is particularly advantageous, as properties using geospatial analysis reportedly see 7.3% higher annual returns.

The platform’s AI-driven forecasting tools boast an 87% accuracy rate in identifying growth areas, enabling investors to achieve 4-5% higher risk-adjusted returns. By simplifying complex migration scenarios, these predictive models help transform raw data into actionable strategies.

CoreCast also supports stakeholder communication through customizable, branded reports. These reports make it easier to share migration-driven insights with investors and partners, ensuring that demographic trends align with investment goals.

With a beta price of $50 per user per month (set to rise to $105), CoreCast offers access to advanced migration analysis tools that were once exclusive to large institutions. As Shulem Rosenbaum, CPA/ABV, and member of Roth&Co's real estate leadership team, puts it:

"The key is to think ahead and be ready to pivot, because in real estate, just like in business, staying stagnant is not an option".

FAQs

How do regional migration patterns affect commercial real estate asset classes?

How Regional Migration Shapes Commercial Real Estate

Regional migration patterns significantly influence the performance of different types of commercial real estate. When a region sees inbound migration, there’s often a surge in demand for multifamily housing, retail spaces, and office properties. This uptick in demand can lead to higher property values and rental rates. On the flip side, areas experiencing outbound migration might struggle with declining demand, increased vacancy rates, and higher cap rates, all of which can negatively impact property performance.

For investors, these migration trends provide valuable insights. High-demand markets with growing populations often present attractive opportunities, while areas facing population declines may pose risks. Grasping these shifts is key to making smart decisions in real estate forecasting and managing portfolios effectively.

What drives regional migration in the U.S., and how does it impact commercial real estate?

Regional migration in the U.S. largely hinges on factors such as job opportunities, lower taxes, affordable housing, lifestyle choices, and quality of life. States that combine strong economic growth with business-friendly policies and appealing living conditions often become magnets for new residents.

These shifting population patterns have a direct impact on commercial real estate. Areas experiencing a surge in residents typically see growing demand for office spaces, retail hubs, and multifamily housing. This creates opportunities for new developments and can drive up property values, making these regions attractive for real estate investors and developers.

How can migration trends help commercial real estate professionals predict market shifts and investment opportunities?

Migration trends reveal essential patterns of population growth, decline, and movement across regions. For commercial real estate professionals, this information is a game-changer, offering a clearer picture of where demand for properties - whether residential, retail, or office spaces - might rise or fall.

Knowing where people are relocating to or leaving from can highlight new markets and uncover promising investment opportunities. It also helps guide decisions on property development or acquisitions. By examining both historical data and future projections, professionals can take a data-backed approach to forecasting and planning strategically.